Few people like to pay tax on their income and assets, but unfortunately taxes are an inescapable part of life.
Fortunately, however, there are ways to reduce to reduce your tax liability, including through the use of annual tax exemptions. Murray Beith Murray would like to remind all tax payers to make sure they make full use of these exemptions before the end of the tax year on 5th April. These exemptions usually can’t be carried over, so if you don’t use them you will lose them.
Tax exemptions can come in a variety of forms, but one of the most important to be aware of is the Annual Exempt Amount for Capital Gains Tax.
Capital Gains Tax is a tax that is payable on the profit made when you dispose of an asset that has increased in value. The types of assets that can be liable for this tax include some personal possessions worth over £6,000 and shares that aren’t in an ISA or PEP.
Most people who are liable for this tax have an annual tax-free allowance - known as the ‘Annual Exempt Amount’, which renews each year. You only pay Capital Gains Tax if your overall gains for the tax year are above this amount.
Another important exemption to be aware of is the Inheritance Tax (IHT) annual exemption, which allows you to give away assets up to a total of £3,000 in a year without incurring IHT. This ‘gift allowance’ can be an effective way of passing on some of your wealth while you are still alive, but expert advice is recommended to ensure you use the allowances effectively.
For expert advice on Tax Planning and Asset Protection then contact our specialist solicitors today.
Contains public sector information licensed under the Open Government Licence v3.0.