If you dread completing a tax return and have only just made your online submission, leaving it to the last minute, you will probably agree that the UK tax system is incredibly complicated. Arranging your finances so that you make use of the available tax wrappers and tax allowances could go a long way to not only simplifying your tax affairs, but also significantly reducing the amount of tax you pay. You do not need to resort to complicated avoidance schemes to reduce your tax bill. By choosing how and when to crystallise an investment gain or loss, or when to make a pension contribution, can change a tax bill by hundreds if not thousands of pounds. In the current tax year, there are up to £32,740 of main stream tax allowances available to an individual. To maximise these allowances, does require you to plan how and where you save; knowing which products to use, and how much to contribute. You should consider spreading your savings across different tax wrappers so that you can benefit from their different allowances and features. For example pension contributions can benefit from up to 60% tax relief, and can also allow you to regain child allowance that is lost if your earnings take you into higher rate tax. Outside the tax benefits of an ISA, an individual can receive up to £2,000 of dividends each year free of income tax. And what about the £11,700 annual capital gains tax allowance? Are you regularly re-balancing your investment portfolios to wash out gains up to your annual exemption? Investment Bonds also have very useful features including tax deferral.

Taxation is effectively a charge on investment returns. We often see prospective clients that have focused almost entirely on the investment aspect of their savings without too much thought to the effect tax will have when they withdraw their funds. I sometimes wonder how the amounts saved through tax planning over the years compares to the actual investment return.

Tax planning is an incredibly valuable service. Here at Wingate, we can help you maximise the use of available tax allowances, across the entire range of pension and savings products. We can prepare you for retirement and create a tax efficient withdrawal strategy, protecting your wealth for you and your family.

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