5 Tax Planning Projects you should be thinking about...

So, we're at the beginning of a new tax year again, and we get the delight of possibly having a second budget this year depending on the outcome of next month's general election. Couple this with an increasingly darkening mood in the media towards the issue of tax and you could be forgiven for thinking that all thoughts of saving tax are moot, yet nothing could be further from the truth...

Tax Efficient Savings

Of course we can talk about the use of ISAs and the increased allowances that were announced in the budget, or even the new home-buyer ISAs. However, of more interest are the recent changes to the tax legislation surrounding pensions, and the fact that under the right circumstances they are now effectively a completely tax-free vehicle (even on the event of your death). Okay you say, but I'm limited to placing £40,000 a year into pension (of course you could carry forward if you've not been making the most of pensions, but that's a blog all on it's own). Well, then we can move on to look at EISs and VCTs, both of which offer the advantage of reducing your income (and possibly capital gains) tax bill.

Off to University?

Very often overlooked is the ability to use your personal company to fund your children's university fees in the most tax efficient manner. I did write a whole blog post on this a little while ago, see here for more details http://stevenholdentax.blogspot.co.uk/2014/09/university-fees-and-tax.html

Family Investment Company

Again, this is the resurrection of some well tried and tested planning, the only reason they fell out of favour was due to the higher rate of corporation tax being applied to close investment companies. However, with the higher rate of corporation tax falling down to 20% now there is no longer a penalty for operating your investments through a company structure. The advantages are manifold, although there can be some disadvantages too, full details can be found here http://stevenholdentax.blogspot.co.uk/2015/01/could-family-investment-company-help.html 

Review your investments

This particular bit of advice has two prongs, the first of which is to ensure that you are using up all of your available allowances for income tax, capital gains tax, inheritance tax and maxing out your contributions to tax favoured investments. That's the easy one. The less straightforward option is to look at the more unusal investment wrappers that come with a built in tax advantage such as bonds (which offer a 5% tax deferred income for 20 years), and others like discounted gift trusts and loan trusts that not only offer income tax benefits, but capital gains and inheritance tax benefits too.

Avoid Tax Schemes

Whilst the promises of mass marketed tax schemes can appear attractive, their success is often short lived. Furthermore, given the current Government's and the media's appetite for naming and shaming those involved in aggressive avoidance is another deterrent. There have been several high profile cases in recent year's and the "tax scheme" industry as a whole has been painted in a very bad light indeed. I would also expect it not to be too long before we see HMRC flexing the new muscles it gained when the GAAR was introduced. The day of the mass marketed tax scheme is all but over, unfortunately certain parts of the profession have failed to recognise this and are still peddling such schemes, BEWARE!