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Careful Planning - New Tax Laws
Those with taxable income in excess of £100,000 per annum face a significant increase in personal taxation as from 6 April 2010. An individual’s Personal Allowance (£6,475 – 2010/11) will be reduced by £1 for every £2 of taxable income over this figure. A new “top tier” of Income Tax will be introduced for those with taxable incomes in excess of £150,000.
Here are some financial planning opportunities which could be considered for those affected wishing to mitigate some of the inevitable tax increase:
- Delaying expenditure such as Charitable Gift Aided Payments and other allowable deductions.
- Where available, the use of a lower earning spouse’s lower rate tax band.
- Contributions to tax efficient investments such as Individual Savings Accounts.
- For investors wishing to adopt an adventurous approach towards investment, Venture Capital Trusts and Enterprise Investment Scheme provide valuable tax breaks.
- Reviewing Pension Contributions. Although higher rate Income Tax relief on new pension contributions paid will be removed as from April 2011 for individuals with taxable incomes of £150,000 per annum or more, there are still opportunities for higher earners to make tax efficient savings for their retirement.
- The timing of dividend payments received from Limited Companies.
- Investing for Capital Gains rather than Income.
- Long term plans on residence and domicile status.
For further advice, please contact a member of the Financial Services Team on 01206 217309.