Top tips for good tax planning

This article is part of
Guide to getting tax planning done early

Top tips for good tax planning

How can one encourage clients to take tax planning more seriously, and not to leave it til the last minute each year?

Respondents to this guide have suggested several top tips to help hammer home the importance of timely tax planning, without making rushed decisions.

Tracyann Kneen, product technical manager at Nucleus, states: "Just as an individual’s life can be viewed in cycles so too should tax planning.

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"At any given point, an individual may be juggling a career with raising a family, or thinking of a comfortable retirement with an increasing focus on passing wealth tax efficiently to the next generation."

For Ms Kneen, top of the list for advisers is to "help their clients regularly take stock of where they are in their life cycle and to explore the tax planning options that will help them achieve current and future financial goals".

But it's important to help clients understand what their goals, their liabilities and their tax allowances are in the first place, says Ian Battersby, business development director for Seneca Partners.

That way, he says clients can "plan their tax strategy in advance of liabilities falling due, to help manage their cashflow".

Make the most of the Isa allowances

James Nield, investment manager for Thesis Asset Management, comments: "It's important to make the maximum use of Isas for the whole family, including junior Isas (Jisas).

"With interest rates as low as they are at present, consider transferring cash Isas into stocks and shares Isas, and keep cash reserves outside of the Isa wrapper.

"Most investors can earn between £500 and £1,000 of savings interest tax free now, so sheltering cash from income tax in an Isa wrapper might not be the most efficient use of the Isa wrapper."

Make the most of other allowances

Take into account the various allowances available (before the Chancellor takes them away), such as the annual gifts exemption, small gifts exemption or charitable donations.

As Tim Morris, IFA for Russell & Co, advocates: "Know your annual allowances: pension, Isa, personal savings allowance, dividends, IHT, venture capital trusts, enterprise investment schemes, capital gains tax and income tax.

"It's a lot - but use it; don't lose it. Basically, get financial advice."

Mr Nield adds: "Where possible spread income and assets between spouses as a married couple to make the greatest use of allowances and exemptions."

It is also worth for certain clients still in employment to consider salary sacrifice for those earning, for items such as childcare vouchers or pension contributions.

Make the most of new Isa rules