It’s the time of year to work with Enable’s IFA’s to make sure you have made the most of your annual tax exemptions. If you have been looking at how to manage inheritance tax it is good to remember that the first £3,000 given away each tax year will attract no Inheritance Tax if you die. Amounts greater than £3,000 can later become subject to inheritance tax if you die within 7 years.
If you don’t use the inheritance tax exemption in a year you can carry it forward for one tax year and use it then. So you can carry forward a gift of £6000. There is also a Small Gifts Allowance. This means you can give up to £250 to any individual in each year without being liable for any inheritance tax. These small gifts are a good way to add to your grandchildren’s Junior ISA’s to help them manage their finances in the future.
Another useful and generous way to reduce your gross income to below certain annual tax thresholds is by giving money to charity instead of HMRC. For any charitable donation, you receive tax relief, at whatever the highest rate of tax is that you pay during the year.
Reducing your gross earnings figure can be particularly useful if your earnings are not far above the 20% basic rate tax threshold, or the earnings for the threshold for Children’s Allowance. By using an allowance, such as your annual pension allowance, you can also reduce your gross figure to below the 20% cut off point, avoiding having to pay 40% on anything above it, while providing for your financial future at the same time. Enables IFA’s in Bishops Stortford can work with you and your accountant to make sure you have considered your options when it comes to annual tax exemptions.
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