Monday, 22 April 2013

Spring Clean Your Finances

As Spring appears to have finally arrived, now would seem a good time to give your finances a “spring clean”.

The Chancellor of the Exchequer delivered the Budget for 2013 on 20 March and announced a number of changes that will affect UK taxpayers.

The personal allowance for those under 65 has risen from £8,105 to £9,440, while for those aged 65-75 and over 75, the allowance remains the same at £10,500 and £10,660 respectively.

While the increase in personal allowance is good news, people earning over £41,450 (instead of £42,475 in 2012/13) need to be aware that they will become higher rate tax payers and any income earned above this amount will be taxed at 40%.

Individuals will have their personal allowance reduced by £1 for every £2 earned over £100,000; therefore an employee earning £118,880 will have no personal allowance and an effective income tax rate of 60% on the income between £100,000 and £118,880.

Those that earn over £150,000 will benefit from a reduction in the top income tax rate from 50% to 45%.

Have your circumstances changed? 
Have you had a pay rise recently?     Does the 2013 budget affect you?

It is possible to reduce your income below the £41,450 and £100,000 levels and therefore reduce your income tax liability by making contributions to your pension.

If you would like to know more about tax-efficient financial planning, please call us on 01932 830664 to speak with one of our qualified advisers or to book an appointment.

Tuesday, 16 April 2013

Ways to reduce your IHT liability

“The only two certainties in life are death and taxes” – Benjamin Franklin

Inheritance Tax (IHT) is usually payable on an Estate in the event of someone’s death. The current IHT threshold, also known as the 'Nil rate band', stands at £325,000. If your overall Estate is above this level, any excess amount will be taxed at 40% (although there are some exceptions in respect of charities etc).

Since October 2007, any late spouse’s or civil partner’s unused nil rate band can be transferred to the second spouse or civil partner when they die. This will mean that currently on second death the IHT threshold will be £650,000.

Example – Husband & Wife
Private property
Bank accounts
Investments (incl. ISAs)
Other assets (e.g. cars)
Total assets
Combined Nil rate bands
Liable to IHT
Taxed at 40%
£90,000 tax liability to pay

To find out how to reduce your potential IHT liability, please call us to book an appointment or have an informal discussion with one of our highly qualified financial planners.
Ward Williams Financial Services Ltd is authorised and regulated by the Financial Conduct Authority. The Financial Conduct Authority does not regulate taxation advice.