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Financial planning throughout your lifetime

Proper planning plays an essential role in helping you to achieve your lifetime goals, and in today’s challenging economic climate this is more the case than ever. Here we outline some of the key areas to consider as part of your personal financial planning strategy.

Minimising the tax take
Whatever your long-term goals, your key personal planning objectives should include making the most of tax-free opportunities, keeping marginal tax rates as low as possible across the family and maintaining a spread between income and capital. We can help to minimise the impact of regular and more periodic taxes.

Planning Tip: Every member of your family is taxed as an individual, and entitled to their own allowances and exemptions. With careful planning, a couple and their two children could have tax-free income and gains of up to £81,360 in 2013/14.

A family affair
Employing family members in your business can prove a tax-efficient option, as long as the package is commercially justifiable. In addition to a salary, tax-efficient remuneration packages may include benefits such as a company car or medical insurance, and payments into a pension scheme.

Planning Tip: Taking family members into partnership can allow more flexibility in profit allocation, and can prove a tax-efficient way of passing on the family business in the long term.

Investing in the future
A number of investment products produce tax-free income, including some National Savings products and Individual Savings Accounts (ISAs). All investments held in ISAs are free of capital gains tax (CGT). Other alternative tax-efficient investment options may include the Enterprise Investment Scheme, Venture Capital Trusts and property.

Planning Tip: Up to £11,520 can be invested in an ISA during 2013/14, including up to £5,760 in cash and deposits. Younger investors can invest up to a maximum of £3,720 in a Junior ISA.

Tomorrow never comes?
Statistics show that many individuals are heading towards retirement without sufficient pension savings to support even a minimum standard of living. It may seem a long way off but it is vital to plan now to ensure that you can achieve a comfortable retirement.

Planning Tip: Personal and stakeholder pensions provide tax relief on contributions, being payable net of basic rate tax relief at source. Stakeholder premiums can be paid on behalf of another person, for example by a grandparent on behalf of an infant grandchild.

Your estate – your legacy
Careful planning and a well-drafted Will can ensure that the wealth you have built up during your lifetime will be distributed tax-efficiently and according to your wishes. If your estate is worth more than £325,000 it could be liable to inheritance tax, so it is important to make use of the available exemptions. You may also want to consider making gifts from your taxable estate into trust, or maximising the tax relief on charitable donations.

Planning Tip: A structured programme of lifetime giving can significantly reduce the tax due on death, while allowing you to witness the benefits during your lifetime.