Did You Know - Spring 2009
A new tax year, New opportunities in 2009
As we start the new tax year for 2009, new opportunities arise to being tax efficient with your investments, savings and overall financial planning.
Global economies have changed significantly in the last year and this tax year (2009/2010) may be no different, however the new tax year introduces new allowances and this generates potential opportunities. Our latest newsletter focuses on these allowances and I have listed some of these below.
Examples of New Year Tax Allowances
ISAs 2009/2010
The allowances for this tax year remain unchanged and many clients like to arrange their ISA investments early in the tax year rather than waiting to the end. The maximum contribution is £7,200 in total, with the maximum allowed into a cash ISA arrangement of £3,600. If the cash option is used, then it is still possible to contribute £3,600 into a stocks and shares arrangement.
UPDATE 2009
The Chancellor, Alistair Darling, has announced in his April Budget 2009, that the ISA allowance will increase to £10,200 for individuals from 2010/2011. For individuals over the age of 50, the increase applies in this tax year 2009/2010 from 6th October 2009.
Annual Gift Allowance, Surplus Income and Inheritance Tax Planning
Many clients are concerned about the effects of inheritance tax on the value of their estates. Married couples have seen their allowances extend out to a level of £650,000 (2X £325,000) in recent times with changes in legislation. With local property prices remaining high, many find that this still places their estates in a taxable position. Some clients choose to use their annual gift allowance of £3,000 each to gift away to their beneficiaries early in the tax year. If they did not use last year’s allowance, they can also use last year’s allowance, making the total gift allowed for the tax year of £6,000.
Also, as an additional allowance, Her Majesties Revenue & Customs will allow individuals to gift away surplus income each year, subject to the gift not affecting their standard of living. If used properly, this can be a highly effective allowance, but you should take advice before proceeding.
If you would like to review this or consider your overall inheritance tax position then please let us know. At the same time, you may also wish to review any existing life assurance protection arrangements to ensure that any existing protection arrangements still the needs of both you and your family.
Capital Gains Tax Allowance (CGT)
This is a valuable allowance, particularly to higher rate tax payers. The CGT allowance of £9,600 for 2008/2009 will not increase this tax year and will remain unchanged. Any gain achieved above this level of allowance is currently taxed at a flat rate of 18%.
Talk to Churchouse Financial Planning about how investments can be arranged, if appropriate to benefit from the potential that this and the other allowances offer.
Please note this information is for guidance only and is not intended as personalised investment advice. Churchouse Financial Planning Limited is authorised and regulated by the Financial Services Authority.
