Personal financial and budget planning 2 … pay less tax
It’s entirely understandable that people should be sitting on their wallets at the moment. The credit crunch, volatility in share markets and falling house prices have driven a lot of us to keep our money in cash and personal financial and budget planning has been put aside by many Britons. As readers of previous posts will know, we here at Walletwatcher think cash is a wise and prudent idea … at least in part. But you HAVE to remember that inflation, for so long ignored as merely an historical fact of the UK financial landscape, is back. Even hovering between 2 and 3% a year, it makes for a steady erosion of your savings. You HAVE to have a vehicle that’s delivering you growth each year, and if you can get that growth tax free, then your savings will compound all the quicker.
That’s why, when the UK Government offers you a tax-free savings vehicle, you should grab it with both hands, and there are a few around. Here are our top ten ways to snaffle something back from the Chancellor. Put money into your pension pot - lower rate taxpayers get 20% back, while higher rate payers get 40%. So for every £60 you put in, the Exchequer will make it up to £100. Those over the retirement age should investigage immediate vesting pensions. Use your ISA allowance of £7000 a year, for shares or (if you really are cautious) for cash. Transfer assets to your husband or wife, thus reducing your tax exposure. Give money away (gulp) to dodge inheritance tax.
Check you’re on the correct tax code, and while you’re at it, ensure you’ve filed a tax return. It MAY be a pain, but it gives you the opportunity to really work through your tax position and checking you’re getting and claiming all your entitlements. Investigate ways to minimise your exposure to Captital Gains Tax (CGT); the rules on taper relief change in April 08. Claim back Gift Aid on charitable donations - you won’t get the extra cash but your charity will. Similarly, investigage Salary Sacrifice, whereby you can forego a chunk of pay but have it paid as tax-free childcare certificates, for example.
