The tax we pay helps to fund things we will all rely on at some point, like schools and the NHS. While it is important we all contribute, it is a good idea to understand what you should be paying and what you should not. You do not want to end up paying more than your fair share!
Taxation can be a complicated area of personal finance, so it can be easy to miss out on opportunities to reduce the amount of tax you pay if you do not take advice. Your job, your savings and your personal circumstances will all have an impact on the amount of income tax you should pay each year, so it is important to know what you do and do not have to declare.
For example, any interest earned on savings you have in an Individual Savings Account (ISA), will not be taxed, but interest you earn on money that is not in a tax sheltered investment will need to be declared as part of your taxable income. ISAs offer other tax privileges on investments such as freedom from capital gains tax and higher rate income tax.
Pension contributions enjoy generous tax relief and the new pension reforms make them a more attractive investment.
Inheritance tax (IHT) is a tax on money or possessions you leave behind when you die and on some gifts you make during your lifetime. There are legitimate ways to minimise the inheritance tax burden so that more of your estate can be passed on to family or other beneficiaries. These involve using trusts, gifting and use of certain investment products. We can advise you on the most suitable methods for your circumstances.
Obtaining financial advice from Financial Choices could help you manage your finances in a more tax-efficient way.