Paperwork spread across a table

Tax planning

Nothing on this page is clever. It is the allowances you already have, used properly and in the right order.

An ISA allowance not used by 5 April is gone for good. Higher-rate relief goes unclaimed. Gifting exemptions reset every April and nobody touches them. Gains get taken in one lump when splitting them over two tax years would have cost less. Couples hold things in the wrong name.

All of it is worth real money, and most of it is an afternoon's work once a year.

Where the money usually is

ISA allowances
Returns inside an ISA are free of UK income tax and capital gains tax. The allowance is annual, it does not carry forward, and it resets every 5 April.
Pension contributions
Contributions attract tax relief at your marginal rate, subject to the annual allowance and your earnings. For higher and additional rate taxpayers this is usually the single most efficient thing available.
Using both halves of a couple
Transfers between spouses and civil partners are generally exempt. Holding assets in the right name and using both sets of allowances is one of the least glamorous and most effective moves there is.
Capital gains timing
Realising gains across two tax years, offsetting losses and using the annual exempt amount can materially change the bill on the same underlying decision.
Inheritance tax exemptions
Annual gifting, small gifts, gifts on marriage and normal expenditure out of income all renew each year and are routinely unused.
Taking money out of a company
Salary, dividend, pension contribution, or leaving it in. The mix changes the total tax paid substantially, and it is best decided with the accountant and the adviser in the same conversation.

The annual rhythm

Almost all of this is driven by the tax year, and almost all of the value is lost by leaving it until March.

  1. 1

    Autumn review

    Look at contributions and allowances while there is still time to act on what you find.

  2. 2

    Decide before Christmas

    Pension and ISA decisions made with months still to run.

  3. 3

    Gift deliberately

    Use the gifting exemptions deliberately, and keep a record of what went where.

  4. 4

    Check gains before selling

    Work out the capital gains position before you sell.

How this works with your accountant

Your accountant knows what has happened and the adviser is planning what happens next, and the saving is usually in the overlap. Buzz has its own accountants and we work alongside other firms' just as readily.

What we do not advise on is anything artificial. Arrangements that depend on a favourable interpretation surviving an HMRC challenge leave the client carrying the risk long after the promoter has moved on.

Questions people ask us

Is this tax avoidance?

No. Using an ISA, contributing to a pension or gifting within HMRC's stated exemptions is using the system as Parliament designed it.

Do you complete tax returns?

For most clients the best arrangement is that we plan and an accountant files, with the two talking to each other. Buzz Accounting can do the filing if you want it in one place.

Can you help with tax on investments I already hold?

Yes. Moving holdings into ISAs over time, using the annual exempt amount, sequencing disposals and considering which spouse holds what can all reduce the ongoing drag without changing the underlying investment strategy.

How often do the rules change?

Every year at least. Allowances, thresholds and reliefs move at Budgets, and some of the most significant recent changes only matter if somebody is watching for them. That is part of what an ongoing advice relationship is for.

Tax treatment depends on your individual circumstances and on current rules, both of which can change. The Financial Conduct Authority does not regulate tax advice.

What would the inheritance tax bill be?

What your estate would pay as things stand, and which bands you can use.

Answered in full

Longer answers to the questions that come up most on this subject.

Start with a free conversation.

Tell us what is on your mind: a pension you have lost track of, a fixed rate ending, a will you keep meaning to write. We will tell you honestly whether we can help.