Personal Tax Planning

Personal Tax Planning

In order to maximise the return on our savings and investments and ensure we minimise our tax liabilities, we need to ensure that our financial affairs are arranged as tax efficiently as possible. Everyone’s circumstances are different and are likely to produce different tax planning and tax saving opportunities. Here you will see that there is a wide range of options to consider.

The Financial Conduct Authority does not regulate Tax advice.

Warwick: Wealth Management Advice Services

Charlotte engaged the services of ASPL for wealth management advice after she had inherited a sizeable fortune. She was considering emigrating, and purchasing a number of properties where her children lived, in Asia, Australia and London.

She wanted to invest on a long-term basis, but also required a flexible, sizeable capital withdrawal facility to enable property purchases to be made, as and when she wanted.

Charlotte did not want to take much risk with the portfolio, and wanted income/capital withdrawals to be paid into her Guernsey bank account(s).

We have managed her capital and income without giving rise to any taxation liabilities, to date, and provided her with a suitably flexible and diverse portfolio, that meets her needs.

NB. Whilst the Client names have been changed for Client privacy purposes, these case studies are actual ASPL Client case studies.

Tax Efficiency Review

Many of us acquire investments over a number of years, a bit at a time. It is prudent to stop and review what you have accumulated over the years with a view to assessing the tax efficiency or otherwise of how your assets are arranged. Please contact us for a Tax Efficiency Review.

The Financial Conduct Authority does not regulate Tax advice.

Tax-Free Investing

Some savings and investments can give you a tax-free return. This therefore means that all other things being equal, such investments will give you a higher return than those which you have to pay tax on the interest or income you get (unless you are a non-tax payer).

We advise on a full range of investments with a strong focus upon tax-free and tax-efficient investing.

Most investors will have heard of NISAs, National Savings and Investments and Pensions, but investors may also want to consider other tax-efficient investment options. Please contact us for more details.

The Financial Conduct Authority does not regulate Tax advice.

Tax Calculations of Gains

We often find that Clients are referred to us because they have reached the point in their investment portfolio whereby they are holding onto investments they would otherwise like to dispose of because of concerns over taxation implications.

If you would like us to consider the tax implications of disposals on your portfolio, kindly get in touch.

For more complicated taxation matters, we are able to refer you to our Chartered Accountant colleagues.

The Financial Conduct Authority does not regulate Tax advice.

Using your Family’s Tax Allowances

Nearly everyone in the UK is entitled to an income tax Personal Allowance. This is the amount of income you can receive each year without having to pay tax on it. How much of a Personal Allowance depends on your age and your total income in the tax year. Currently ( 2014/15), this allowance ranges from £10,000 (with a maximum income limit of £100,000), up to £10,660 for people aged 75 and over (subject to a maximum of £27,000).

Children, like adults, have a Personal Allowance (£10,000 for 2014/15) and thus this is the income they can receive tax-free. So long as their annual income (including interest) is below this amount, they will be able to receive interest without having tax deduction (parents need to fill in Form R85) and claim back any tax they shouldn’t have paid (parents can claim from HMRC using Form R40).

Care needs to be taken where the capital from children’s investments has come from the parents, as the income generated may not be taxed on the child but the parent.

Therefore careful planning of the family’s tax allowances can certainly be beneficial.

Please contact us for more specific advice.

The Financial Conduct Authority does not regulate Tax advice.

Chargeable Events

We are often asked about “Chargeable Events” and what this means for the investor.

Most typically we are consulted about the impact of Chargeable Events upon a Client’s tax situation as a result of a surrender of a UK (or Offshore) Single Premium Investment Bond.

Unfortunately, where Clients withdraw funds from their Bond without seeking advice, a tax bill can arise which a Client didn’t anticipate. This is because a liability to tax can arise even where the overall investment in the Bond has not made a gain.

Also, the annual 5% tax deferred allowance can cause confusion.

If you require further information, or you have Investment Bonds where you are unsure of the implications upon withdrawals or surrender, please get in touch.

The Financial Conduct Authority does not regulate Tax advice.

Income Tax Planning

We have a number of Clients who are healthy in investment terms, but pay nil or negligible Income Tax. This is because the “income” that we produce for them to live off does not attract Income Tax.

If you would like to consider rearrangement of your affairs to minimise Income Tax, please get in touch.

The Financial Conduct Authority does not regulate Tax advice.

Capital Gains Tax Planning

Capital Gains Tax planning for our Clients has become more important since an individual’s net gains (after all reliefs, losses and annual exemptions are added to income) are taxed at 18% (basic rate band) and 28% for higher rate band. This is because the maximum Income Tax band is now 45% (for income over £150,000) and 40% (for income from £31,866 - £150,000) for 2014/15.

This difference in tax rates for higher income Clients presents us with tax planning opportunities in addition to the usual utilisation of Capital Gains Tax annual exemptions (currently £11,000 for individuals, and £5,500 for most Trustees). Please contact us if you think a Capital Gains Tax Planning Review may be beneficial for you.

The Financial Conduct Authority does not regulate Tax advice.

Inheritance Tax

Nil Rate Bands

Everyone’s estate (the value of everything you own) is exempt from Inheritance Tax up to a certain threshold (£325,000 in 2014/15).  This is also known as the “nil rate band”.

Married couples and registered civil partners are also allowed to pass assets from one spouse or partner to the other during their lifetime, or when they die, without having to pay Inheritance tax. This is known as the (UK) Spouse or Civil Partner Exemption.

Since October 2007, you can transfer any unused Inheritance Tax threshold from a late spouse or civil partner to the second spouse or civil partner when they die. This can increase the Inheritance Tax threshold of the second partner from £325,000 to as much as £650,000 (2014/15), depending upon the circumstances.

Typically if someone leaves everything they own to their surviving spouse or civil partner in this way, it is not only exempt from IHT but it also means that they haven’t used any of their own IHT nil rate band and it is therefore available to increase the nil rate band of the second spouse or civil partner when they die (even if the second spouse has remarried).

This means that their estate can be worth up to £650,000 in 2014/15 before they owe any Inheritance Tax.


There are some important Inheritance Tax exemptions that allow you to make gifts to others and not to have to pay tax upon them when you die. These include the “7 Year Rule” (Potentially Exempt Transfers or PETs), Annual Exemption, Exempt Gifts, Gifts into Trust etc. Please contact us for a more in-depth discussion about your own circumstances.

You can use Trusts to pass assets onto others, for example to those who aren’t immediately able to look after their own affairs, such as your children.

Gifts into a Trust may still be subject to Inheritance Tax if your estate, including the amount being transferred, is over the Inheritance Tax nil rate band threshold (£325,000 in 2014/15).

Trust planning requires professional advice and so please contact us for further details.

The Financial Conduct Authority does not regulate Trusts.

The Financial Conduct Authority does not regulate Tax advice.

Business Property Relief

The use of Business Property Relief (BPR) in the mitigation of Inheritance Tax (IHT) liabilities continues to be popular.

BPR was originally designed for entrepreneurs passing on family firms and it gives full relief from IHT on assets held for a minimum of 2 years. Also of importance is the fact that investors in assets such as Alternative Investment Market (AIM) stocks can retain access to their investments which could include forests, agricultural land and suitably qualified companies listed on AIM and the Enterprise Investment Scheme (EIS). (Please note that AIM stocks must be “trading companies” to qualify for BPR, so resources, stocks and most property companies do not qualify).

Whilst not for everybody, "BPR investments" could be an excellent investment solution to Inheritance Tax since the 7 year qualifying period for Potentially Exempt Transfers can effectively be reduced to 2 years with BPR. However the quid-pro-quo is often that such investments tend to be higher risk than more popular investments. Please contact us should this be of interest.

The Financial Conduct Authority does not regulate Tax advice.

Selling your Business

Selling your business requires careful tax planning. Most people want to pay the minimum tax to achieve the highest net result. Dealt with properly, you can reduce or even eliminate your Capital Gains Tax and Income Tax bills, but getting it wrong could be expensive.

Entrepreneur’s Relief allows individuals (and some Trustees) to claim relief on Qualifying Gains up to a Maximum Lifetime Limit made on disposal of business assets. The relief is available to individuals if certain criteria are met-thes include holding shares in your personal trading company or you are a sole trader or a partner in a trading business. There is a Maximum Lifetime Limit on the amount of Entrepreneur’s Relief you can claim on Qualifying Gains (from 23rd June 2010 all Qualifying Gains up to the Maximum Lifetime Limit made are taxable at 10%. The Maximum Lifetime Limit is £10 million in 2014/15).

The criteria is not overly complex but by structuring your business/company sale in certain ways could result in adverse tax liabilities with gains being taxed at considerably higher rates than 10%.

If you are considering selling your business, please contact us and we can put you in touch with one of our accountancy contacts who specialises in tax advice on selling your business.

The Financial Conduct Authority does not regulate tax advice.


Adrian Smith

Adrian is a Chartered Financial Planner and a CERTIFIED FINANCIAL PLANNERTM professional. He established Adrian Smith & Partners Ltd. in June 1999. His qualifications include Chartered Financial Planner, Certified Financial Planner (CFP), Financial Planning Certificate (FPC), Advanced Financial Planning Certificate (AFPC), Securities Institute Foundation Certificate, Dip PFS.

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Ivan Hutchings

Ivan is a CERTIFIED FINANCIAL PLANNERTM professional and joined ASPL in 2003.  His qualifications include: Certified Financial Planner (CFP), Advanced Financial Planning Certificate (AFPC), Financial Planning Certificate (FPC), G60 Pensions.

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Doncaster: Tax Planning

Simon had sold his company shares some years before and invested the proceeds, enabling him to give up work relatively young. He sought our advice, via his Accountant, who could see that there may be a better way of organising his affairs to reduce their overall tax bill.


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Adrian Smith

Chartered Financial Planner
Chartered Wealth Manager

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