What happens if I’m confused about personal tax planning?

Are you bewildered by the thought of personal tax planning? Don’t worry – at MD Consulting we can help.

Filing your taxes is not a topic that is taught in school, so it can be a daunting prospect for many of us.

Unfortunately, this means that people often pay much more tax than they should. This is why we have asked our tax experts to identify five simple ways that you can save money on your personal taxes.

Pensions

Individuals can contribute to their pension pots tax-free, as long as they don’t go over the £40,000 annual limit (subject to tapering for those earning in excess of £150,000).

Savers can also contribute a further £2,880 towards a pension for a non-earning spouse or child, saving even more in tax. This not only helps future-proof you and your family’s retirement income, but also helps keep you out of the higher or additional rate tax bands.

ISA

Savers can open an Individual Savings Account (ISA) for themselves and their families. The allowance for 2019/20 is £20,000 per person, meaning that you can start generating interest tax-free from today.

Fight back against Inheritance Tax

Individuals can gift up to £3,000 of gifts each year to family and friends without incurring Inheritance Tax. Remember, this allowance can be rolled over by up to one year.

Beware employee benefits

Most employee benefits – such as company cars – are now taxable as regular income. If you don’t actually need a company car, substituting it for cash and contributing it towards your pension could be a more tax-efficient option.

Marriage has its benefits

All married couples in the UK are entitled to the Marriage Allowance, but very few are aware it even exists.

This allows you to transfer £1,250 of your Personal Allowance to your husband, wife or civil partner, providing they earn more than you. To benefit, the partner transferring their allowance must normally have an income below the Personal Allowance – currently £12,500.

This can result in annual tax savings of up to £250 a year.

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