As the 2012/2013 tax year begins unbiased.co.uk,the professional advice website, provides top tips on getting your personal finances in order for the year ahead, with the help of its panel of independent financial advisers.
1. Karen Barrett, Chief Executive at unbiased.co.uk
“The new tax year is the perfect time to spring clean your finances and get your affairs in order. Review your financial goals and ask yourself whether you are on track in achieving these. You may be surprised how much money you can save by putting some new plans in place and finding ways to be more tax efficient with your cash.
“The new tax year brings a host of changes with new tax rules coming into force that will affect the current tax credits system. Some of these changes can be confusing and if you're unsure of the impact this will have on your finances then seek guidance from an independent financial adviser (IFA). As well as explaining the impact of any new regulatory changes and new options available, an IFA will also take time to review your finances and recommend products which are both affordable and suitable for you. Just go to www.unbiased.co.uk and search free and confidentially for an adviser close to your chosen postcode.”
2. Joss Harwood (Eldon Financial Planning) – Imagine that the tax year ends in the summer
“Imagine that the tax year ends in the summer, not next March and resolve to consider the tax efficiency of your affairs by the end of September. That gives plenty time to receive all the paperwork relating to the tax year just past, and clear up any queries. This also leaves you time to submit a self assessment return by the end of October if appropriate. You will also give yourself a longer period to make tax efficient regular contributions to pension arrangements and ISAs in the tax year and ultimately you can have a well-deserved moment of self satisfaction!”
3. Alistair Cunningham (Wingate Financial Planning) – A great year for pension contributions
“2012/13 will be a great year for making pension contributions, with up to £200,000 possible contributions to a pension in some cases. Those earning over £150,000 in 2012/13 will have a limited window of opportunity to get 50% tax relief, as in 2013/14 their highest rate of tax will fall to 45%. 2012/13 will not see any end to the effective rate of tax of 60% for those earning from £100,000 to £116,210. This is because these individuals see their personal allowance of £8,105 whittled away by £1 for every £2 they earn over £100,000. Pension contributions (or gifting) can be used to reduce this tax rate.”
4. Jon Hill (Milford & Dormer Solicitors) – Think about protection
“Think about protection – think about your life, health, earnings. Who will pay your mortgage if you are off work? Plan ahead and don’t rely on future increases in property prices to repay your mortgage and provide funds for retirement.”
5. Danny Cox (Hargreaves Lansdown) – The early bird catches the ISA worm
“The early bird catches the ISA worm. If you use your ISA allowance early in the tax year then you benefit from up to 12 months more tax-free growth and tax efficient income.”
6. Mel Kenny (Radcliffe and Newlands) – Don’t forget to claim your tax relief
“It’s that time of year where lots of people give to charity whether it be via the London Marathon runner or otherwise. If you are a higher rate tax payer, then you need to pro-actively contact your tax office to claim the additional 20% tax relief owed to you. Unfortunately few do this and are missing out on potentially hundreds of pounds. If you have been missing out on this relief for years, the good news is you can make a backdated claim. The same principle applies if you have been contributing to an employer’s group personal pension or simply a personal pension scheme out of your after tax pay – higher rate tax payers have to claim their extra relief. Be careful, you might find you have additional taxes due too!”
7. Christopher Wicks (Bridgewater Financial Services) – Consider ways of protecting your personal allowance “It is not necessary to leave things until you get to the end of the tax year. Pension contributions, despite concerns over annuity rates, are a very good way of protecting the personal allowance because they have the effect of reducing income for tax purposes. People with earnings around the tax threshold where they lose some of their personal allowance, can make a lump sum pension contribution at the beginning of the tax year to bring their income back down to £100,000 and thereby restore their personal allowance. If they HMRC are notified in good time the personal allowance can be restored to the full rate and effectively 40% tax relief will be gained more or less at source.”
8. Jason Witcombe (Evolve) – Make the most of tax breaks
“Take time to understand your tax position so as to make the most out of tax breaks on pensions and charitable donations. For people under 65 your 20% income tax starts at £8,105, 40% tax starts at £42,475, there is an effective 60% tax rate for income between £100,000 and £116,210 and then 50% tax starts at £150,000. Furthermore, child benefit will start to be lost at £50,000. Planning around these thresholds can make your money work much harder for you.”
9. Dan Clayden (Clayden Associates) - Check if you’re holding your investments in the correct tax wrapper
“Making sure that you select the correct tax wrapper for your savings and investments is now probably more crucial than ever. The currently tax regime sees individuals liable to income tax at the ‘additional’ rate of 50% on income over £150,000, personal allowances reduced when income exceeds £100,000 and for higher rate tax payers, capital gains are now taxed at a rate of 28% – which now affects even more taxpayers since we’ve seen the basic rate tax band reduced in April. So if you don’t choose the most appropriate tax wrapper you’ll probably end up paying more tax than you need to ... and no-one likes doing that!”
For more information contact:
Karen Barrett, Chief Executive, unbiased.co.uk: 020 7833 3131
Lisa Grando/ Emily Falla/ Maddy Morgan Williams, Lansons Communications: 020 7294 3682
For expert commentary or case studies from over 190 media-friendly IFAs, journalists should visitwww.unbiased.co.uk/bluebook.
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The unbiased.co.ukportal is a free and confidential UK-wide search matching consumers with local professional advisers: ‘find an IFA’, ‘find a mortgage adviser’, ‘find a solicitor’, and ‘find an accountant’. These searches enable consumers to find professional advisers by postcode, area of specialism, qualification and payment method. In 2011, unbiased.co.uk fulfilled around 450,000 searches for local, professional advice.
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