There are a few basic facts you need to know to make the most of your tax planning and help reduce the tax you pay:-

• You cannot carry forward any personal tax allowances that you do not use, so it's a good idea to utilise them as much as possible. 

• Back in the good old days, it used to be possible to transfer any unused allowances between a couple but this is no longer the case. However there are still things couples can do. 

• If you have jointly-owned assets that generate income, HMRC will assume that they are owned 50/50 but if this is not the case and it would be beneficial; you notify HMRC of the the true proportions. If you are not married or not civil parners this option does not apply.
• If your partner has unused allowances or you pay tax at higher rates, it may be advatageous to transfer income generating assets to them. Don't forget though that once the asset has been transfered you have no control over what your partner does with it. Depending on your circumstances there may be Inheritance Tax (IHT) implications, generally transfers between spouses and civil partners are free from IHT but there may be implications on the nil rate allowance in your partners estate. If you are not married you can still use this option but there may be Capital GainsTax implications.
• If you or your partner have a business and do not want to transfer any ownership, then an option is to pay a salary to the relevant partner to the value of the primary limit for NIC (currently £7,956 2014-15). No NICs will be payable but the salary will qualify for a year's state pension credit and a good proprtion of the personal tax allowance will be utilised. There is one condition, the salary must be at normal market rates and be commenserate with the work carried out.
• In addition to the above it is possible to make pension contributions for an employed partner provided they take an active role in the business and the above salary/ contributions again meet the above condition.

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• Couples who work at in excess of 24 hours/week are eligible for tax credits, however if you do not have a child aged under 16 as part of your household (up to 18 if at school) then this figure increases to 30 hours/week. If you claim as a couple then hours can be split between each partner provided one partner is working at least 16 hours. The 16 hour rule applies if you are a single parent.
• The income limit for couples claimimg purely for themselves is £18,000, although if you have had a year with an income that is very low, then this could trigger a two year entitlement.
• Make sure you claim as early in the tax year as possible as tax creits can only be backdated for a month, onnce claimimg you will automatically get get a renewal pack each year.
• Make sure you keep HMRC updated on any changes in your circumstances, as this will avoid any delays or problems.

• Each child has a tax allowance of their own but you cannot directly transfer income to them other than to a maximum of £100/year
• Children can be employed in a parent's busines provided you comply with child exploitation rules, they need to be processed through payroll in the normal way. The child will be liable to NIC's on their wages once they reach 16 and their pay exceeds the threshold (currently £153/week 2014-15).
• Junior ISA's are exempt from tax on interest on both the child and the parent, even if the parent provided the funds invested. £3,600 can be invested in each year, the minimum is usually £10/month.

Want to know more about ISA's then please go to Investments.

• Capital Gains tax allows an individual to make annual gains to an amount of £10,900 (2013-14) before any tax liability arises, it is therefore it can be advantageous for assets to be jointly owned by couples/civil partners as any gains arising will attract two annual exemptions.
• You can gift assets to a spouse just before a sale/disposal but be careful; as always tHMRC is aware of this practice and there are restrictions.
• Unused losses can be offset against the gains made by the same person, so if a spouse has such losses then there is potential for savings by making an asset transfer.
• Entrepreneurs' Relief may be available if you are disposing of an interest in a business. Again a bit of tax planning and transfering part of the interest before sale can save tax.
• Gains on the sale of your main residence will normally be exempt from Capital Gains Tax however if you have a holiday home which you use regularly, then it might be beneficial to elect to have it treated as your main residence if you are planning to sell it. Generally you can only nominate one property at any particular time as your main residence.

• It's a good idea to conduct a regular review of your Inheritance Tax strategy.
• You can gift up to a maximum of £3,000/year and if you have not utilised the previous year's allowance you can carry it forward into the current year. Any sums paid in this way within 7 years of death will not be liable to IHT.
• It is now possible to transfer unused proportions of the £325,000 exempt allowance on a spouse's estate to the other spouse such that your civil partner or spouse's estate will have a nil rate allowance of up to £650,000.

Please take a look at our Home page if you need to claim your CIS Tax Refund.

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If you have any queries please contact us:

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Mob: 0779 4734711 (text Name & Address followed by "CISPACK" or "SATPACK") & we will send you a CIS Tax Return or Self Assessment pack.

Email: enquiries@cismadeeasy.co.uk

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