Lower Your Investment Taxes

Taxes Halifax Investments

Almost all things we do are taxed these days. We at Halifax Investments wonder whether breathing oxygen will soon be taxed…

But seriously, from driving, to eating to saving, there is always something going towards the taxman.

When it comes to money you are able to minimise what you have to pay the taxman, even without using unscrupulous tax avoidance schemes.

All UK residents have an Isa allowance of £11,520, up to £5,760 of which can go into a cash Isa and the rest in a stocks and shares Isa. The interest on money in their cash Isa is earned tax free. With an investing Isa you will still have to pay 10 per cent tax on dividend income, but won’t have to worry about paying any more than that amount, you can also avoid any capital gains tax liabilities when you sell your hard earned assets. Conveniently, an Isa also slashes paperwork by keeping your investments off your tax return.

You can also benefit from the tax system by contributing to your pension. This can easily generate extra free money as your employer will often match contributions in a workplace scheme and the government will give you tax relief on what you put in to a retirement fund.

This calculates that a basic-rate taxpayer gets an investment for 20 per cent less, a higher-rate payer 40 per cent, and a top-rate payer 45 per cent.

Therefore, for every £80 you pay into a pension, you get £100 into your pension fund as a basic-rate taxpayer.

There will be costs for managing investments within the pension fund, but there will be no tax until you come to take your pension out at retirement.

You can put up to £50,000 a year into a pension tax free. From April 2014 this has been reduced to £40,000.

There are numerous of other tax reliefs you should make sure you are using.

Example, you are also allowed to make a profit up to £10,900 on investments in this tax year before having to pay capital gains tax. Every year you get a new CGT allowance, so try to keep any asset sales within this bracket if you can and if you have a very big profit consider selling portions of the investment.

Also, don´t forget that if you are a married couple you can combine your CGT allowances and pass assets between yourselves as a couple, entirely free of tax.

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