Chartered Accountants of Poynton, Cheshire |
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Pension PaymentsThere have been considerable changes to the pension contribution rules over the last couple of years. In summary, these are as follows: • Any individual can make payments of £3600 per annum gross of tax, whether they have an income or not. • If an employer makes a contribution on behalf of an employee, this will be tax deductible in that employer's accounts as long as the payment is made 'wholly and exclusively1 for the purposes of the trade. • The maximum any individual can pay in any pension payment period (which is usually the same as the tax year) is normally £21,5000 and any contributions over this will be subject to income tax of 40%. There are some exceptions to this rule. • There is no longer a provision which allows excessive personal pension contributions to be carried back to the prior year. Some special rules remain in place for retirement annuity contributions. Keep your income below the age allowance limitThere are many ways to save tax - all of them perfectly legal. For example, if you are over 65, keep your income below the £18,900 limit - at that limit the higher allowances are scaled back. Call us at Appletons Accountants and we'll tell you more! Pay less tax - Create a tax shelter investmentThere are many ways to save tax - all of them perfectly legal. Did you know that.... Tax can be effectively deferred by investment in Enterprise Investment Scheme shares, Venture Capital Trust shares (both subject to limits), or in film finance partnerships? Call us at Appletons Accountants and we'll tell you more! |
Family Tax PlanningWith the high cost of university and college education, encouraging children to start saving early can help them in later years. Parents and grandparents may want to give some money to their children or grandchildren for the future. There are several tax-efficient ways to do this and you will need to bear these points in mind... A child has the same personal allowance as an adult, which is currently £4745 per annum. This means that if a child's income is below this level, they may not have to pay any tax. This could be an incentive for a child to work within a family business at weekends and during school holidays as no tax would be deducted from their earnings. Also see 'Bits and Pieces' on the use of the P38(S). If a parent gives money to their child, any annual interest over £100 earned from that money is counted as the parents' income (but see 6 below). For instance, if a parent puts £5000 in a bank account in the child's name, any interest earned on the account is treated as if it were the parent's. However, grandparents can give money to their grandchildren without being affected by these rules. So, grandparents can put money in a unit or investment trust for their grandchildren, which can be a tax efficient-way of saving towards school or university fees. Parents or grandparents can set up a trust to transfer their assets to their children or grandchildren. From 6 April 2005 a parent will be able to contribute to a child's trust fund without any income from that trust being taxed as the parent's income. This only applies to children born after 31 August 2002. Giving money to children can reduce any future inheritance tax (IHT) liabilities because a gift of £3000 a year is exempt from IHT. You are sure to have many other questions that need answering for your particular situation. Appletons will be pleased to advise you on how the tax rules of providing for your children or grandchildren affect you. |
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