Tax Planning and Asset Protection

How much tax you pay is based on your total income for the tax year concerned.  To make sure you pay the right amount of tax, HM Revenue & Customs (HMRC) allocates an individual tax code to you. Everyone is entitled to a Personal Allowance, which is the amount of income you do not have to pay tax on.

You should check your PAYE tax code to confirm that it is correct, especially if you have recently changed jobs or perhaps started a second job.  Other changes to your income may include receipt of a taxable state benefit or a new source of income, for example rental income.  You can check your PAYE tax code through your Personal Tax Account with HMRC and let them know if any changes are required.

If you are paying too much tax, this can be reclaimed from HMRC but you will have to provide them with the relevant documents confirming you have paid too much tax.  

It is possible that you might not be paying enough tax. Again, you should make sure you have all the relevant documents and contact HMRC as soon as possible.

If you own your own house, a family company or business, landed estate or farm, it would be wise for you to consider planning for the future ownership for these types of assets at the earliest opportunity so that you can plan for and mitigate any tax liabilities as far as possible. This type of planning is not always straightforward as no two families’ circumstances are the same, each having their own complexities. 

When planning for succession, there are a number of elements to think about including:

• Who is to inherit and when will they inherit?
• How to structure your succession plan according to your particular needs and wishes
• Planning for Inheritance Tax liabilities and mitigation of other taxes
• Family dynamics

Implementing a good succession plan early can provide savings in tax, protect against family disputes and guard against unwanted claims on your estate, whilst also providing peace of mind.

Find out more about succession planning for businesses.

If you have disposed of a chargeable asset you may be liable for Capital Gains Tax. A chargeable asset includes property, shares or a business asset. Disposing of an asset includes selling it or gifting or transferring to someone else.

Capital Gains Tax is payable on your overall gains above the annual exempt amount. The taxable gain is worked out by calculating the sale proceeds less what you paid for it (or market value if it was a gift) and any allowable expenses. Some reliefs may also be available to be claimed. If your resulting gain is above the annual exempt amount then Capital Gains Tax will be payable.

If your total taxable gains are under the annual exempt amount you may still need to report the disposal if you fall within the reporting requirements.

If you make a loss on the asset, you can report this to HMRC and the loss will be available to offset future gains.

Your liability for Capital Gains Tax is calculated based on the total gains you have made in the tax year. You can also offset any losses against this. Your losses can be carried forward from previous years if they have not previously been considered for capital gains tax purposes.