Following our theme of the seven deadly sins of tax planning, or in other words seven key things to make sure that you avoid prior to the 5 April 2019, this time we consider… Not making best use of the personal allowance and tax bandings.
If you have a non-earning spouse or adult child you may want to review income allocation to make sure that their personal allowance (currently £11,850) and their basic rate tax band (currently £34,500) is utilised, particularly if you are a higher rate taxpayer.
Transfers of assets and investments can be made between spouses tax free. The same does not apply to transfers to adult children and so care will be needed not to trigger any tax liabilities as a result.
HMRC usually assume that rental property owned by spouses is owned 50:50 and so will expect the rental income to be taxed in the same proportions. It is possible to amend this if, for instance, it is preferable for all rents to be taxed on one spouse, however further tax advice should be sought first.
For more information, please contact Lesley Sutton on 01484 550037 or email firstname.lastname@example.org.