PERSONAL TAX

When you are a High Net Wealth Individual there are some additional tax compliance issues you may not necessarily think of. Carrying out effective tax planning can help to mitigate your overall tax liability and thus retain more of your hard earned money.

The starting point for personal tax planning and wealth management is gaining a good knowledge of our client. Rawlinson Pryde & Partners will take the time to make sure that we know our clients’ individual circumstances which will determine which strategies are correct for them. Understanding the family structures of our clients and their objectives and desires enables us to tailor our personal tax advice to each client’s individual circumstances.

 

Personal Tax Services We Offer

Our team is able to provide advice but is not limited to, the following topics:

Pension Taxation

Pension taxation is effecting High Net Wealth Individuals and there is a lack of awareness amongst individuals.

An individual has an annual allowance of £60k (£40k 22/23).  However, when you earn (all earnings plus all pension contributions) over £260k (£240k 22/23) your £60k annual pension contribution limit starts to be restricted by £1 for every £2 until it is capped at £10k (£4k 22/23).  This generally means that once you earn £360k (£312k 22/23) your annual allowance is only £10k (£4k 22/23).

Your annual limit includes:

  • your grossed up contributions and
  • your employer contributions.

This means you are more likely to potentially have a tax charge without realising.

You are able to carry forward unused allowances from the 3 previous tax years and these should be utilised to mitigate your taxation.

If you go over your Annual Allowance and have fully utilised your prior year carry forwards you will have additional taxation to pay.

 
 

High Income Child Benefit Charge (HIBC)

When you have a child and are married or living as a married couple without actually being married you may be subject to the High Income Benefit Charge (HIBC).

The HIBC impacts those couple where the higher earner earns in excess of £50k.  When the earnings reach £60k you may have to pay back all the Child Benefit received.

There are ways to help prevent or reduce the amount that has to be paid particularly if you are in or just over the band, which is impacted by this rule.

Personal Allowance Protection

For those who earn above £100k they start to lose their Personal Allowance (article here), which is £12,570 (at the time of writing).

The Personal Allowance is abated £1 for every £2 earned over £100k.  This means when you earn £125,140 you potentially lose all of your Personal Allowance and are effectively taxed at 60% in this range. 63% for a Scottish taxpayer.

There are potentially a few ways to help protect your Personal Allowance by shifting income producing assets to a spouse, using your pension, or making sure you make any charitable donations instead of a spouse.

 
 

Other Tax Planning Considerations

There are various other things you should consider when you are a High Net Wealth Individual such as:

How do we Assist you and what is our Approach?

We work with you to understand your life priorities and assist with personal tax planning to minimise the impact any changes to the legislation introduces. We very much believe in a proactive approach rather than reactive and alert our clients to these changes, especially if there are opportunities to minimise tax.

The majority of our clients have been with us for many years and we pride ourselves on developing strong, lasting relationships by meeting their needs.

We are also happy to assist individuals with one-off exercises to ensure you remain compliant with the tax laws whilst mitigating your taxation liabilities.

If you require some assistance with your Personal Tax affairs please contact us by calling us on 01234 300500, emailing us at [email protected] or directly to one of our team and we would be delighted to assist you.