What does tax planning mean?
Also known as ‘tax mitigation’, this involves the use of legitimate transactions to reduce the amount of tax payable.
For example:
Chris and Rita are happy living together but decide to get married to take advantage of the IHT inter-spousal exemption – as well as the fact that transfers between spouses are not immediately subject to CGT. (Sadly the married couples’ income tax allowance is now only available to couples where one of the spouses has a birth date prior to 6th April 1935.)
Use of ISAs or pensions as product wrappers with reduced tax liabilities is another example of legitimate tax mitigation. These tax reliefs are limited in scope and are given to encourage saving.
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Levels and bases of, and reliefs from, taxation are subject to change
