Our 5-minute read – Tax Tips – for UK doctors and dentists will help you save tax, get organised with your tax affairs and make sure you meet important deadlines with ease.
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. The Financial Conduct Authority does not regulate tax advice.
When buying and selling property, you may be aware that you can save tax by allocating some of your profits to your spouse or partner, if you have joint ownership over the property. But what you may not know is that you can also save tax if you or your partner isn’t using all your basic rate tax band.
A 40% taxpayer is able to share their income with another person who has unused 20% Basic Rate band. The overall tax saving can be as much as £7,500 for each additional joint owner.
A 40% taxpayer is able to share their income with another person who has no other income at all. All of their tax-free Personal Allowance would then be available, so the tax saving could be as much as £12,500 per additional joint owner.
If your joint owners are close family then there are some crucial things to look at when trying to save property tax:
- Entitlement to government benefits
You or your partner may lose your entitlement to government benefits if your income increases. - Child Benefit repayment for high incomes
Depending on how much your ‘Adjusted Net Income’ (ANI) is, you or your partner may have to pay back all of your child benefit. However, by balancing ANI between two taxpayers, you may keep your child benefit as is because your tax rate wouldn’t be flagged up as High Income. - Student Loan Repayments
Once you earn over a certain amount, you’re liable to pay back a student loan. So bear in mind that receipt of additional income could mean you or your partner will need to start making loan repayments, although likewise, a fall in income can reduce the payment. - Capital Gains Tax (CGT)
Getting the lower rate CGT of 10% depends on how much unused Income Tax Basic Rate Band the taxpayer has. - Transferrable Marriage Allowance
The flexibility to transfer unused Personal Allowance to your partner may be lost if either of your incomes is too high. - £1,000 personal savings allowance (PSA)
The starting rate for savings falls from £1,000 to £500 when a taxpayer has a ‘higher rate income’ so by joint partnership you get to keep the PSA of £1,000. - £500 personal savings allowance (PSA)
The PSA is reduced to nothing when a taxpayer has an ‘additional-rate income’. - Access to ‘Tax-Free’ Childcare options
If either parent in a family has an ‘Adjusted Net Income’ (ANI) of more than £100,000 then the childcare ‘tax breaks’ most families make use of will not be available to you. - Restricted Pension contributions Annual Allowance
The tax relief for your pension contributions is restricted by clawback if your contributions are more than your Annual Allowance. The standard Annual Allowance is £40,000 but is reduced to a rate of 50% if your ‘adjusted income’ exceeds £150,000.
Your first step towards saving Property Tax
Speak to an Independent Financial Adviser who can advise on tax planning. Your IFA will be able to go through all the tax options in finer detail and help you plan your property tax savings effectively. Contact us today to discuss your finances.