COVID-19 (Coronavirus) – Gemini Update.

5th July 2020

We are in unprecedented times. In line with current Government guidelines, we have taken the decision to close our offices and we are operating a working from home policy for the majority of the team.

However, to reassure you, it is business as usual!

We are still available to contact by phone and email as all our systems can be accessed and operated remotely. Face to face meetings, however, are on a strictly emergency basis only.

Indeed, it is times like these where you may need to seek additional advice from financial services professionals. Both our Wealth Managers and Estate Planning Consultants remain available to assist you and are able to offer guidance on the phone, by email or by video technology.

Please contact us FREE on 0800 255 0123 or email info@gemini-wm.com where we will do our best to assist you.

Family & Friends – If any of your family, friends or colleagues would like to seek assurance from a financial professional, please do pass on our details. Please be aware, any such introductions will be treated with the same confidence and care we give to all of our clients.

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5 Tips to Get the Best Tax Deal in 2020/2021

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With the recent uncertainty surrounding Coronavirus and oil prices, despite us being well into the tax year, many people are adopting a ‘wait and see’ approach before putting any more money into the market via their ISAs or pensions.

Regardless of what is happening in the economy, a sound financial plan, maintained for the long-term is the best way of achieving your goals.

There is never a perfect time to invest. As with planting a tree, the best time is 20 years ago. The second best time is now.

Fortunately, there are several tax advantages available, which mean it is still worth investing even during periods of volatility. By starting your 2020/2021 tax planning now, by this time next year you can relax, knowing your finances are in hand.


Structure Your Income Efficiently

Everyone has a tax-free personal allowance of £12,500 per year, although this is reduced for anyone earning over £100,000. But there are several ways to make the most of your tax-free income, or even increase it. For example:

·       Marriage Allowance – a lower-earning spouse can transfer up to £1,250 of their tax-free personal allowance to their higher-earning partner (providing the partner is a basic-rate taxpayer), reducing the household tax bill by up to £250.

·       Personal Savings Allowance – you can receive tax-free interest on your savings. The amount is £1,000 for basic rate taxpayers and £500 for higher rate taxpayers. This allowance is not available to additional rate taxpayers.

·       Starting Rate for Savings – interest of up to £5,000 may be paid free of tax, providing this forms part of your total income, up to a maximum of £17,500.

·       Dividend Allowance – you can earn dividends of up to £2,000 per year from your own company or investments without tax liability.


Use Your ISA Allowance

You can contribute up to £20,000 per year to an ISA. All income and growth is free of tax, and you can withdraw your money at any time without tax or penalty. Depending on your circumstances, you may wish to contribute to a Cash ISA, Stocks and Shares ISA or even a Lifetime ISA.

If you don’t use your ISA allowance in a given tax year, you can’t carry it forward to the next year.

Regular, monthly contributions are the best way to use your ISA allowance, for the following reasons:

·       Your savings form part of your budget and take priority over discretionary spending. It’s likely that you’ll save more than if you wait until the end of the tax year to decide.

·       You can benefit from ‘pound cost averaging.’ Rather than trying to time the market, you are investing throughout the year. Even if the market falls, this can work to your advantage, as your monthly contribution will buy more shares at a cheaper price.


Make Pension Contributions

Pensions are one of the most tax-efficient ways to save for the future, but many investors are not fully aware of the tax treatment. Early planning not only helps you take advantage of the benefits, it also ensures that you don’t fall into certain tax traps.

Here are some ways in which you can make the most of your pension:

·       Opt into your employer’s pension scheme. The reduction in monthly net income will be relatively small compared with the boost received to your pension.

·       Higher and additional rate taxpayers should check that they are receiving full tax relief on their contributions. If your contributions are paid by salary sacrifice, this will happen automatically. If you pay personally, or via the ‘net pay’ method, you will need to reclaim the tax relief, either via your tax return or by contacting HMRC.

·       Making pension contributions can result in a lower income, and therefore a lower tax band. This is attractive for higher rate taxpayers, particularly so for those earning £100,000 - £125,000, as it can save tax at an effective rate of up to 60%.

·       You may be able to carry forward your pension contribution allowance from previous tax years. Contribution allowances are complex, particularly for high earners, so it is always best to seek advice if you are planning substantial contributions.

·       You can contribute up to £3,600 gross (£2,880 net) for a non-earning spouse or child. They will still receive 20% tax relief despite having no taxable income.

·       Take financial advice before taking benefits from your pension. This can help to reduce or avoid tax penalties, as well as making sure your income is set up in the most efficient way.


Use Your Capital Gains Exemption

If you sell any investments, other than those held within an ISA or pension, capital gains tax may be due on any profits. While this may be unavoidable, there are a few ways to minimise your liability:

·       Use your £12,000 exemption each year. This can be done by changing funds, rebalancing your portfolio, or transferring money from taxable investments into your ISA. By doing this, you avoid large gains rolling up and becoming taxable when you need to withdraw money.

·       You can transfer assets to a spouse without a capital gains tax liability. You then have two annual exemptions (£24,000) to set against gains.

·       Certain investments allow you to defer tax on gains realised from other investments, or avoid CGT altogether if you hold the investment for a certain period. These investments are very high risk, and should only be considered after taking advice.


Other Tax Savings

There are a few other options for saving on tax, either directly or indirectly, which many people are not aware of.

For example:

·       Tax-free childcare. This replaces the former Childcare Vouchers scheme. You can pay up to £8,000 per year into an account with HMRC. This will then be topped up to £10,000 providing you spend it on registered childcare.

·       Claim business mileage. You can claim 45p for every mile travelled (up to 10,000 miles) free of tax.

·       If you have to wear a uniform for work, you can reclaim the cost of cleaning and repairing it.

·       Your employer may offer an incentivised share scheme. Always check the scheme rules carefully, and only invest what you can afford.


By combining different strategies for saving tax, you could save thousands each year without any major changes to your lifestyle.

Please don’t hesitate to contact a member of the team if you would like to find out more about your options for saving tax.

The value of investments can fall as well as rise. You may not get back what you invest.’

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