Don’t tax-plan for the sake of it

We can get carried away with tax planning. Over-doing it is usually a result of not thinking of the non-tax consequences. The classic example is giving assets to youngsters who can’t handle the wealth. An alternative may have been the use of trusts. Here are a few others:

• Include the realistic life expectancy of you and your spouse and compare estimates of your income against expenditure taking account of inflation. Don’t give away too much too early.
• Before strewing shares round the family ensure they want them, particularly family companies. Some people can’t handle associated perceived worries
• Do not buy assets simply to obtain capital allowances to reduce your taxable profits. Similarly do not deliberately incur losses in your business simply to create tax losses and reduce your tax bill.
• Tax rules change as the years go by. Avoid schemes that take a long time to mature and try to keep your plans flexible so you can change them in sympathy with the changing rules.
• On the other hand, don’t put off tax saving measures – make the most of opportunities while they last. You never know when legislation will change.
• Do not be over-dogmatic about the difference between income and capital in your planning. In the end, it’s all money. It is not necessarily imprudent to live off capital, as long as everything is planned properly.
• Finally, get the best advice – from us, of course!