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How to be smart with your taxes in 2016

17th December 2015 Print

Taxes: they have to be paid, but it can be quite a chore to deal with them. For many people, even just the routine process of filing a tax return can feel monotonous - so why would you want to even think about your tax affairs at any other time of year? Actually, we have a good answer to that: because you could make seriously good savings. Here's a bit of explanation about how.

Move money from ISA into a pension

Of course, during your working years, you should make sure that you are gathering enough money to provide for a comfortable retirement. One good, tax-effective way in which you can do that is by moving any money you have sitting in an ISA into your pension.

There are several compelling reasons why this is good for tax. One is that, left inside your ISA, the money is part of your estate and therefore liable for inheritance tax at the hefty rate of 40% should you die. However, your pension is not considered part of your estate; therefore, placed in there, the money could - should certain other circumstances be met - be passed on to your family without incurring income tax. Pensions can attract better tax treatment in other respects, too.

Put some money into your children's Junior ISA

If you have children or grandchildren, you might like lavishing gifts on them on special occasions like Christmas and birthdays. However, if you struggle to think of good ideas for presents to give them, or even if you don't, a better alternative to physical gifts could be monetary additions to their Junior ISA.

It's possible that they don't even have a Junior ISA - or JISA, as it can sometimes otherwise be called. However, it can be well worth setting up for them, should they be UK residents aged under 18. For the current tax year, the savings limit is £4,080 - and, especially as tax is payable on the interest on the cash saved, a JISA can eventually add up to a valuable extra source of money for university fees, buying a house, or whatever other big project the young person wants to spend it on, once they have turned 18.

Standard Life Savings offers various other tips for helping you to hand more tax-free cash to members of your family. You could also get specialised, tailored advice from Associate Services.

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