Tax is present throughout our lives and something we can’t avoid. Yet, many of us will admit we don’t always understand it. And with more than 1,000 ever-changing reliefs and allowances available to taxpayers, keeping on top of tax is a challenge – even for the experts!
It’s therefore very useful to either have a good idea about tax and its impact on our finances, or to know someone who does – ideally, a professional financial adviser. That way, you can be sure you’re keeping as much of your hard-earned money as possible in order to ensure it’s working hard for you.
So, do you feel as if you have a good handle on the taxes you might come across? Do you know enough to just about get by? Or do you need to engage the help of an expert? Take our quiz and find out…
1) Inheritance Tax is charged at what rate above your nil-rate band?
2) Which tax do you need to consider when you make a profit on the sale of assets such as investments held outside of ISAs?
A: IHT (Inheritance Tax)
B: CGT (Capital Gains Tax)
C: VAT (Value Added Tax)
D: TFC (Tax-Free Cash)
3) Under the personal tax-free allowance, how much can you earn in the current tax year before you start paying tax?
4) What level of National Insurance contributions do you pay once you reach state pension age?
5) How much can you add to an ISA account each year per person, through the annual allowance?
6) The tax year always ends on which date?
A: 5 April
B: 1 April
C: 31 December
D: 30 January
7) How much tax relief do higher-rate taxpayers get on their pension contributions (up to a maximum of £40,000 per year)?
8) Which of these is NOT a real form of ISA?
A: Lifetime ISA
B: Innovative Finance ISA
C: Junior ISA
D: Saver ISA
9) Which of these assets falls outside of your estate for the purposes of Inheritance Tax?
B: Money in pensions
C: Buy-to-let property
D: Cash held in bank and building society accounts
10) For how many years can you carry forward your pension’s annual tax-free allowance?
A: As many as you like
How did you do?
Answers at the bottom of the page!
10: Are you a financial adviser in disguise?
6-9: You’ve done your homework, but those gaps could prove expensive.
3-6: You might get by without seeking advice, but you’re likely to find greater peace of mind by speaking to an expert.
0-2: There’s no shame in this – but it’s worth contacting an adviser as soon as possible.
Whatever your score, there’s always room for improvement. If you’d like help identifying tax-saving opportunities, get in touch with us about completing a Tax Health Check before the end of the current tax year on 5th April!
Answers: 1) C, 2) B, 3) C, 4) C, 5) A, 6) A, 7) C, 8) D, 9) B, 10) C
The levels and bases of taxation and reliefs from taxation can change at any time. The value of any tax relief depends on individual circumstances.