Personal Tax Planning
Our hope is that you filed your personal taxes on time and avoided the penalties for non-compliance. Even more to hope for is that your tax bill for 2017 – 2018 is not too high.
For those whose tax bill was high, it may be probably because they had themselves a very good year. One may have a high personal tax liability not because of having an increased income but because of relying on accountants and tax advisers to help them out.
That is not to say that accountants can’t proficiently give tax advice, they can. The fact remains however that what accountants are best at is accounting, whilst the best people to give tax advice are tax advisers.
If you are one of the many people out there that still uses an accountant to calculate your tax rather than a tax adviser, here are five tips to help minimize next year’s personal tax liability.
1. Allowances, reliefs and credits
For some of us, this may seem pretty obvious but it is good to make sure that one utilizes any credits or allowances that may be available to you as an individual or to an individual. Moreover most of us are unaware of where those relief’s can be applied.
2. Income – What, when and how
The mode of receiving ones income has an impact on ones tax liability. For instance one may opt to take dividends instead of the normal salary offered, however, there are very many other options available. Further to being paid in form of dividends, one may increase their pension contributions so as to keep reducing their tax liability even further.
TaxEfficient Manner of investment.
If you have the available surplus funds, it can be beneficial to utilise tax efficient vehicles such as Enterprise Investment Schemes or Venture Capital Trusts, or even the humble ISA.
However, it is important to remember that any kind of investment has its risk and it is important to have a broader strategy.
Other kinds of taxation
Where you live, reside and are domiciled makes huge differences to your liabilities and options to utilise domicile tax planning should always be investigated. Further to this is whether one remits their charges continually or on contractual basis. Even considerations of where you want to retire could positively impact upon your tax bill.
Planning before hand for your tax.
If you are one of those earning more than ?150,000 per annum, then bespoke tax planning might well open your eyes to what great tax planning actually is.
Offshore tax planning and wealth planning can offer fantastic opportunities for tax efficient wealth maximisation and this form of planning is far more accessible than you might think.
For the risk averse, simple forward planning can make great differences.