Minimizing Personal Tax Liability
Our hope is that you filed your personal taxes on time and avoided the penalties for non-compliance. All that most people wish for is the that the personal tax bill will not be as high as it was for last year.
If your tax bill does seem a little high this time around, we hope it is high simply because you have had a good year. Most of the times however, a high personal income tax is not because of increased income but because of turning to tax advisers to handle this issue for you.
it is possible for tax advisers and accountants to handle your personal taxes proficiently. We are only driving that tax advisers should be left to handle everything to do with your taxes while accountants should be left with accounting only.
For those of us who still want to use their accountants to calculate their tax, here are some viable pointers to help them minimize their 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. Most individuals however, do not know where the reliefs can be made.
Regarding your income
The mode of receiving ones income has an impact on ones tax liability. One possible way of reducing ones tax liability is by receiving ones income in form of dividend rather in form of money. Increasing your pension contributions will lower the current year’s income tax and NIC and by combining this with some specialist retirement tax planning could see you paying less now and in the future.
ensuring that you invest in a tax efficient manner.
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.
Any form of investment carries a degree of risk, but they offer reduced tax incentives and as part of a broader tax planning strategy can greatly reduce your income tax liability.
4. Domicile taxation
various tax differentials apply regarding to where one resides, one should therefore carry an investigation to see how this turns out. There are two main things to consider, a contract basis of remittance or a remittance basis which have an effect on how you pay the tax bills. Other things that coukd impact your tax bill where one would want to retire to
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.
However the most efficient mode of reducing ones tax income is through offshore wealth and tax planning.
For the risk averse, simple forward planning can make great differences.