With a top income tax rate of 45%, even minor improvements to your tax position could save you a considerable sum. Here’s our guide to the ways you can minimise your exposure.
Accountancy
Because most of us don’t make full use of our allowances and exemptions, we provide a full range of accounting services for How to Pay Less Tax on your UK income and savings. According to the Annual Tax Action Report of 2012, each of us pays, on average, more than £4,000 more than we need to. Our experts will help you avoid over-payment.
End-of-Year Checklist
Our checklist identifies where you can reduce your tax liabilities and sets out all your allowances and exemptions. These include Personal Allowance, Marriage or Civil Partnership Allowance, Personal Savings Allowance, ISA Allowance, Dividend Allowance, Capital Gains Tax Allowance, Pension Carry Forward and allowances for Venture Capital Trusts.
Paying Less Tax on Income
Every individual has an annual tax free allowance (currently £12, 570) including pay, bonuses, rental and pension incomes. If you don’t reach this threshold, perhaps we can help you identify ways to increase your annual income so you enjoy your full entitlements.
The 60% Tax Trap
If you earn over £100,000, your tax free allowance will be reduced and you’ll pay National Insurance at 2%, meaning you will effectively pay tax at 60% on additional income such as a bonus. We can help you avoid this trap by having the bonus paid into your pension fund.
Capital Gains Tax (CGT)
If you make a profit from the sale of an asset you may need to pay Capital Gains Tax. Anything over your personal allowance will be taxed at between 10-20% and for property at between 18-28%. However, if you are married or in a civil partnership, your collective allowance increases and if you have other loss making investments, you may offset those losses against gains made. We’ll help you navigate the prevailing CGT rules and regulations so you never pay more than you have to.
Restricted Stock Units
Sometimes employees receive shares in the company for which they work. These are known as Restricted Stock Units (RSUs) and may be liable for CGT. However, there are two ways to minimise the tax payable either through immediate sale or by transfer to a spouse. Our experts will help you decide on the best course of action.services together under one roof to provide peace of mind for you and your loved ones.
The Company Tax Bill
If you own a business and make a profit you will pay Corporation Tax (CT). However, pension contributions are classed as deductible expenses, free from income or dividend tax, so you could reduce your tax liability by making a pension contribution instead of paying yourself a salary. Rest assured we’ll help you take all the steps necessary to reduce tax.
Income Tax Liability
The most common way to reduce income and therefore your tax liability is to pay into a pension which has a Lifetime Allowance Tax Charge. If the value of your pension exceeds the limit you will pay tax at between 25 and 50%. However, our experts can show you the various ways to minimise this charge by withdrawing the tax free portion, taking your pension benefit early, setting up an alternative investment pot, carrying forward unused allowances from previous years or opting for an increased salary instead of pension contributions. Your professional adviser will guide you through all the details.
