The beginning of a new fiscal year is coming, bringing with it many opportunities to save tax (legally) and keep as much of your money in their hands, and away from Gordon Brown & 39; s.
The budget was a bit of a damp squib, so let& 39;s look at some of the best ways to save tax!
Now, you may have heard of some of these ideas, but if you actually use them? I heard that many customers have heard of something and then admit you have done nothing about it. Do not let this be you ...
On with tips.
1. Use an offset mortgage to reduce the amount of tax you pay on your deposit of savings. If you have, say, 20000 pounds in a deposit account and it is gaining interest of 3% AER, the gross amount is 600. A new 120 (20%) in IRS taken at the source, plus another 120 tax if you are a higher rate taxpayer. Therefore, the net interest is just 1.8%.
Now say you have a mortgage of 100000 pounds, a 5% interest, which means you are paying 5000 pa in the service of loan.
Now you place the 20000 account of a diversion, which means you are now paying interest of 80000 pounds, which is 4000 pa.
Let & 39; s see what you have achieved. You WERE win 360 pa interest on the 20000. Now you are saving 1000 per year on payment of the mortgage, giving you a net gain of 640!
You would really need another deposit of 36000 in savings to offset equal savings. The other is that you no longer have to declare interest savings on your tax return.
2. If you do not want a flexible mortgage, or do not have a mortgage, you can still save tax. If your spouse does not work and have no income you must place to deposit their savings in name.
For example, if you have 50000 in a deposit account and 40% are paying tax on it, you can only be won 900 pa In 3% gross interest. If this is the name of the non-salary you receive another 600 in interest. Wages not seek the money being paid for raw completing form IR85, available from your tax office.
3. Linked to the above recipe, you should also make sure you are getting the best interest rates on any deposit of savings. ING are currently paying 4.5% AER. So if you double the example above, you could win 2250 pa. When compared with the original value of 900 pa, this is an increase of 150%!
4. If you employ your spouse in their practice, there is a way in which they can qualify for a basic state pension, without paying National Insurance. If you pay them less than 84 pw they are not eligible for a pension. If you pay them more than 84 and less than 97 pw will benefit the basic state pension.
Any employment of a spouse should be done on a commercial basis and you should qualify and confirm this with your tax or the Department of Work and Pensions .
5. Use the new pension rules to boost the retirement funds. For the fiscal year 2006/07, can contribute up to 215000 to receive their full pension and tax benefits, or 100% of its revenue lower.
If if you are independent workers that is particularly useful to reduce their tax bill. Remember, if you are a higher rate taxpayer you get 40% relief in their contributions.
6. Buy Pension Term Assurance, instead of " " normal life assurance. If you have, or are considering buying life cover, you can now get tax relief on your contributions.
So, instead of paying 100 pm for protection, you may be able to get the same level of coverage of 60 pm. Over 20 9600!
7. Look what you are doing to your tax for you. It is your tax simply follow their orders and produce their accounts, or if he / she proactively work with you to increase your profits, or by the help increase turnover or reduce costs? Ultimately, it is YOU who signs the accounts and YOU that the taxman will pursue with any questions, so make sure you are claiming all of which should, and not for items that should not.
The Financial Tips Bottom Line:
Saving tax is really being organized and working alongside the professional tax law in the long term. By structuring your business to your advantage, it is possible that you could give itself a pay rise without any money.
Take win more time to think how you can save more money, and then take appropriate action!
Copyright () 2006 Ray Prince asa teresia
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