Tax affects every area of our financial lives, right from personal to business liabilities and tax planning is an area which requires specialist expertise. Tax planning services are able to identify and maximise any savings that may be open to you either on a personal or business level. This article gives you five extremely useful tips relevant to UK tax, which you may wish to discuss further with a professional advisor.
1. Entrepreneurs' Relief
This relief can allow business owners to manage their tax liabilities should they sell their business but the opportunity presented here will require some forward planning on their part. It can be applicable whether you are a sole trader, partner or shareholder. There is provision for gains of up to £5m per person to be taxed at 10%, providing all the necessary conditions have been satisfied. This is an opportunity that you really do need to discuss with a Tax Planning expert to explore whether it might apply to your particular business. Like a great many aspects of tax, it is strongly recommended that you gain appropriate advice to fully understand the implications and possibilities of this relief.
2. Principal Private Residence Relief
This can be applied when a second home is sold, whether that home is located in the UK or overseas; in a similar vein to the above advice given Entrepreneur's Relief, here you really do need to gain expert advice in advance. Essentially there are some circumstances which will allow for Private Residence Relief to be applied to your Capital Gains Tax liability. The appropriate returns must be lodged with the HMRC in order to gain the relevant reduction in the tax bill that you would otherwise need to settle for the sale of your second home. Ask to discuss Principal Private Residence Relief with your tax advisor to find out more.
3. Managing liability for the 50% Tax Rate
The Chancellor made an announcement recently to the effect that those with incomes exceeding £150,000 each year are going to be liable for tax at anew higher rate of 50%. In addition, they are also due to contribute an extra 2% National Insurance from next April onwards. If you fall are or likely to fall into the group affected by these increases, you might want to discuss the issues with your tax advisor in regard to managing your effective rate of tax.
4. Managing Inheritance Tax Liability
For those who inherit inherited larger estates, it can be worth considering speaking with your tax consultant about methods which could manage your liability. This can often be achieved alongside allowing you access to funds, and simultaneous important savings may be created. For example, tax effective investments could be combined with loans to allow more of the inheritance to be passed on to the next generation.
5. Realising capital value from a business
Many business owners make extremely careful plans for the growth of their business, and when the business enjoys success there can still be opportunities to reward your hard work over the previous years. Ask your tax adviser to begin discussing methods to manage a management buy out by the team involved. With expert management, owners may receive a somewhat larger capital sum taxed at just 10%. It can also be possible to continue to enjoy a minority stake in the business in question. Of course, this strategy is another one where you really do need to appoint an expert tax advisor to help you understand all the details and requirements.