Minimising your tax liability
Nobody wants to pay more tax than they need to, but the government seems to be finding more and more ways to take our money by stealth that it is important for each of us to consider how we can at least minimise the impact.
Taxes fall into a number of areas:
- Tax on spending – not much can normally be done about VAT and other excise duties;
- Tax on income – from what we earn through work and from our investments – it is often possible to minimise this by making use of allowances (for example, for pension contributions) and special investment opportunities (such as ISAs and other tax efficient investments);
- Tax on capital gains – now levied at 18% for everyone except many entrepreneurs, who can realise gains of up to £1 million throughout their lifetime, on which they only pay 10%;
- Tax on inheritance – is levied at 40% on everything above a threshold which was set at £312,000 for an individual for 2008/9 and is expected to rise thereafter (husbands and wives and civil partners can ‘transfer’ unused relief between them, on death).
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