A Guide to Tax Efficiency in 2018

By rotide
Created 15/10/2018 - 16:46

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While we cannot avoid either, it is still possible to enjoy a more tax-efficient status during the remainder of 2018. What are a handful of innovative approaches to embrace and what benefits does each have to offer? If you have been hoping to obtain extra liquidity, the advice mentioned below should never be taken lightly.

Correctly Utilising In-House Profits

Assuming that you own a small- to medium-sized enterprise, closely examine how you distribute in-house profits. It is wise to consider paying yourself a salary and allocating the remainder as dividends [1]. This will often help to reduce mandatory taxes as well as national insurance requirements. Should your spouse or partner be actively involved in day-to-day operations, paying a small salary can also prove beneficial.

Spread Betting as a Form of Investment

According to CMC Markets, spread betting [2] is a tax-efficient way of trading on price movements certain financial instruments. Why is this the case? First and foremost, you will not be obligated to pay stamp duties or capital gains tax. This arises from the fact that the trader is not making a physical purchase or sale when spread betting. A myriad of underlying assets are available and these can suit the requirements of the individual investor.

Take a Look at Previous Deductions

Grouping your deductions together can help to maximise their inherent value. Thus, you will be able to claim more back at the end of the tax cycle [3]. There are actually a handful of reasons why this approach can prove to be very useful:

●       Certain types of deductions are unable to be claimed until they represent a specific percentage of your total income. This is often the case when referring to medical deductions.

●       Assuming that you expect to generate a significantly higher income than in the past, grouping deductions together will help to increase their tax-saving benefits.

It should also be mentioned that itemising these deductions does not always make sense. The only time when they should be itemised is if the deductible amount is larger than the standard deduction that you would otherwise be able to claim.

Speak with a Qualified Solicitor

This next suggestion should go without saying and yet, many individuals fail to properly capitalise upon the advantages associated with a financial adviser. These professionals will be able to closely examine your tax status and determine whether or not there are more efficient methods at your disposal. Although such services are always associated with a one-off fee, the return on investment can be well worth the initial outlay. Above all, the taxation protocols within the United Kingdom can be confusing and new regulations may confound the process even further. Obtaining the insight and clarity provided by a trained expert is the best way to make certain that your hard-earned money is working for you as opposed to against your ultimate goals.



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