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  • Tax Planning Strategies

    Tax Planning Strategies

    “Tax planning can only be done on the basis of what we know today.”


    1. Property Tax Strategy – Reduce Tax by Selling Portfolio Slowly

    Wherever possible, there are a few simple steps that a property investor can follow in order to maximise the growth made on the portfolio and to minimise the Capital Gains Tax liability. Those steps are:

    • Own properties in joint names wherever possible in order to maximise the CGT annual exemptions
    • Keep taxable income low in the years when assets are being sold
    • Gradually dispose of properties over a number of years in order to utilise multiple basic-rate bands
    • Exercise patience!


    2. Pensions Tax Strategy – Almost Double the Money?

    If, for example, you receive a bonus of £5,000 from your employer, then as a higher-rate taxpayer you will only take home £2,900 of what you may feel you earned for great performance. (£5,000 less 40% tax, less another 2% National Insurance.)

    However, what happens if you decide to ask your employer to pay that bonus into your pension instead and, also, ask them to make a few contractual changes to your pension (that we can explain to you) to maximise your tax position? Very briefly, this is what happens:

    1. Employer pays bonus into your pension : £5,000 (no tax deducted)
    2. Employer adds just under 14% (approx) into your pension : £700 (contractual changes made)
    3. Total paid into your pension : £5,700 (“almost double your money” if taken as salary)

    It’s really important to take advice with this strategy, possibly legal advice too, because clarification will likely be required on details of the bonus e.g. how and when it is paid, the conditions / criteria surrounding payment, your position within the company, etc.

    Click the link to discuss your Tax or Financial Advice requirements (or send us an e-Mail / call us using the telephone number at the top of this page).

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    Opening Doors Finance is an Appointed Representative of Intrinsic Financial Planning Limited and Intrinsic Mortgage Planning Limited which is authorised and regulated by the Financial Services Authority. Intrinsic Financial Limited and Intrinsic Mortgage Planning Limited is entered on the FSA register (http://www.fsa.gov.uk/register/) under reference 440703 and 440718
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