What are the three basic Tax Planning strategies?

Tax planning is an essential aspect of managing your finances. It’s responsible for ensuring that you are paying the correct amount of tax on your income and assets. But, everyone wants to know how they can best minimise the amount of tax they are paying. The good news is that there are several legal strategies you can use to do this. So, we’re taking a look at the three basic tax planning strategies that can help you minimise your tax liability and make the most of your money.

The three basic tax planning strategies – Strategy 1:

The first strategy is to take advantage of tax-efficient investments and savings plans. This can include things like ISAs (Individual Savings Accounts) and pensions, which are tax-free and can help you to save for the future while also reducing your tax bill. Additionally, there are various tax reliefs and exemptions available for business owners and entrepreneurs, such as Research and Development tax credits and Capital Allowances. By investing in these tax-efficient options, you can minimise your tax liability and make the most of your money.

You can also subscribe for shares in EIS, SEIS and VCT investments to gain tax relief at very generous rates.

The three basic tax planning strategies – Strategy 2:

The second strategy is to make use of tax deductions and credits available to you. These include things like charitable donations, work-related expenses and the use of home allowance.

By claiming these deductions and credits, you can reduce your taxable income and therefore lower your overall tax bill. It’s important to keep accurate records and receipts throughout the year, as these will be necessary when preparing your tax return.

The three basic tax planning strategies – Strategy 3:

The third strategy is to consider tax-efficient ways to structure your income and assets. For example, if you are self-employed or a business owner, you may want to consider incorporating your business in order to take advantage of the lower corporate tax rates. Additionally, you may want to consider holding certain assets in a trust or a company to take advantage of the different tax rules that apply to these structures.

Have you checked whether your assets are held in the most tax efficient way between you and your spouse? This can be a very advantageous way of saving tax between the two of you.

By structuring your income and assets in a tax-efficient way, you can minimise your tax liability and make the most of your money.

In short…

Tax planning is an essential aspect of managing your finances. By taking advantage of tax-efficient investments and savings plans, making use of tax deductions and credits, and structuring your income and assets in a tax-efficient way, you can minimise your tax liability and make the most of your money. It’s important to stay up-to-date with tax laws and regulations and review your tax situation regularly. With the right approach, you can effectively plan your taxes and avoid any penalties or fines.

Here at Lewis Brownlee, we have a team of expert tax planners. So, if you would like some help to get your affairs sorted, safe in the knowledge that they are both tax efficient and tax effective, while remaining compliant with the law, please do give us a call.

You can reach us on 01243 782423 – or alternatively email us from our contact page. We’re always glad to see how we can help!

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