Category Archives : Tax Advise

Will be putting articles on how you could reduce your your tax liability here. Use the contact us form if you have any specific questions.

How the Rich Avoid Tax – Channel 4 Dispatches

The rich always seem to play by a different set of rules. And this is particularly true when it comes to tax. The rich seem to have a lower marginal tax rate than the majority. This is because they have the best advisors and tax planners on their side and thus can pay a rate of tax according to their ‘moral barometer.’ So how do the rich avoid tax? Trusts – There are a number of schemes that revolve around offshore trusts. One of the schemes is to set up an offshore trust, in particular the trust is set up in Belize. An offshore company is also set up to […]

The risks of over-taxing the rich in a progressive tax system

“The wealthy get all the tax breaks.” How many times have you heard that saying before? Probably more times than you could care to remember. Many people in today’s society think that the rich get all the tax breaks. But is this really the case? Consider the parable below first devised by Professor David R. Kamerschen of University of Georgia. The bar stool economics piece aims to show that people are too narrow minded when it comes to ‘big picture’ things like Tax breaks, and thus they make assumptions without knowing the true facts. Suppose that every day, ten men go out for beer and the bill for all ten […]

Determine your Tax Residency using Statuary Residency Test 1

Residency is an important concept in tax. This is because you pay tax depending on where you are resident (and domiciled) as seen by the post “ Should you pay Tax in the UK on your income?”. In short, If you are resident and domiciled in the UK, you pay tax on the arising basis . This means you will have to pay tax in the UK on any income earned throughout the world. If you are resident but not domiciled in the UK, you pay tax on the remittance basis. This means you will need to pay tax in the UK on any income earned in the UK and […]

Should you pay tax in the UK on your income? 1

As an individual, your tax liability in the UK depends on your residency and domicile status. Your residency is where you live permanently or on a long-term basis. For tax purposes, your residency is determined by the Statutory Residency Test. You can read all about the Residency test in an article I wrote here so that you can determine if you are resident for Tax purposes or not. Your domicile is normally your country of origin or where you were born. If you are resident and domiciled in the UK, you pay tax on the arising basis . This means you will have to pay tax in the UK on […]

Why you should invest in an ISA before a Personal Pension Scheme!

Many financial advisors will tell you to invest in a Personal Pension Scheme (Stakeholder Pensions) before an Individual Savings Account (ISA). Whilst your financial advisor may have your best interests at heart, this move may not be right for your finances. I am of the opinion that by opening and investing in an ISA first, you are in greater control and much more aware of your finances. read on to find out why. A personal pension, sometimes also referred to as a private pension involves a person making regular or lump sum contributions to a regulated financial organisation that invests the money on your behalf. Don’t mistake this with a […]

How to Claim Tax Relief on Pension Contributions 1

When you put money into a pension, you are able to get the tax back, also called tax relief, on the amounts you have contributed into the pension. You can get relief on your contributions by either of the three methods listed below taking into account your annual allowance. (To read more on annual allowance, read my article on How Pension contributions and the Annual Allowance Work). There are three methods by which a member can get tax relief. They are: Through a net pay arrangement. By claiming relief at source. By making a claim to HMRC. They all result in members getting tax relief on their contribution at the highest […]

How Pensions Contributions work and the Annual Allowance 3

To encourage retirement savings, government offers tax incentives when you contribute to a pension scheme. What contributions apply for pensions relief? Most contributions to a registered pension scheme qualify for tax relief and are referred to as qualifying contributions. Qualifying contributions can be made by: a member (or other person on behalf of a member) an employer. (Also Read ‘How to claim relief on Pension contributions‘). Member contributions A member of a registered pension scheme may make unlimited contributions to the scheme during a tax year, as long as the scheme rules allow it. Other persons may also contribute to a registered pension scheme, as long as it’s for a […]

Simple Explanation of Changes to Pensions – Summer Budget 2015 2

In the budget speech today, the chancellor of the exchequer, George Osborne, stated that they would be changes to the pension system in the coming years. The chancellor is currently considering a green paper which has proposals for the changes in the pension system. The green paper can be found here : “” Osborne stated the following in his speech: “While we have taken important steps with our new single tier pension and generous new Isa, I’m open to further radical change. Pensions could be treated like Isas – you pay in from taxed income and it’s tax-free when you take it out, and in between it receives a top-up […]

Changes to Dividend tax – Summer Budget 2015

In his budget speech,Chancellor George Osborne has just announced a major overhaul of how dividends are taxed. The Dividend tax credits system which the Chancellor described as ‘archaic’ will now be replaced by a tax-free allowance of £5,000 of dividend income for all taxpayers.The rates after the allowance has been used up will  be 7.5%, £32.5% and £38.1%. Essentially, the changes are as follows: First £5,000 received in dividend income will be tax free Dividend income exceeding £5000 will be charged at 7.5%, 32.5% and 38.1% depending on the amount of dividends you receive Dividends paid within ISAs and pensions are unaffected by these changes and will remain tax free.With these changes coming […]

A Guide to Registering and Paying VAT

VAT can be a very confusing minefield that often leaves people questioning things like “how much is VAT in the UK? Where does the money go? Why do people have VAT?” Well, Value Added Tax (VAT) is a tax on consumption. It is a consumer tax charged on the supply of goods and services. The end consumer essentially pays VAT but businesses need to collect VAT on HMRCs behalf. All businesses in a supply chain will be required to account for VAT to varying degrees. When a business passes a turnover limit they are required to register for, and charge VAT. This article will look at the various aspects of […]