10 Ways to Save Tax
Published January 2010
Before we get to either the budget, or the end of the fiscal year when new higher rates of income tax and personal allowance withdrawal will bite its time to look at ways of reducing tax liabilities. The following ten ideas are somewhat topical:
Sacrifice salary: Tax and NIC increases will lead to an increase in interest in sacrificing “current” salary for future pension benefits.
Grab tax breaks: Focusing on VAT savings...the rate goes back up to 17.5% in January.
Book gains: Based on a strong possibility that the Budget (the “real” Budget) may increase the rate of CGT above the current low rate of 18%.
Take dividends: Especially for those where the dividend tax rate will do up 25% to 42.5% in 2010/11.
Go self-employed: To save NIC – there are other factors to consider, though, before taking the leap: professional advice is essential.
Defer bank bonuses: As the special bank bonus surcharge is only imposed until 5 April 2010 for bonuses in excess of £25,000.
Split the difference: It would seem that bank “bonus receivers” could take a salary increase instead and split the special “bonus tax” saving with the employer. No doubt advice from appropriate sources will be forthcoming.
Get paid in shares: With the emerging benefits taxed at 18% (under the current law at least) as opposed in income tax (and possible NIC) on income. There is, however, a strong expectation that this CGT rate could be increased sooner rather than later – despite the lack of any proposed change in the PBR.
Save in other ways: Consider pension alternatives if you are likely to be a 50% taxpayer. Professional advice will be essential.
Bale out of Britain: Maybe leave the UK to save tax...drastic but an increasing possibility for likely additional rate taxpayers.
