It’s Tuesday! Let’s talk Tax!
Read this week’s short tax snippet for Doctors & Dentists, to help you save money and get more organised with your tax affairs. It’s just to give you a flavour – take 5 minutes to have a read.
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. The Financial Conduct Authority does not regulate tax advice.
Forward planning is essential with tax
If you received a shock when your accountant told you your tax bill for January 2017, or if you were just disappointed that it was so high, then it is likely to be due to poor planning.
Naturally, if you prepare your tax return close to the deadline, and have not been keeping on top of your finances through the year, a high tax bill can be problematic if you haven’t saved sufficiently.
Points to note for tax planning
- ACT NOW BEFORE 5 APRIL – Once the tax year-end has passed, on 5 April, there is typically very little that can be done to reduce your tax bill
- ACT SOON AFTER 5 APRIL – Preparing your tax return shortly after the year end will mean you know your tax liability and have time to find the money to pay your tax, and not fall into arrears.
(1) Act now before the tax year end passes
- Extend your basic tax threshold by paying into a private pension plan – great if you are just creeping into higher rate tax!
- Maximise your ISA savings allowance as the interest on these savings accounts is tax-free
- Work with your accountant to ensure you are claiming tax relief on all business expenses
- If you own a rental property, ensure you are claiming maximum tax relief for rental property expenses
- Time large purchases before the end of the tax year, so you can claim the tax relief sooner
- Time purchases of capital items before the end of the tax year, so you can claim the Annual Investment Allowance sooner
- Speak to a specialist accountant who can ensure you are maximising all relevant tax breaks.
- Combine allowances with your spouse or civil partner
(2) Act soon after the year end passes
The second way to avoid a shock tax bill is to prepare your tax return shortly after the tax year-end passes. By May or June you should be able to gather the necessary information and work with your accountant to get it finalised.
This way, you still have plenty of time to make additional savings and also start working on tax planning for future years.
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