How can I lower my personal tax bill?

Whether you feel like you are paying too much tax or just want to ensure you are tax-efficient, there are many areas you can review.

Here are some of the ways you can minimise your tax:

1. Allowances – The government have a wide range of allowances available to bring down your tax bill. Some of these include the use of home as an office, marriage allowance, savings income allowance.
2. Capital Gains Tax (CGT) – You could utilise the CGT exemption by buying and selling assets and shares. If you have a CGT bill, you could defer the gain and invest it in something else, giving you access to reinvestment relief.
3. Property – You may be able to reorganise the property’s ownership to split the profits more efficiently. A capital allowances review could also highlight some savings.
4. Enterprise Investment Scheme (EIS) – By investing in the EIS, you will receive income tax relief of 30% on the amount invested, and any growth will be exempt from Capital Gains Tax.
5. Venture Capital Trust (VCT) – Any dividends received through a VCT are exempt from tax. The target return is greater than that of the Bank of England and similar to the EIS, you will receive tax relief at 30% of the amount invested.
6. Seed Enterprise Investment Scheme (SEIS) – This is similar to the Enterprise Investment Scheme. However, tax relief is 50%, and the risk is much higher.

If you are a director of a company, there are few other areas you could review:

1. Remuneration – how you take money out of your business could affect your tax bill. Depending on how much income you receive, you could utilise a mixture of extraction techniques, including dividends and salary.
2. Rent – If you personally own the property that your business operates from, you could charge your business rent to use the property as an office.
3. Directors Loan Account – If you loan money to your business, you could charge interest on the amount, which can be extracted tax-free and bring down your corporation tax bill.
4. Trivial Benefits – You can give yourself a tax-free gift a few times a year as long as it meets the trivial benefits criteria.
5. Reorganise shares – You may be able to reorganise the shareholding in your business to allocate dividends more efficiently. This may involve gifting shares to your spouse or children.

These are just a few of the ways you can minimise your tax. Although taxes are one of life’s certainties, we review your taxes as a whole to ensure your tax bill is as efficient as possible.