Another Friday night with some friends round…
And yet another argument about life, money, tax and liberty – all over a juicy steak!
On one side of the table was my mate Steve. He thinks – like the government – that everyone has a moral obligation to pay the full whack of tax, no matter how much it hurts.
On the other side of the table – me, shouting:
“It’s perfectly LEGAL to make your finances more tax efficient. Why should you give a wasteful government a PENNY more of YOUR MONEY than you have to?”
Look I don’t care if the coalition is cutting down on wastefulness these days.
And I’m not averse to paying my way in society…
But I take exception to the seemingly arbitrary array of taxes imposed on us in this country.
It makes me fill with rage just thinking about it… you work hard all of your life, trying to make a crust for yourself and your kids… You pay into the system in all kinds of ways: through income tax, road tax, national insurance, duty on petrol, wine, cigarettes, import duty, council tax… You know as well as I do: the list is endless.
And then, at the end of your days, if you haven’t got your affairs sorted out, the government can lay claim to a whopping 40% of your estate through Inheritance Tax!
Of course, The Rich Life Letter is not a political vehicle… I don’t mean to get into an argument about who’s in government. I’m sure things would be the same no matter who was running the show.
What I said to Steve on Friday night while hacking away at my steak in a frenzy, is that my first loyalty is to my family.
If that’s wrong, or unethical, so be it.
And if there are ways, loopholes, strategies and tricks I can employ to keep more of my own money – legally – then I’m sure as hell going to look into them…
And then pass the details onto you, naturally!
What if you could keep more of YOUR money?
The main problem with the taxation system in this country is that it’s so complicated – and deliberately so. The revenue’s main tax return form is TEN pages long for crying out loud!
But it works: you see the cloudier and more complicated the system is, the more we’ll simply pay HM Revenue & Customs what we’re told to like a bunch of compliant little lemmings.
But I remind you: this is YOUR money… YOU earned it… so YOU should get more of a say in how it’s spent – right?
Right?
Can you honestly say, hand on heart, that every bit of your income – wages, earnings from shares or property, interest earned on savings, inheritance – is being taxed at the correct amount?
You might be shocked: approximately THREE QUARTERS of all taxpayers are paying more tax than they need to!
Don’t you think you should check your situation out as a matter of priority?
I’m not talking about, or advocating, tax evasion because that’s illegal. But there’s absolutely NO reason whatsoever why we can’t ALL be more tax EFFICIENT…
There are some great and easy ways to LEGALLY pay less tax – without having to jump through too many hoops! Here are a few ideas:
7 ways to pay less tax
*** Get an ISA… Individual Savings Accounts (ISAs) allow you to invest up to £7,200 a year in a tax-efficient wrapper. You can make investments either in cash or stocks and shares. Any interest earned on your savings, and any gains made on your shares are tax free. For more on ISA’s click here
*** Claim tax back… non-taxpayers can claim back tax charged on the interest on your balance in bank and building society accounts. To get back your tax you need to complete an Inland Revenue R85 form, which you can download at this website here
Here’s an idea: if you’re a taxpayer and your spouse isn’t, you might want to consider transferring any savings accounts into your spouse’s name… but if you do this, the account must be solely held in your non-taxpaying partner’s name – not joint names!
*** Save As You Earn… Check whether your company has a “Save As You Earn” (SAYE) scheme. This is a savings-related share option scheme, set up by your employer, that allows you to purchase shares in the company you work for at a discount… and you pay for them out of your PRE-TAX salary…
*** Invest offshore… Hold your money offshore in investment vehicles situated in low tax areas outside of the UK. There are definite tax advantages to investing offshore… some offshore banks and building societies offer deferral accounts where tax is not paid on interest until the money is brought back to the UK. Best to Google “Offshore saving” on this one…
*** Check your tax code…You may remember that back in January 2010 the HM Revenue & Customs computer sent out incorrect tax codes. This sort of thing is common, and many people are paying too much tax this way.
First thing to do is march on over to your payroll or HR department and ask how your tax code has been generated. Ask them to explain the coding to you so that you’re in the know. Then telephone your tax office and ask them whether or not you have been put in the right category.
You could find yourself getting a nice fat tax-back cheque – plus your wage packet will be more substantial going forward.
*** Offset your mortgage: I’ve banged on before about the many benefits of offset mortgages… and here’s another one: by offsetting your savings against your mortgage, you don’t pay tax on the interest that your deposits would otherwise have earned.
Okay, you don’t earn interest on your savings, but how much interest are you going to earn anyway these days? And it means you will pay less on your mortgage – and that you’ll cut its term. An example: If your mortgage rate is 5.95% and you offset £10,000 against a £100,000 mortgage, this is equivalent to earning 7.44% on that money if you’re a basic-rate taxpayer or 9.92% if you are a higher-rate taxpayer.
Of course, Steve hasn’t changed his mind, and neither have I… what you do with this info is up to you.
All I can say is that when I put my mind to it I can cook a pretty mean steak.