Short-term personnel typically operate their businesses as self employed individuals but in all other respects they are just wage slaves like their employed colleagues with no employment rights and positive aspects that the latter take for granted. You can speak to a Wirral based tax planning firm here to find a way of offsetting your tax allowances in the most tax efficient way.
In certain situations, employing a company can let you take advantage of some very significant tax savings and in one particular case review we demonstrate how a contractor saved in excess of £4,700 per year. A company could also allow you to split your cash flow with your husband or wife or partner. In one particular case study we demonstrate how undertaking this could save you an additional £10,673 each year. You may find that you will need a loan to help you out whilst you are sorting your tax out so you could try the Guarantor Loan Lender here.
Even so, these tax savings are by no means guaranteed and saving money on your tax could be financially disastrous if you don’t employ tax professionals. Most contractors with their own firms are very aware of the so-called IR35 tax guidelines and self employed individuals and company directors should treat them with the gravity that they warrant…messing about with your tax situation should not be taken lightly.
These can offer you a great deal of positive benefits. By way of example, some schemes let you to take tax-free shares as an alternative to a taxable salary. Additionally they can offer you positive capital gains tax benefits and in terms of tax breaks available, please look at the following:
- Share Incentive Strategies (SIPs)
- Save As You Earn (SAYE)
- Enterprise Management Incentives
- Firm Share Selection Strategies
We cover every one of the most current features and benefits to these schemes and we can demonstrate exactly how much tax you might possibly save. Some salary earners will also be able to claim certain tax breaks on their property bills and interest on borrowings.
How much tax do salary earners shell out?
Calculating Your Cash flow Tax
For the 2013/14 tax period, starting on 6th the April 2013, most individuals will be subject to the following income tax bandings:
0% 1st £9,440 (personalized allowance)
20% following £32,010 (basic-rate band)
40% over £41,450 (higher-rate threshold)
Normally speaking, if you earn more than £41,450 you also happen to be a higher-rate taxpayer. In every other case where you earn less than that, you will be a basic-rate taxpayer.
Illustration Higher-Rate Taxpayer
Jane earns a salary of £60,000. Her calculations for tax are as follows: (2013/14)
- 0% on the 1st £9,440 = £0
- 20% on out the following £32,010 = £6,402
- 40% on the ultimate £18,550 = £7,420
- Total tax bill: £13,822
Income in excess of £100,000
When your taxable income exceeds £100,000, your tax allowance is slowly withdrawn. For each added £1 you earn, 50p of one’s personalised allowance is taken away. What this means is that when your income reaches £118,880, your personalised tax allowance could have fully disappeared.
Furthermore, it shows that people who earn a salary of between £100,000 and £118,880 face a marginal tax calculation of 60%.
Income above £150,000
After your income exceeds £150,000, you will pay out 45% tax on any further salary you receive, which is a huge tax burden and also why any individual earning this amount must consider tax planning to mitigate their tax bill.
Everyone should pay tax, it is the absolutely right thing to do because how else would we pay for our public services such as healthcare, schools and essential council services. However you are within your rights to ensure that you only pay what you need to and what you are required to by law…No more no less.
If you haven’t done so already, make sure you speak to a tax adviser today.