Income tax can be applied widely not just to your salary. There are ways to reduce your annual income tax bill. The best source of guidance is your Anstee & Co. financial adviser, but here are some of the options you might consider:
Make a pension contribution to reduce your taxable income.
Escape the child benefit tax charge by making a pension contribution to reduce your income below the £50,000 threshold.
Move funds to your spouse/civil partner.
Review strategies to invest for capital growth instead of income.
Income tax information you might find useful.
Although it is primarily associated with money you earn from employment, income tax can also be applied to; some state benefits; pensions; annuities; rental income from property; employee benefits; dividends; savings(above your annual allowance);and income from trusts. Here are the current rates and bands.
Income tax rates 2016/17
- Personal allowance: Up to £11,000, tax rate 0%
- Basic rate: £11,001 to £43,000, tax rate 20%
- Higher rate: £43001 50 £150,000, tax rate 40%
- Additional rate : Over £150,000, tax rate 45%
Your personal allowance decreases by £1 for every £2 that your adjusted net income is above £100,000. So as an example if your income is £122,000 or above, your personal allowance is zero!
The above rates tend to change at the start of each new tax year. For the most up to date information please book a free initial meeting with one of our expert financial advisers. Our financial advisers offer independent, unbiased financial advice after fully understanding your personal financial position.