Sunday, 15th September 2019
FINANCE & INVESTMENT Article
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This Month's Magazine
Ever Thought You May Be Paying Too Much Tax?

Ever Thought You May Be Paying Too Much Tax?

You may be inclined to argue that paying any tax at all is paying too much but then of course our society needs tax revenue to function. By Richard Alexander Dip. PFS

We have all read about the rights and wrongs of tax evasion and tax avoidance and of course there is a huge difference, the former being illegal and the latter being totally legitimate but sometimes appears to be in the realms of the very wealthy only.

I think it is reasonable to say that no one should pay more tax than they need to and that it is prudent to ensure that you do not pay more than is necessary. In this way, you can sleep at night without the concern that the taxman may be knocking on your door any minute but also safe in the knowledge that you have made your contribution to society.

So how can you make sure that you are paying the right amount of tax? Well that is likely to involve a closer look at where you keep your capital and what your sources of income are.

With regard to capital, whether you are Spanish or UK tax resident, there are different types of investment that can enjoy either a tax-free environment or a tax-deferred basis. It is important that your investments are able to grow with little or no tax being applied and that it is only when your “take some money out” that you need to account for the tax due on any gain being realised.

This will mean that you will need to keep only a minimum amount on deposit earning interest, as interest is taxable, whether you intend to use it or not and that the majority is sheltered in an appropriate investment wrapper.


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With regard to income, your tax residency will again have a bearing and if you are one of those people who have been living in Spain for a number of years but are still paying taxes in the UK, you might find that you are paying more tax on your income than you need to. This could be particularly true if you are in receipt of pension annuity income. In the UK every penny will be assessable for income tax but in Spain, only a proportion would be and the resulting tax payable would quite possibly be lower than in the UK.

With various authorities and financial institutions sharing information more than ever before, no longer is it safe to try to “sit under the tax radar” and hope that you don’t get found out. It is much better to take some advice and ensure that your financial affairs are in the best shape they can be and this includes looking at the tax implications as well.

I know that planning finances can be pretty boring stuff, so why not make it a bit more interesting by combining it with a visit to the Homes, Gardens and Outdoor Living Show in Estepona on 9th& 10th of November.

You will find us on Stand no 6 and you might just pick up a few good ideas for your home while we have a look at your finances.



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