With the end of this tax year just around the bend, now is the time to get your finances in order. This means that this February presents an opportunity you to save on your taxes by minimising your tax liabilities. You can minimise tax liabilities through such actions as capitalising on low capital gains tax rates, itemising and assessing your tax deductible personal and business expenses, and taking advantage of pension contributions. Below, we'll go into detail on how to get the most out of your tax liabilities this tax year.
Capitalising on low capital gains tax rates
At the current moment, long term capital gains tax rates are set to match income tax rates. If your assets have been held for at least one year, they could be eligible for capital gains tax rates at a lower rate than the income tax rate at which those assets might be taxed. Selling these assets before the end of this tax year might be a smart defensive choice in the event that the currently low capital gains tax rates are hiked in the next tax year. Additionally, if the money attained from selling the assets subject to the capital gains tax is donated to a charitable organisation, that donation can be written off as tax deductible, saving on assets that could otherwise be subject to income tax for this tax year.
Assessing and itemising your deductions is a time-tested way to save on income tax for the tax year. Business owners and self-employed individuals have unique opportunities to write off several types of expenses as deductions. Such items that might be subject to deductions can include:
- Home Office – if a dedicated part of your home is used for business purposes, a portion of the electrical, gas, internet and other such household bills that are spent in maintaining the home office can be claimed as part of the business.
- Travel – business-related travel, whether it is domestic or international, can be written off as tax deductible.
- Food and drinks – while on business travel, the costs of the meals purchased while traveling can be tax deductible, whether the food and drinks are at a restaurant with a client or just a quick take-out order to be eaten in a hotel room; however, there are restrictions dictating that the meals cannot be particularly exorbitant.
- Automobile use and associated costs – in the case that you have used a car as a means of business travel, the cost of basic maintenance and repairs as well as petrol and some forms of insurance can be eligible for tax deductions; the standard mileage rate is the easiest way to calculate your deductions for the tax year.
- Office furniture – from basic cubicles to new swivel chairs, any furniture purchases made for your office, whether in or out of a business owner's home, can be written off as tax deductible.
- Business liability insurance – premiums that are paid on various types of business insurance can be written off as tax deductible.
Contributing toward personal or business pension plans
Pension contributions can be written off as tax deductions, protecting these contributions from and reducing the income tax and capital gains tax for this tax year. As much money as an individual can contribute to their pension, the more assets can be written off as deductions. As for businesses, employers can be eligible for tax relief by contributing to their pension plans; many employers contribute 5-8% of their annual salary to pension plans, which qualifies as tax deductible.
Should I utilise the services of a tax professional to save on income tax this year?
Whether you are an individual or a business owner, you have several options available to save on income tax for this tax year. Through low capital gains tax rates, itemising and assessing deductions, and taking advantage of investments in long-term pension plans, individuals and business owners can minimise their income tax.
For additional services and clarifying details, consult a tax professional contact us. There is no better resource than a trained expert when it comes to managing your taxes and making sure that you are utilising all of the options for minimising tax liability that are available to you this tax year. Schedule a consultation with a professional in order to get assistance with those complex, often byzantine tax regulations. There are several types of expenses that can be eligible as write offs for tax deductions, and a professional can help you locate those expenses and categorise them efficiently and effectively to save in every area that you can.
Lawrence Grant has demonstrated a distinct devotion to customer service, always going the extra mile for their clients and guaranteeing collaboration through all steps of the process as this tax year comes to an end. Schedule a consultation with a tax professional today to save on your income tax this year.