With the cost of living continuing to increase and more contractors finding themselves becoming higher or even additional rate taxpayers, it is more important than ever to provide contractors with guidance on ways in which they might reduce their personal tax burden.
At PayStream we always have your contractors at the forefront of our mind, and so we are always looking for ways to improve their financial wellbeing.
Simple measures such as advising their family members to make full use of their personal allowances and to transfer ownership of income generating assets to their family members who pay tax at the lowest rate will help.
We also advise that tax relief is available on all qualifying gift aid donations, by way of a reduction to the amount of tax payable at the higher and additional rates of income tax.
As with all our contractors we are always looking for ways to ensure that they are making the most of any tax efficient investments available to them. There are several ways and methods that contractors can invest their money in order to mitigate their tax liability;
- Individual savings accounts (ISAs) are perhaps the simplest method of investing their money in a tax efficient environment.
- We also advise that individuals who have invested the maximum amount in an ISA each year since their introduction, could now be receiving tax free income and gains on an investment of over £87,000.
- Venture capital trusts (VCTs) and enterprise investment schemes (EIS) also offer various tax related benefits for investors.
- Perhaps the most common of all tax efficient investments is the pension fund. The rules on VCTs, EIS and pensions can be complex however, and contractors are advised to seek further advice before making any significant investment decisions.
PayStream's Personal Tax Team are always on hand to assist your contractors and look for ways to reduce their overall tax burden. Visit here