Are your tax bills starting to take a real psychological as well as financial toll? Lee Goggin, our Co-Founder, makes the case for why you owe it to yourself to mitigate taxes by all the many means at your disposal.
I think it’s fair to say that American statesman Benjamin Franklin continues to speak for us all with the grim acceptance contained in his much-quoted line, “In this world, nothing is certain but death and taxes”. Indeed, presently, we could probably add to that, nothing is certain except more taxes, and at higher rates, for those of us with any wealth at all in the UK.
The recent Spring Budget was not, unfortunately, filled with the kind of tax breaks many might have predicted from a Conservative government which is undeniably in big trouble as regards the upcoming General Election and should be looking to woo its small state, low-tax favouring traditional voting base. In fact, except for an expansion of child benefit for earners of up to £60,000 a year, there wasn’t much for middle to higher income earners to like. At the upper end of wealth, the abolition of the non-dom regime has reportedly already got the internationally mobile packing their bags in droves too.
that notion only holds up to a point and on the assumption that the tax take is well spent. More and more though, people are starting to feel that this is not the case
Those who are lucky enough to have significant assets invariably accept with grace that that those with the broadest shoulders have to bear more of the tax load, practically and perhaps even morally. However, that notion only holds up to a point and on the assumption that the tax take is well spent. More and more though, people are starting to feel that this is not the case.
Money not well spent
Recent figures revealed that the government is spending four times as much on welfare as it does on defence, arguably the state’s primary responsibility; even more shockingly, twice as much is spent on the benefits bills as is invested in education – and by extension the country’s ability to generate wealth in the future. Schools are overflowing with teachers underpaid and hardly a day goes by without worrying commentary on the woeful inadequacy of our war readiness (at what could hardly be a worse time). A workshy culture has been allowed to take hold, with more than a fifth of working age UK adults unemployed and not looking for work, according to government data.
The social contract most people have in mind about taxation is that they will gladly help support those in genuine need and contribute generously to public services, infrastructure and our institutions on the assumption that we all benefit greatly from these things. But what if that contract appears to have been broken, and that we are simply paying more and more for less and less? Scandinavian-level taxation should secure similar standards of services and social care, but when there is a widespread perception that there is vast inefficiency and waste in government expenditures, tempers start to fray. A sense of real value for money is the key when we fork over our taxes.
Top Tip
Lee Goggin
Co-Founder
Unintended consequences
When taxation is seen as too high, or unfair in how it falls, the phrase ‘government funds’ starts to truly grate. Many people start to not chase that promotion quite so vigorously or take their foot slightly off the gas with their own business, whether consciously or not. Worse still, those with the get up and go then start to, well, leaveOverburdened taxpayers may just seethe and resign themselves. The irony is that there is generally a lot that people can do to get their tax bills down, even when thresholds are frozen so that fiscal drag brings growing numbers into higher tax bands (as is the case in the UK now) and they would be well justified in feeling beset on all sides by levies that are known to be unpopular and even inefficient at actually raising money in net terms, as so many are; Inheritance Tax, which the Spring Budget left unchanged, is a case in point. The reason people don’t take action is very often due to fear of falling foul of the taxman, or just what seems to be the sheer headache of it all. That, many would argue, is rather the point. One doesn’t have to be much of a cynic at all to believe there is a reason the UK tax code is an incredible 10 million words and 21,000 pages long. Finding it impenetrable, the layperson simply gives up and pays up. Those who are savvy and more determined do however find a way to keep more of their hard-earned or inherited wealth for themselves and their families. And that is by turning to experts who make it their business to know which amount of tax really does need to be paid, and which actually does not. There is a world of difference between tax evasion (illegal) and tax avoidance (perfectly legal and within your rights), and that is where wealth managers come in.
One doesn’t have to be much of a cynic at all to believe there is a reason the UK tax code is an incredible 10 million words and 21,000 pages long. Finding it impenetrable, the layperson simply gives up and pays upThe uninitiated might think of wealth management as being solely about managing portfolios, yet wiser heads known that it’s as much about your tax returns as your invest returns. There are many, many ways that wealth managers can help you to trim taxes, whether that be by timing the sale of assets well, taking advantage of the full spectrum of reliefs on offer or by structuring your assets in clever ways. You may not think of tax as exciting, but you may change your mind quickly when you see just how immense – and absolutely legitimate – your savings could be. While paying taxes might be a certainty, the amount that you end up having to pay certainly is not. Professional tax advice typically pays for itself in very short order and over the long term it is likely to make a huge impact on your financial health. You might say you owe it to yourself to explore the potential savings and, whichever moves you eventually decide upon, it will make a nice change from thinking about what the government might make you owe them!
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