Save Money This Year with Tax Breaks for Couples

It was Valentines Season, and as you celebrate with your significant other, I thought you could use a few pointers about how to make your status as a couple work for you – financially speaking. For this feature, couples will refer to married pairs (because marriage is recognized by the law).

Here are a few tips to help you put money aside for other household items.

How can I save money as a married spouse?

Under the current UK tax regulations, the following scenarios can result in tax breaks for married couples:

  1. Marriage Allowance

For couples in different tax brackets, marriage allowances present a great tax relief option. If you earn less than £11,500 and your partner falls within the £11,501-45,000 tax bracket, you can transfer 10% of your unused personal allowance to your partner. He/she will then be able to save up to £230 per annum.

  1. Sharing ownership of Buy to Let Property

Transferring ownership of a property between a married couple will incur no capital gains tax. This is what makes it a great tax relief strategy for couples. This strategy involves one spouse transferring shares of a property to the other. If your spouse earns lower income and pays tax at lower rate, this enables part of the property income being taxed at lower rate. However, the overall situations of both partners need to be assessed in order to determine whether or not this strategy is a good fit.

  1. Transfer of Business Ownership

If your partner makes a significant and legitimate strategic contribution and bringing him or her on board was part of your long-term business strategy, transferring shares of your business to them will help you save tax in the long term. Your business will enjoy the first £5,000 tax-free allowance, while the payment of dividends and salaries to you and your spouse will reduce the taxes owed by the business.

  1. Savings on Wedding Cost

This is a creative way for couples to save money through tax relief if they’re planning to get married. Donating valuable wedding decorations to your church, or a charity that is close to your heart, is considered as charitable donations and you can get tax relief from it. However, be aware of the limitations. For example, you will not get tax relief if the size of the donation is more than 4 times of the tax you’ve paid in previous year.

  1. Inheritance Tax

As a married couple, you and your spouse could double your nil rate band for inheritance tax purposes. What that means is that your inheritance value could go untaxed for up to £650,000 if your spouse did not utilize his/her inheritance tax.

P.S. If you find this content useful, we do provide tailored professional advice on your personal or business tax matters. If you are interested, please book me in via the link so we can arrange a chat: https://hannah-xu.youcanbook.me

Brexit: Looking at the Bigger Picture

A few interesting things happened this past week. The Eagles won the US SuperBowl for the first time in history. And EU leaders met to discuss one of the most crucial topics for UK companies: Brexit.

Since I felt that this issue concerns you, I invited an expert on EU trading to offer a new perspective on what Brexit means to business owners.

This week, my guest was Charles Markowicz. Charles runs a firm that helps companies from non-EU countries acclimate to the trading conditions of the EU. As a business owner working on issues of EU compliance for over two decades, Charles had some unique opinions to share about Brexit. Hopefully, you can learn from his insights.

Brexit is a time for evaluation

One of the first factors Charles noted is that the Brexit negotiations are volatile and business people should treat it as such. As Brexit negotiations are underway, you as a business owner should keep informed and look at all possible scenarios. What would a hard Brexit mean for your company? What would a soft one? How likely is either outcome? Are you prepared for both these scenarios? Do you have contingency plans in place? Only by evaluating the position of your business can you better prepare for any Brexit outcome.

You need to be ready for the cost

During our conversation, Charles pointed out a significant point: businesses based in the UK can expect the downside of losses in terms of time and money for as long as Brexit negotiations run. He cited a study that showed the UK’s economy could take a hit of about 2-3% from a soft Brexit and up to 15% from a hard Brexit.  Even the English pound has taken hits so far. You need to accept, that Brexit might have adversely affected your company, before moving on to step three.

The best course of action: prepare a plan

One path Charles proposed was expanding your market. For instance, setting up a subsidiary in an EU country or one per continent, preferably one with English speakers. The benefit of such market diversification is that your business would be able to source materials cheaply and export products despite the outcome of Brexit.

To summarize, being aware, staying informed and preparing for the consequences of Brexit is the best way to look at the bigger picture for your company.

Don’t forget to follow me on Facebook/Youtube for these and more interesting takes on emerging financial issues.

Have an engaged, informative week!

P.S. If you find this content useful, we do provide tailored professional advice on your personal or business tax matters. If you are interested, please book me in via the link so we can arrange a chat: https://hannah-xu.youcanbook.me

The Tax Season Highlight: 3 Reasons to Feel Positive About Taxes

As the taxing season comes to an end, I wanted to give you a few reasons not to dislike the taxation process.

A lot of my clients are doctors and majority of them have negative feelings about tax. I understand why there would be a lot of negative emotions surrounding taxation. We work hard five to seven days a week to get our paychecks, then have to hand over a chunk of our earnings to the government, or at least that is what it feels like. You are not alone if you share these feelings. However, I made this trip to your inbox to show you that negativity is not necessary when it comes to paying taxes. Below I have compiled a list of three tips to help you feel more motivated to participate in the tax process.

Here are the 3 tips that will help you feel more positive about paying tax

  1. Tax rules are there to help us pay less tax

Have you always thought that the taxes were too high? It turns out that it doesn’t have to be. If we look out for the taxation guidance, only a small portion of the information is about how the Government collects taxes. There’s more information showing a multitude of tax reliefs including exemptions, allowances, and deductibles that you can file for to optimize your tax bill. All you have to do is take advantage of them. Seek out a professional and assess which provisions apply to you. I do this for my clients so that they can minimize their tax expenditure.

  1. Look on the profitable side

I was so excited the first time I paid my corporate tax. I know this sounds absurd, but it’s true. And do you know why? It’s because having to pay corporate tax meant that I was doing good and my business was profitable. If I owned a struggling firm, I wouldn’t have to cater to pay taxes. So (Name), the next time you feel like taxation is a burden, look on the positive side: at least your business is healthy.

  1. Money you pay into the system is still YOURS

The taxes you give to the government are still yours. Here’s why. That tax money you pay is what goes into funding free public healthcare so that you pay little or next to nothing when you visit a public hospital. It funds the public education for your kids or those of your friends and family as well as the pension and unemployment benefits that you may enjoy one day. Ultimately, the taxes you pay benefit you too.

I hope you have enjoyed this wrapping-up-the-tax-season session. Remember that loving the Tax Man comes down to one key element – looking on the bright side, which I hope you will.

Don’t forget to follow me on Facebook for more tips on how to discover your ability to create wealth next week!

P.S. If you find this content useful, we do provide tailored professional advice on your personal or business tax matters. If you are interested, please book me in via the link so we can arrange a chat: https://hannah-xu.youcanbook.me