Revenue Logos

How to Save Tax as an individual

The comments made under the VAT & Corporate Tax Mitigation link are equally valid here as notwithstanding the new general anti-abuse rule (GAAR) individuals can continue to arrange their affairs in such a manner that provides the most favourable tax consequences provided such are not abusive. In other words, all the methods used by legitimate tax planning and accountancy firms will still be valid in almost all circumstances.

For example, there are three different Income Tax rates on UK dividends with the rate you pay depending on whether your overall taxable income (after allowances) falls within or above the basic or higher rate Income Tax limits. In such instances where an individual's dividend income is at or below the £32,010 basic rate tax limit (2013-2014), then the tax exposure is limited to 10%, which is obviously far more favourable than if such sums had been received as a salary (see below):

Dividend tax rates 2013-14*

Dividend income in relation to the basic rate or higher rate tax bands Tax rate applied after deduction of Personal Allowance and any Blind Person's Allowance

Dividend income at or below the £32,010 basic rate tax limit

10%

Dividend income at or below the £150,000 higher rate tax limit

32.5%

Dividend income above the higher rate tax limit

37.5%

Obviously, the above is only one of a number of accepted domestic tax mitigation with other possibilities including using EU based holding companies to own shares in a UK company under the EU Parent Subsidiary Directive 90/435* or indeed benefiting from the generous Entrepreneurs' Relief from capital gains, which amounts (at the time of writing) to £10,000,000.00 during an investors lifetime.

How to Save Tax as an Individual Working Abroad

Working abroad, be it a UK ordinarily resident person working outside of the UK or a non-UK subject working temporarily in the UK, provides a plethora of legitimate tax planning opportunities. However, in order to avail of them it is vital to receive proper tax planning advice from a suitably qualified certified or chartered accountant as circumstances, time spent abroad, the countries involved, applicable tax treaties and strict adherence to UK and local tax rules will mean the difference between legitimately saving sometimes literally tens of thousands a year or not.

For more information on SCF international accountancy services please contact an SCF Consultant

  •  Sourced from HMRC
  •  Using EU directives or regulations does not change an individual's personal tax exposure which will depend on factors such as domicile; ordinary residence and amount of time spend in the UK