Is there any way I can reduce the tax I have to pay at the end of the month?
January 31st is less than three weeks away and, I guess, you’ll have some income tax to pay!
Here at Styles and Co we are continually looking at ways to make our clients’ lives easier. One such way is to reduce the burden of tax.
As we are approaching the end of tax return season we have already submitted the vast majority of our clients’ tax returns to HMRC and we have also helped some clients to significantly reduce the tax they have to pay.
One such client had a personal tax liability of more than £33,000 looming and this did not appeal to him at all.
Then, after discussing the figures and looking at the options available, we managed to reduce his tax bill by £30,000, leaving him with only £3,000 to pay at the end of the month.
How did we do that?
The answer to that question is simple.
After liaising closely with us and taking further advice from an Independent Financial Adviser (IFA), our client decided to invest some of his savings in The Enterprise Investment Scheme (EIS).
The Enterprise Investment Scheme is designed to help smaller, higher-risk companies raise finance by offering tax relief on new shares in those companies that qualify. For the investor, such as our client, it’s a highly tax efficient way to invest up to £1,000,000 per year in small qualifying companies.
What makes it especially attractive, particularly at this time of year, is the ‘carry back’ facility where the cost of shares acquired in one tax year can be treated as though they were acquired in the preceding tax year.
This is exactly what our client did. By making the valid investment before 5th April 2019 he was able to apply the EIS relief to reduce his 2017/18 tax liability, which was due to be paid by 31st January 2019.
In addition to the highly effective income tax relief referred to above, there are other interesting benefits relating to the EIS that might make it worth your while making such an investment.
Nonetheless, EIS is not for everyone. The availability of any tax relief depends on the individual circumstances of each investor and of the company concerned, and may be subject to change in the future. If you are in any doubt about the availability of any tax reliefs, or the tax treatment of your investment, you should obtain independent tax advice before proceeding with your investment.
You should also seek the advice of an IFA before deciding whether or not to take this route.
Remember, by taking positive, appropriate action today you could drastically reduce your tax bill due on the 31st January.
Please feel free to contact Amy Lowe from Styles and Co Financial Planning by phoning her on 01925 761600 or by email email@example.com and she will gladly provide you with more information to help you decide whether EIS is appropriate for you..