Hi Dozens Community!!
I, personally, wanted to get your thoughts on the subject of tax planning and how you, as an individual, go about it or if you have any knowledge about different taxes which might be applicable to your income / investment holdings?
I do not write on behalf of Dozens, but as an individual who wants to know at what stage in your life you might have thought of tax planning or if you haven’t, maybe if you might give it a go after reading this message?
Why I want to discuss this:
I work in finance (and recently joined Dozens) and have been closely associated with tax laws around personal income, savings & investments and frankly there is just a lot to think about when it comes to saving every penny.
Even though I know about it, I haven’t given it much thought which makes me wonder about the thought process of others and seeing if there’s a pattern, or maybe an important trigger?!
I really hope we can have constructive discussion about this and look forward to hearing your thoughts.
For me, I think the block is on the phrase “tax planning”.
That’s something that the rich and famous do. And is morally dubious, with offshore accounts and exotic ways of minimising tax.
The second reflection I have is that it’s actually v difficult for the amateur. Because of crowdfunding, a few years ago I started to do self assessment. It’s (pun intended) taxing. This year, I know that I should (I think) be able to write off the loss of a small crowdfunding investment (we’re talking £50 tops) and a corporate bond (a little bigger).
But I just don’t know where to start. I keep meaning to message HMRC to ask about the mechanics - but just knowing where to account for this is difficult. Let alone if I can/should.
I suppose I could get an accountant, but that seems a bit of a luxury. And I’m sceptical whether I’d save more than it’d cost.
So I suppose my reactions are that this sort of thing isn’t for “people like me”. It’s obscure, complex and the phrase seems to suggest doing a disservice to the taxman (or, more properly to my fellow citizen).
But, more rationally, I think three things:
that the tax code is overly complex and burdensome (although having started to invest, I worry a bit about harmonisation of income and capital gains taxes - even though I’m nowhere near the threshold that that’d really bite).
Like a lot in finance, this is one of those places where having money leads to money. The richer you are, the better you can plan for tax and maximise return. So the people for whom this could really make a difference aren’t really catered for.
I should probably get over myself and seek some advice. Any suggestions on where?
Thank you for your views.
I completely agree that taxation is indeed very complex & ever-changing. For the common man, who can’t afford lawyers & accountants to take relief and benefits within different sections, it is really tough!!
And yes, it is about complying with the disclosure rules, if any, related to Capital Gains Tax or ISAs and maintaining a log and you never know when the £ 50 would help us in the future!
Interesting question @SaurabhRastogi and thanks for raising it here
I completely understand @Peter’s reaction to the term “tax planning” - it implies the kind of activity we read about where those who have money find ways to avoid paying something that the rest of us cannot avoid (of course we only hear about the dramatic / exorbitant / questionable ones)
But I’m sure that there are plenty of legal (and well-intentioned) ways to save money that fall under this term. It is not wrong to know that the complex rules allow you to not pay tax in certain circumstances, usually for good reasons - like encouraging new savers & investors or supporting early-stage businesses.
I too am concerned I’m missing out on savings, but I (maybe wrongly?) assume that the benefits would be easily offset by the cost of getting advice.
But, thinking about it, as more of us get more involved in our own investment activity, I’m also guessing that more of us really ought to know about this as we will probably end up having to complete self-assessment forms.
I really ought to educate myself more, but am usually just happy to have (finally) completed all the forms that HMRC decides to put in front of me, then not think about it for another year.
As a matter of interest @SaurabhRastogi, what are the main areas of ‘tax planning’ that you are thinking of? Off the top of my head I can think of SIPPs, ISAs and individual Capital Gains thresholds.
@robert SIPPs, ISAs & Capital gains are the main tax areas which an individual would be concerned with but there’s also allowable deductions which might reduce the tax liability of an individual & sole proprietor. Moreover, the periodical changes to the tax structure confuse me a lot.