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You Can’t Hide From Tax But You Can Certainly Mitigate It

You Can’t Hide From Tax, But You Can Certainly Mitigate It

 

Tax effects us in every aspect of life, and there’s no escaping it. It is such an all-pervasive thing, so everyone needs to have a tax strategy – you should not just accept it and pay it.

As an employee you will be paying the highest rate of tax. Employees go to work, and before receiving their payment for the month – the Government has already taking it’s share and you receive what remains.

In contrast, when you own your own business, you earn money from the sales of goods – you are then allowed to spend the money you receive on business related expenses (which can also overlap in some cases with items you may previously have purchased with your own personal funds) – and then pay tax on what is left.

The reality of course is that there are far more caveats than the simplified explanation provided above. However the facts remain that in order to achieve wealth you will need to take control of the way in which money flows into your life, and if your only way is relying on someone else to continue paying you a wage every month, you’re going to find it very difficult to maximise all of the tax benefits that are available.

Tax is the fifth component of D.E.B.I.T.S, which is the Foundation stage of what we teach at WealthBuilders; finding extra money in your life that you simply did not realise was there – no matter what stage of your wealth-building journey you are at.

If you’re not familiar with (or simply need a refresher) on the 6 components which form the Foundation and spell out D.E.B.I.T.S then head over and watch this video now.

Robert Kiyosaki, Author of the Best selling series of ‘Rich Dad Poor Dad’ books preaches the benefits of owning a business

In Order To Build Wealth You Need To Think Like An Entrepreneur

Only when you begin thinking with the mindset of an entrepreneur as opposed to the mindset of an employee, can you begin to offset things against tax.

In episode 005 of the WealthBuilders Podcast: WealthTalk, I discussed ‘Wealth Mindset’ – being able to look at ways to add or create value. If you haven’t yet listened to this episode, or indeed subscribed to receive an update of new episodes when they are available you can listen and subscribe here.

It’s also worth mentioning that whether you are employee or a business owner, it pays to get a good tax advisor because they will save you more than they cost. If you have any difficulties in finding a good tax advisor yourself, request access to the WealthBuilders Facebook Community and drop a post in there and tag me – I’ll do my best to put you in touch with some people to speak to.

Tax Freedom Day: Are You Ready For A Shocking Statistic?

Every year, the Adam Smith Institute calculates the number of days the ‘average’ person would have to work just to pay off their taxes.

In 2018 every penny the average person earned up until May 28th went straight to the taxman. From May 29th (Tax Freedom Day) onwards, the average person got to keep every penny they earned.

To work out the date, ASI added up the total tax take, including indirect taxes (such as VAT and corporation Tax) and direct taxes (income tax and national insurance). It then divided the number by the UK’s net national income, a figure which encompasses the income of households, businesses, and the government.

 

The More You Save, The More Wealth You Build

You could have fun trying to work out how many taxes there are. But it wouldn’t be lost on you to realise that here at WealthBuilders we’ve got all the tax strategies in place.

If you’re a business owner, and many of our clients are, did you realise it’s possible to get tax relief on that, too?

So the government is paying you to be insured, because they want you to be a responsible business owner. And that tax relief will reduce the premium. And if that reduces the premium, it puts more money in your account.

It’s called relevant life insurance, and if you would like further information to find out if this could apply to you then simply reach out to us and one of our team will be happy to help.

So whatever aspect of your work, whether you’re in a job, which is where the highest taxes are paid of course, or if you’re self-employed or you have a business, there are many ways where you can reduce tax. And if you can do so legitimately and claim tax relief back, in other words get money paid into your account from the government instead of paying it, then of course all of that activity is going to help you create more wealth for yourself.

 

Tax is such an all-pervasive thing, so everyone needs to have a tax strategy.

Kevin Whelan

Founder, WealthBuilders