The following article has been written by Peter Clare (Specialist Tax Consultant) for Mr Tax - Hinckley, your local tax advisors.
So, you may ask, where does this 60% rate of income tax come from when you thought that the top rate of tax was 40%?
The problem of course is that Mr Brown and his Government have a very big hole in their finances at the moment and the simple solution to this problem for any Government is to just raise the rates at which we pay income tax to fill it. So what do we find, well from the 6th April 2010 if your income exceeds £150,000 you will now pay income tax at the rate of 50%. But that’s not all! You will also find that if you earn over £100,000 your personal allowance is also withdrawn! The result of this means that you will be paying income tax at an actual rate of 60%!!
On the positive side, Corporation Tax is only 21% and Capital Gains Tax even less at 18% and with entrepreneurs relief this can be brought down even further to just 10% (if you qualify). So what can you do about this? Well clearly, you would have to develop a strategy to convert your income into either corporate income or into capital gains. If you don’t know how to do this then that is where we can help.
If you think that you may be paying more income tax than you legally have too then that is the time to have a chat with MR TAX – your local tax consultant.Contact us now on 07833 204 611 and let’s arrange to meet to have a friendly, no obligations chat about your finances to see just how we can use our knowledge of the tax system and our wealth of experience to actually save you money - not cost you money!
When income tax gets too taxing then it’s time to talk with Mr Tax.