How to optimize taxes and earnings?
Everyone knows that taxes change every year. However, it's crucial to adapt to these changes as quickly as possible and utilize all "personal allowance" (tax reliefs) that you are entitled to.
And among them for the 2020/21 tax year are:
- personal allowance (Income Tax) – the tax-free amount for income tax – remains the same as last year: £12,500
- National Insurance threshold – the limit from which we start paying social insurance contributions is £9,500
A Private Pension Plan is a very interesting form of tax optimization
- in the 2020/21 tax year, a taxpayer can still contribute up to £40,000 to their Personal Pension Plan, and the "Lifetime allowance" (the amount you can accumulate in a pension over your lifetime and receive tax relief on) will increase to £1,073,000
- changes regarding taxes Capital Gains Tax after selling property primarily concern the timeframe for paying this tax. It will be shortened from 22 months to just 30 days.
- Capital Gains Tax, or tax on capital gains – this year, the tax-free amount for CGT will increase to £12,300
- In the video below, I discuss how in this tax year, in theory, we are able to earn £24,800 without paying a penny in tax
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