Life is Taxing part 1

Welcome to the Purposeful Wealth Podcast

Partial Transcript:

Benjamin Franklin once said, "But in this world nothing can be said to be certain except death and taxes." I'm sure you would agree...albeit there are other certainties I can think of! Not paying more tax than you need to is sensible in order to create and preserve wealth. Strategies will include utilising allowances, exemptions and tax planning products and solutions to legally minimise tax, in other words, Income Tax, Capital Gains Tax and Inheritance Tax. As much as reducing tax is about wealth creation and wealth preservation, it is also about proper stewardship. In other words, you want your money to work hard and smart for you so you can live the life that’s important to you, yet to ultimately transfer as much as possible to loved ones or causes and communities you care about. Tax will always play a part in the transfer of wealth, but if it’s done tax efficiently then the next generation will be able to enjoy more money. Furthermore, you will also enjoy more money during your life if you take a tax-efficient approach to wealth creation and preservation. I feel it’s important to explain, I don’t believe tax is a bad thing. We have to accept our responsibility for giving something back, paying our way in society and to ensure that goods and services are paid for. Paying tax is about integrity, and I believe, integrity is an important principle in living a fulfilled, and meaningful life. There’s also a Christian principle of paying tax. A story in the Bible, in Matthew’s Gospel, tells of an exchange between Jesus and the Pharisees, who were Jewish and the religious leaders of Jesus’s time. They were always trying to plot and catch Jesus out. One day they said to Jesus, “Tell us then, what you think? Is it lawful to pay taxes to Caesar, or not?” But Jesus, aware of their malice, said, “Why put me to the test, you hypocrites? Show me the coin for the tax.” And they brought him a denarius. And Jesus said, “Whose likeness and inscription is this?” They said, “Caesar’s.” Then Jesus said to them, “Therefore render to Caesar the things that are Caesar’s, and to God the things that are God’s.” Tax evasion vs tax avoidance Whenever you’re dealing with tax, it’s very important to understand the distinction between tax evasion and tax avoidance. Tax evasion is illegal; however, legally there are things that you can do to reduce your tax liabilities. You need to know that the strategy you are employing does not constitute tax evasion. In fact, tax evasion cases have reached a record high over the past few years, according to figures by HM Revenue & Customs (HMRC). Therefore, I would advise you to be very cautious in this respect as HMRC takes tax evasion extremely seriously. The government is always looking for ways to clamp down on anything that’s a little too aggressive when it comes to evading tax. As well as being cautious, much diligence is needed and you need to understand the risks of whatever you’re doing. Over the years, I’ve seen many people reduce their tax liabilities following advice they have received, from an accountant or financial adviser, but lose money in the process. There’s a balance to be struck here and new ways to avoid tax are emerging all the time. You have to be careful about what strategies you choose to implement and make sure you’re aware of the risks so you can determine whether these are risks worth taking. Simple ways to reduce tax There are som

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