First Year Self Employed Tax Free UK

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There are two main groups of people who need to know about first year self employed tax free UK:

  1. People starting up a new business part-time
  2. People who do stock trading to make money

In regards to stock trading, it is not ‘tax-free’ in the UK.

But there are tax allowances for capital gains and this is how people reduce their tax bill.

Pro Tip: It is smart to speak to a tax professional about this in more detail before filing your income tax return.

 

First Year Self Employed Tax Free UK Explained

I know a woman who worked from home doing stock trading and spread betting only.

She earned 6-figures each year and paid hardly any tax.

For everyone else, there is a tax personal allowance each year and this is how some of your self employed income could be classed as tax-free.

For example, in 2019 the tax allowance was increased to £12,500.

 

Investing and Tax Free

Once you get a handle on a few basic investments financial planning and investment management get a whole lot easier.

There are bank accounts available that are tax-free and this can help you if you want to know about first year self employed tax free UK.

Here are 6 investment basics or factors you need to consider before investing money.

 

1. Long-Term Strategy

Much of financial planning involves investment management and selecting the best investments to achieve your financial goals.

There are long run goals as accumulating money for retirement or earning more investment income in retirement.

There are shorter term goals like putting money aside for future college expenses, for a cash reserve, or for a down payment on a brand new house.

What investment basics should you consider before investing money earmarked for particular goals?

Bear in mind that the initial step in financial planning is to define your financial goals.

 

2. Short-Term Cash

For shorter term goals SAFETY and LIQUIDITY are the investment basics that take center stage.

Here you’re investing money that should be safe and available whenever you need it.

The best investments, in this case, are the likes of bank and savings accounts, money market mutual funds and perhaps short term bond funds.

Do not earmark stock funds or other riskier investments for short term goals.

The cash you need might not be available whenever you need it if the market goes south at the wrong time.

 

3. Tax Advantages

How much of your investment portfolio you allocate to stocks depends on your age and risk tolerance.

Here’s where investing money in stocks and accepting more risk makes good sense.

Whether you’ve a bad year or two you have got time to recover and won’t need to liquidate or sell at a loss.

Because you’ve this money earmarked for retirement, along with other funds like a cash reserve to cover short term needs.

Look for tax advantages when investing money for retirement.

In the UK many people can accumulate money tax deferred in a stocks and bonds ISA account.

Or you can contribute to a private pension, with a tax deduction every year you add to it.

There are some limites to the amount you can invest in an ISA.

However, it has been increasing over the years and is currently around 20,000.

 

5. Smart Investing

If you invest 5000 a year in an equity fund averaging ten percent growth annually in a tax free or tax deferred account your money grows to 286,000 in 20 years.

This money can continue to grow uninterrupted by taxes until you begin pulling money out in retirement.

 

6. Income Producing

The last factor to consider is INCOME.

For many individuals in search of higher income or interest, bonds and bond funds have been the best investments through the years.

Millions of retired folks invest in bonds to supplement their income.

Investing money in bonds for the income they produce is secondary for young middle-aged investors, who should include bond funds in their retirement portfolio mainly to add balance and decrease overall risk.

 

I hope this helps you learn more about money and take the right steps for first year self employed tax free UK.

 

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