Tax Advisors: Their Importance in Tax Planning

Whether you are an investor, a contractor, a sole trader, a limited company or an established business owner, almost all financial decisions of you and your business have a tax impact.  

And it is important to take into considerations  the impact of taxes into consideration while making important business decisions throughout the year in order to avoid paying more in taxes than you need to.  

A tax advisor can help you in tax planning and make you more tax efficient. 

Here we will take a closer look at the importance of tax advisors in tax planning, 

What tax advisors do?

While an accountant’s role is to file your taxes with maximum benefit to you, a tax advisor ensures that your taxes fit with your long term and short term financial strategy throughout the year.  

A tax advisor identifies the types and source of income you have, how these factors will change over time, and also how the tax will evolve with them. 

Now let’s see how a tax advisor can help you in your tax planning. 

A tax adviser helps you save tax

The Government gives numbers of tax allowances and reliefs each year and making the most of these allowances and reliefs can save you a lot of money.  

But each year people pay additional tax because such tax allowances go unclaimed. 

A tax adviser onboard can structure your finances to help you make sure you’re using your allowances, including: 

  • Income tax 
  • Capital gains tax 
  • Entrepreneur relief  
  • EIS/ SEIS relief 
  • R&D tax credits 
  • Dividend income 
  • Annual investment allowance 

Help you save tax when it comes to retirement

Whether you’re saving for the future or already taking an income, tax advisors can help you to use the available allowances when it comes to your retirement.  

Here are some of the areas tax advisors help you with, 

  • Help you make pension contributions – using pension carry forward 
  • Leaving your pension untouched to potentially help you reduce an Inheritance Tax bill 
  • Pension lifetime allowance protection 

Tax advisors ensure your investments are tax-efficient

Generally, the more tax you pay, the harder your investments must work to achieve the same returns.  

tax advisor on board can help you draw the investment plan most tax-efficiently – from using accounts such as ISAs so that you can take advantages of your allowance of Capital Gains Tax(CGT) and help you make complex tax-advantaged investments. 

You will also be able to plan your current and future cash flows as well by having the tax advisor helping you in choosing the right investment strategies to minimize the taxes you pay throughout the lifetime. 

Helps in VCTs, EIS and other more sophisticated investments

Tax advisors can also help you with tax-efficient investments such as Venture Capital Trusts(VCTs) and the Enterprise Investment Scheme(EIS).  

These high-risk investments offer investors great tax benefits. 

By considering your financial goals, your tax Advisor does your asset allocation based on your risk profile. 

With a complete and clear picture of your financial situation, a tax advisor is in a better position to recommend your products for tax planning. 

A tax advisor will not only help you save tax for the year but would guide you plan your taxes in advance for the next years. 

A tax advisor also maintain a records of trading gains and losses, which can be easily shared with the accountants when filing taxes. 

In short, a tax advisor helps you understand, 

  • Your business’s current tax picture 
  • How to lower your tax bill 
  • What changes in the tax regulations might impact your situation 
  • What strategies might be available to keep your taxes minimum over the long term 

Final thought

Generally filling of the taxes is a very stressful time for any business. 

Taking professional support for saving some tax would always be beneficial. 

If you want to minimize tax anxiety generally associated with the time of tax filing and avoid surprises, always consider hiring a tax advisor for your business. 

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