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The Changing of the Guard

25 July, 2022

The problems in the UK are wide and varied at the current time (mid July 2022), from a health service racked with backlogs and staff shortages through to the ravaging impact of inflation on every day goods and services.

Changing the Prime Minster might fix some problems, but it is unlikely to fix others.

For example, no politician or leader can magic up money from thin air. So, we are in this for the long haul when it comes to higher taxes, as the stark fiscal reality is there isn’t enough money to pay the bills!

But is the public ready and able to handle this or is the pollical imperative to posture towards tax reductions?

The answer is yes, the political posturing will take precedence

What this means in practical terms is the tax take across the economy must surely remain high
whilst the tampering and positioning of certain popular tax cuts will simultaneously occur. So,
appear as if you are cutting taxes, while continuing to have a heavy overall tax burden.

That leads us to frozen allowances. This is the age-old way of getting more tax into the coffers whilst
not looking as if you are raising taxes.

The stealth or creep effect of this is pernicious, as it confiscates earnings or wealth from individuals
or companies in a manner that is difficult for them to see or calculate.

A frozen allowance is the equivalent of a tax rise.

What is important and relatively unique to the UK is for individuals to understand the enormity of
the tax book, by this we mean the complete set of tax regulations and rules.

You don’t need to understand those rules and regulations in any detailed fashion, simply that they
exist and the scale. That’s the crucial bit – the scale.

You can organise your tax affairs under these rules in many different ways, and each way constructs
a different outcome, i.e., more tax some ways, less tax others.

This key aspect allows individuals to work with the tax system to pay a different tax amount, in
certain circumstances.

So, you should be doing two things constantly or regularly:

  • One is to keep reviewing your tax position, considering changing allowances, rates, rules and
  • Two is to work with a specialist who understands the tax book and its scope, so you can explore –
    with them – the ways to pay less tax, rather than more tax.

The new leader of the government, whoever that may be, will not be able to do much about the
ever increasing need to re-establish fiscal control, so we can expect a high tax burden for some time
to come. We just don’t have to pay a penny more at an individual level than is absolute necessary.

If you need assistance, contact us via our contact form or call 01582 761121 to arrange for a face to face meeting where we can discuss your needs and provide a package just for you.