Author Box
Articles Categories
All Categories
Articles Resources

Retire Early With Tax Planning

November 11, 2011 | Comments: 0 | Views: 139

There are a number of reasons why people choose to use Tax Planning. However, the most common reason why people choose to participate in tax planning is by far that it massively accelerates their wealth goals. Tax Planning is an integral tool for investment purposes.

This article will examine the difference in magnitude and speed in ones Wealth that can be achieved through taxation planning. The article will look at what the difference is between someone investing 10% of their net income in comparison to what can be achieved if Taxation Planning is conducted and the additional surplus income is similarly invested.

The article will look at a tax payer at the entry-level for a tax avoidance scheme. This income is 100,000 Pounds in the UK although contractors can access tax planning at 50,000 Pounds. The higher income will illustrate the difference better for the purpose of this article although the net effect is the same regardless of income.

Most Tax Avoidance Schemes cost from 10% to 30% of the income that is being "sheltered" depending on the type of scheme and type of tax. The article will use 20% for the purposes of this example, although less expensive methods are available depending on how the income is derived.

A tax payer earning 100,000 Pounds would typically pay 30,000 Pounds in tax to the HMRC in the UK. The Tax Avoidance Scheme costs 20,000 Pounds so the return on investment is 50%, which makes sense to most investors or business people. This method is based upon a Film Partnership Scheme however there are many other methods available.

The tax payer will without tax planning save 10% of his net annual income and earn an average of 10% on the investment. The aim for this particular Tax Payer is to create a Lump Sum of 500,000 Pounds. The Tax Payer has decided that the sum of 500,000 Pounds invested at 10% will produce an annual income/pension of 50,000 Pounds per annum, which is quite adequate for him and his wife to live on.

At the present rate, excluding any other savings this couple may have, their investment activities will look like this:

Year / Sum Invested

1 7,000

2 14,000 + 10% = 15,400

3 24,640

4. 34,804

20 436,736

21 488,109

22 544,619

After 22 years without tax planning this couple will retire and will have an income/pension of 54,400 Pounds.

If the Tax payer now uses Taxation Planning as an investment tool and invests the additional tax that he has saved, the time required to create an income of 50,000 Pounds or more, accelerates. The tax payer will now invest his original 7,000 Pounds but now add to that 10,000 Pounds that is his tax rebate less the cost of taxation planning, if the he is employed and paying PAYE. If the Tax Payer is self-employed he would not pay the tax but have an additional 10,000 Pounds extra after paying for the taxation planning.

Year / Sum Invested

1 17,000

2 37,400

3 59,840

4 84,524

14 453,239

15 517,263

22 1,185,409

The Tax Payer can now retire after 14 years instead of 22 years without tax planning. The Tax Planning has accelerated the couple's financial goals by a massive 36%. Taxation Planning has effectively "bought back" 8 years of their lives.

If the Tax Payer decided to continue working for the 22 years as in the first example, his wealth would be more than double what it would have been without taxation planning and he will now have an annual income/pension of 118,000 Pounds. This is a huge bonus to lifestyle and comfort. This Planning will even reduce the tax that the tax payer will be liable to pay on his actual investment income!

This article illustrates the point that Taxation Planning goes hand-in-on hand with investment activities and has a massive positive effect on the compounded results of your investment activities. Whether your goals are to retire early or with a more luxurious retirement income, Tax Planning will accelerate your goals.

Jason Russell is a consultant with The Tax Experts, a UK based firm that specialises in UK Tax Avoidance Schemes and Tax Planning. The firm demonstrates to clients on a daily basis that tax in the UK is totally optional and is legal to avoid. The firm offers income tax planning, capital gains tax advice, corporate tax planning, inheritance tax planning and avoiding stamp duty and land taxes on house purchases and commercial properties.

Plain English Tax Guides relating to UK taxation can also be purchased from The Tax Experts Book Shop.

Some of the methods used are the Employee Benefit Trust, film partnership schemes, Employer Funded Retirement Benefit Schemes, offshore company structures and numerous other legal mechanisms. To learn more about The Tax Experts please visit http://www.thetaxexperts.co.uk.

Source: EzineArticles
Was this Helpful ?

 
0
 
0
 
Rate this Article
 vote(s)
Feedback
Print
Re-Publish

Article Tags:

Tax Planning

,

Retire Early

,

Financial Goals

,

Tax Avoidance

,

Investment

,

Retirement Planning

The 3 Month Payday Loans is most suitable options for the people who do not possess assets. There are a variety of loan options for the people who are willing to pledge assets against the cash

By: Cameron white l Finance > Personal Finance l July 09, 2013 lViews: 560

For many people, bankruptcy can make their world fall apart. The apparent loss of reputation coupled with the inability to take financial decisions can deter anyone from thinking clearly. But all is

By: noragwilt l Finance > Bankruptcy Lawyers l November 18, 2012 lViews: 303

If you are availing payday loans with monthly payments, it is easy for you to obtain quick money from online lending companies.By getting the best deals of loan, you can save money in terms of

By: Malen Cheks l Finance > Loans l November 16, 2012 lViews: 288

Loans online have become the popular source of income and people can make smart decision of taking it.Now, don’t go anywhere and sit in your home silently. Such deals would bring you money without

By: Marsh Jone l Finance > Loans l November 13, 2012 lViews: 288

Loans for the unemployed would let you feel comfortable with your unstable conditions due to jobless period.If you compare the rates of a few lenders, you would definitely get the suitable lender to

By: kelse roy l Finance > Loans l November 13, 2012 lViews: 467

By taking cash advance for bad credit, it is easy for you to improve your credit status. This loan is useful to relieve financial stress. This loan is totally free from credit verification and

By: Honard Nork l Finance > Loans l November 09, 2012 lViews: 300

What are tax havens and what are they used for? Did you know that the UK is considered a tax haven? What sort of tax havens are there? What are the uses of the various types of tax havens?

By: Jason A Russelll Finance > Taxes Toolsl February 15, 2012 lViews: 236

What are Double Tax Treaties? What is the format of a tax treaty and what aspects are covered in them? What are tax treaties used for and most importantly how can they benefit you in reducing or even

By: Jason A Russelll Finance > Taxes Toolsl February 11, 2012 lViews: 167

Government agencies are typically run one of two ways: the old way or the new way. If you're seeing too much inefficiency from employees, it could be time to introduce tax collection software.

By: Anna Woodwardl Finance > Taxes Toolsl January 25, 2012 lViews: 230

What are Tax Havens? How can Tax Havens be used to avoid all forms of taxes in the UK? There are some basic rules when selecting an appropriate Tax Haven and the main ones are covered in this

By: Jason A Russelll Finance > Taxes Toolsl January 08, 2012 lViews: 201

This article looks at the current methods used by specialist solicitors and tax planners to avoid stamp duty on the purchase of residential and commercial properties in the UK. Read this article to

By: Jason A Russelll Finance > Taxes Toolsl January 03, 2012 lViews: 194

What is Capital Gains tax? When are you liable to pay CGT? What are personal allowances and how do they work? How do you avoid or totally eliminate Capital Gains Tax? The answers to these questions

By: Jason A Russelll Finance > Taxes Toolsl January 01, 2012 lViews: 182

The European Savings Tax Directive was implemented in 2005 in order to prevent tax avoidance and tax evasion in the EU. It meant that EU citizens from one EU country could not simply open a bank

By: Jason A Russelll Finance > Taxes Incomel February 16, 2012 lViews: 145

What are tax havens and what are they used for? Did you know that the UK is considered a tax haven? What sort of tax havens are there? What are the uses of the various types of tax havens?

By: Jason A Russelll Finance > Taxes Toolsl February 15, 2012 lViews: 236

What are Double Tax Treaties? What is the format of a tax treaty and what aspects are covered in them? What are tax treaties used for and most importantly how can they benefit you in reducing or even

By: Jason A Russelll Finance > Taxes Toolsl February 11, 2012 lViews: 167

What are Tax Havens? How can Tax Havens be used to avoid all forms of taxes in the UK? There are some basic rules when selecting an appropriate Tax Haven and the main ones are covered in this

By: Jason A Russelll Finance > Taxes Toolsl January 08, 2012 lViews: 201

This article looks at the current methods used by specialist solicitors and tax planners to avoid stamp duty on the purchase of residential and commercial properties in the UK. Read this article to

By: Jason A Russelll Finance > Taxes Toolsl January 03, 2012 lViews: 194

What is Capital Gains tax? When are you liable to pay CGT? What are personal allowances and how do they work? How do you avoid or totally eliminate Capital Gains Tax? The answers to these questions

By: Jason A Russelll Finance > Taxes Toolsl January 01, 2012 lViews: 182