Did you know you can fix your tax rate?

As we all know, there are only two things that are certain in life: death and paying taxes.

But just because you have to pay tax, doesn’t mean you have to pay more than your share.

A good way of managing this is to understand the different tax rates available to individuals and entities, and achieving the most effective tax rates for you and your family.

For example, did you know that companies have a different tax rate to individuals?

While individuals are taxed on a scale from 0 to 45%, depending on income level, a company that operates an active business is taxed at 25%, while a company that earns a passive income like rent or interest, is taxed at 30%.

That means it could be worthwhile considering setting yourself as a company, if that’s possible in your situation. Much like fixing your home loan interest rate, you could look to fix your tax rate, irrespective of your income level.

This is particularly useful for individuals who operate as sole traders, or high-salaried employees who might consider switching to a contractor model.

Of course, it won’t be possible for everyone, but structuring yourself as a company if it’s possible for you, could see you paying 25% tax, rather than 45%.

In uncertain times like these, that extra cash in your pocket could be really important.

If you’d like to discuss your options, or have any questions, please don’t hesitate to get in touch.