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Tax Burden

Q: As a higher rate taxpayer and with VAT increasing I am feeling really squeezed. What can I do to reduce my tax burden?

A: Higher taxation is a fact of life these days. If you earn more than £112,950 you will also lose your personal (tax-free income) allowance. There are, however, a few ways to lessen the impact.

If you are a self-employed GP, you could consider taking less income from the practice. Also, buying into the surgery building can help you to reduce tax (by claiming certain expenses) and give you a return when you retire (either by selling on your share to a new partner or taking rental income for it).

The pension rules are changing significantly from 6 April and you will get tax relief on contributions of up to a maximum £50,000 a year only.

You will have to take your NHS pension contributions into consideration first before thinking about paying into a personal pension or stakeholder. If you fall in the 50 per cent tax bracket, you will get 50 per cent tax relief on contributions from 6 April instead of the current maximum of 40 per cent.

Tax efficient investments will help. Individual savings accounts (ISAs), venture capital trusts and enterprise investment schemes are some. Some are higher risk so get professional advice. However, bear in mind that tax rules may change in future.

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