16 Oct 2024
For a Ghanaian living in the UK as an expatriate, paying taxes can be quite a complex task and can make it challenging for you to make either an offline or online money transfer to Ghana that is supposed to support your loved ones back. However, can you imagine if you can legally cut down your spending by hundreds, if not thousands, of pounds every year just by knowing some tricks? With over 40,000 Ghanaians awaiting registration and other legal status in the UK, a lot of people are not knowledgeable about the basic tax relief measures that can immensely contribute to enhancing their financial status.
This blog will discuss some real strategies that would explain how you can minimize loss and retain more of the money earned without running afoul of the tax laws in the United Kingdom. Regardless of whether this is your first time in the United Kingdom or you have been living there for years, these are insights that could redefine your approach to finances.
First of all, every newcomer, every expat, needs to learn how the British system of taxation functions. Irrespective of your residency status and income, one can be able to pay a different amount of taxes.
The tax amount depends on your tax residency status. The rules provide that if a person spends 183 days or more in the UK in a tax year beginning April 6 and ending April 5, he or she is a tax resident. To be a tax resident is to be subject to UK tax on all your income irrespective of what you earn within the UK and send money to Ghana from UK to support your family's back. Residents, as we know, are charged duty on all their income, while non-residents are only taxed on income arising in the United Kingdom.
One must get the residency status right if he does not want to be liable for certain taxes. Not comprehending this can cause taxation at different points, whereby you pay taxes in both the UK and Ghana.
At present, the UK and Ghana both employ a Double Taxation Agreement (DTA), which is intended to avoid your being taxed on the same income twice. This treaty is a very strong weapon that will assist you to have an optimum saving on taxes.
For instance, were you to be paid some income in Ghana, then you should not be charged an equivalent amount in the UK because you have already made your contribution through the tax levied on the income in Ghana. By claiming relief under the treaty, expats are eligible for tax credit or tax exemption. One must seek advice from an international tax lawyer to be able to maximize and or fully qualify for these benefits.
Ghanaians in the UK need to have a grasp of how income tax and NICs work. The taxation policy in the UK is progressive in that the amount of tax paid increases with each level of income. Depending on how much you earn and do money transfer to Ghana, you might be required to provide National Insurance Contributions or NICs which contribute to people’s social security and state pension.
To reduce your tax burdens as much as possible ensure that you complete and correctly tick all allowances or reliefs that apply to you. There are familiar ones and some of them may be the Personal Allowance, which is equivalent to £12,570 (2023/24) to mean that, nobody will be charged tax on this amount.
Expats themselves complain that they are often their worst enemies, unaware of legal issues that may cost them a substantial amount of money, for instance, confusion over residency status or failing to complete their tax returns in good time. Remember to keep track of the tax due dates, record details correctly and avoid silly mistakes that may attract penalties or pay more tax than necessary.
The second step is to find how to handle and control the finances better once you know what your responsibilities are in terms of taxes. Like it or not, there are many ways to legally and effectively minimize your tax responsibilities to help you save more cash.
Exemptions are the most effective way to decrease the amount of taxes paid to the government. Ghanaian expats could qualify for the UK personal allowance which currently allows individuals to earn a certain amount of income free of tax each year. Thus, you will be able to send money to Ghana online. Moreover, you may still be able to claim for other allowances that are available for different circumstances like Marriage Allowance or Blind Person’s Allowance. If you are aware and consequently take these allowances, you can be able to minimize your taxable income hence retain a bigger portion of the income earned.
The United Kingdom has multiple tax-sheltered saving and investment schemes available through which one might be able to build up more wealth and pay fewer taxes. Of these, the most common one is the Individual Savings Account or ISA. ISAs provide you the opportunity of investing up to £20,000 per annum in any financial security and there is no tax on the gains obtained from such investments.
This is a good chance for Ghanaians living in the UK to forge their future by investing and accumulating as many dollars as they can tax freely. Besides, other possibilities, including premium bonds and some forms of pensions, can provide more tax-exempt growth.
Wear and tear allowance and expenses incurred for business, for example, traveling or acquiring materials can be tax-relieved. In as much as an expatriate would occasionally require transportation between Ghana and the UK, or in as much as they would have certain obligatory estimations correspondingly required in the accomplishment of their work, they are prone to these expenditures. It is important here to maintain records for these expenses since they lower your taxable income.
One of the greatest benefits of paying money into a pension scheme is that it reduces your overall tax bill and enhances the amount to send money to Ghana online from UK . Not only are pension contributions efficient in that they lower your taxable income but they are also long-term capital benefits. In the UK pension contributions are allowable expenses up to certain limits to reduce one's income tax burden as one plans for the future.
For example, as a Ghanaian expat, it is also possible to transfer funds such as pension funds back to Ghana depending on the existing tax laws.
Taxpayers must file their tax returns correctly and well within the stipulated period to avoid fines and gain maximum advantages on tax deductions.
The UK's tax year is from the 6th of April and ends on the 5th of April next year, and the deadline for filing Self-Assessment tax returns is 31 January. Make sure that in addition to the documents you have the following; P60 stating the income earned and the taxes paid, and any documents that will validate any income earned or expenses, in the foreign countries one wishes to claim on.
As an expatriate, it may not be ‘fun’ to file taxes and therefore most Ghanaians use the computers or recruit the services of tax consultants. Thankfully, there is software for tax whereby you fill in the information then the software helps you with the rest as well as providing the amount you owe. However, if you are in any of these complex situations especially if you earn income from both Ghana and the UK then it may be advisable to engage the services of a tax advisor.
An expert in this field may guide you on which country’s tax laws apply when taking your business internationally, hence assisting in minimizing your taxes for you and your business based on the UK and Ghana taxation law.
Hence, reducing taxes as a Ghanaian expatriate in the UK is not only about doing things legally, but it is also about strategy and utilization of what is available to send money from UK to Ghana as much as possible. When it comes to tax planning, you have several ways in which you can reduce the taxes that you pay – from understanding the UK-Ghana tax treaty to putting money in tax-efficient investment accounts and pension schemes.
To maximize these strategies, seek the services of a financial advisor who specializes in serving expatriates. From now on, ACE Money Transfer has been there to assist Ghanaians in the UK to handle their monetary affairs effectively through international money transfers at relatively cheaper charges. Seize your financial freedom today—be legal, be wise, and make more money!
The statutes of tax residency are deduced by the number of days one spends in the UK usually exceeding 183 days.
It avoids the situation where a particular income is taxed in both the UK and Ghana, through the provision of tax relief.
Married expatriates enjoy some of the specific allowances such as the Ghanaian expats in the UK enjoy their allowance alongside marriage allowance.
Of course they can, Ghanaians are also allowed to open ISAs and invest in any other tax exemption plan.
Pension contributions are incurred as deductions on the taxable income and the future economic returns are guaranteed.
