4 ideas for keeping banking practices ethical

Follow these recommendations to legitimately help your finances, but avoid unethical practices.

09:46 28 May 2013

It seems that there is sometimes a fine line between what is legal and what is ethical when it comes to subjects like taxes and banking.

 

At the moment, the hot topic is about companies that are based in more than one country and how they try to shift funds around to avoid having to pay higher taxes.

 

While in many cases this is completely legal, perhaps it’s just not an ethical banking practice for those companies to engage in. Personal banking doesn’t often deal with matters exactly like that, but there may be a few ways to save your tax money without abusing the system.

 

• Savings—invest in savings accounts, Cash ISAs and Stocks and Shares ISAs are banking solutions that are able to provide you with tax-free growth. You normally see growth as percentage points which might not look like much, but over many years you can earn a substantial amount off your contributions and having that money tax-free is even more of a bonus.

 

• Gifts—some gifts may be taxable while others are not. Check to find out what the tax policy is when giving gifts for weddings, birthdays, anniversaries or other occasions which might find you spending quite a bit. The benefit here is that reduce the amount of your inheritance when you give gifts.

 

• Pensions—contributions to a pension scheme are a good idea to ensure that you have beneficial banking habits which will provide a good future for you during retirement. You can check the tax code to see if these are also tax-free.

 

• Shifting funds—if an advisor is telling you to shift funds between accounts, or to other countries it could indicate that they are trying to work within loopholes of the banking or tax industry. It’s best to be safe and be content to keeping your investments and banking local.