Tax! There is no doubt about it, we do not like paying it and all of us would like to pay a bit less of it if we could. In order to help you do this, here are 10 saving tips that could potentially cut your tax bill.
1. Check your tax code
Almost everyone will have a tax code. This code normally consists of one letter and a few numbers. If your code is a number followed by a letter, multiplying the number by ten will show you how much you can earn in the year before you have to pay tax. HMRC frequently assign incorrect tax codes. Make sure that yours is right in order to avoid paying too much tax.
2. Investigate rebates
Many of those eligible for a tax rebate are unaware of their eligibility. If you have been placed on the Emergency Rate at any period there is a high chance that HMRC owes you money.
3. Use all of your allowances.
Most individuals will receive their personal allowance for income tax and National Insurance automatically. However, there are numerous other allowances to which you may be entitled but which you may not be claiming.
4. Claim Tax Credits.
The Tax Credit system can sometimes be very confusing, with many people failing to understand what they are entitled to. There are a number of websites that will identify Credits and benefits to which you are entitled after you answer a few questions regarding your circumstances.
5. Plan for IHT.
Inheritance Tax is potentially one of the most expensive forms of taxation. The small number of individuals who make any effort to reduce their IHT burden is therefore surprising. Simple steps like making a will can drastically reduce an IHT bill.
6. Put non-earners allowances to work.
If your spouse earns less than their personal allowance, you should consider moving any income generating assets into their ownership. Making use of this could save you thousands every year.
7. Choose tax efficient savings.
Savings schemes are an excellent way to reduce your tax bill. Simple steps like using up your ISA allowance can cut significant amounts off your tax liabilities.
8. Sort your Self Assessment.
If you are a self assessment taxpayer, completing your return early can result in big savings. However, if you miss the 31st January deadline, you will automatically be fined £100.
9. Use your pension.
Pension contributions are exempt from tax. This means that you can reduce your income tax bill by putting extra cash into your pension.
10. Hire an accountant.
If your tax affairs are in any way complex, hiring a good accountant is likely to save you money.
In summary, it is surprising how few people actually take any steps to reduce their bills. However, if you take a pro-active approach to tax there is no reason why you can't benefit by saving money that would otherwise have gone to the taxman.