10 Powerful Ways You Can Save On Tax
When we give financial advice to our clients in Lincoln, tax is often an area where we heavily focus on discussions. The good news is there are many ways you can lower your tax liability, with a completely clear conscience.
Sometimes it’s as simple as checking the tax credits you may be entitled to. Other areas require a bit more know-how, such as being aware of the effect charity donations have on your tax bill.
#1 Check your tax code
Take a quick look at your payslip, and make sure you tax code is accurate. If it’s incorrect, then you could be paying more tax than you should be.
#2 Check your tax credits
If you are disabled in work, have children or on a low income, then you may be eligible for tax credits. These are government benefits to help you make ends meet each month. The two most prominent benefits are child tax credits and working tax credits.
#3 Meet the tax return deadlines
Normally, the deadline to file a tax return via post is during October. If you do it online, then the deadline is the end of January. Make sure you submit this in plenty of time to avoid a fine.
#4 Consider renting a room
Through Rent A Room Relief, you can currently receive up to £7,500 from a lodger, per annum tax-free. To qualify for this scheme, the lodger’s room must be in your home, which must be furnished. Remember, if you share the property with someone, then each of you can only claim up to £3,750 each. (This scales down in proportion to the number of property owners).
#5 National Insurance
This one sometimes comes up when we give financial advice in Lincoln. If you are working beyond the state retirement age (65 for men, and 63 for women), then make sure you are no longer making National Insurance contributions.
#6 Donating to charity
If you make a charitable donation, then you can make it tax-free. Either you, or the charity, are able to claim the tax back. This is called Gift Aid. Make sure you record when you make a donation, who you make it to, and how much the donation was. Then, when it comes to filing your tax return, you can claim via the self-assessment tax return.
#7 Childcare schemes
Do you currently pay for childcare? If so, it might be worth asking your employer if they offer a childcare scheme. It may be possible, for instance, to establish a salary sacrifice scheme to help you and your employer save money.
#8 Transfer money and assets
If you have savings and investments, then you can often save on your tax bill by transferring assets and money to your civil partner or spouse. Speak to one of our financial advisers in Lincoln today, free of charge, to find out more.
#9 Car cost claims for self-employed people
If you are self-employed, then you can claim the costs of running a car against your tax bill. Make sure you keep accurate records so you can add up your annual motor expenses, and then estimate the amount that counts as business mileage and costs.
#10 Maximise interest of savings
At the moment, you can earn up to £1,000 per year from interest before you are liable to pay tax. This applies if you are a basic-rate taxpayer. The limit is £500 if you are a higher-rate taxpayer.