Top Tips on Tax Savings

No matter whether you are self-employed or an employee, whether you own a small business, whether you’re a pensioner or an investor in the uk, there are numerous ways you can reduce your tax bill legally. Every adult pays a different amount of tax, but here are some tips for reducing your tax burden so that you can take home a little more each month.

Check your tax code

HM Revenue and Customs assigns a tax code to every person paid under the PAYE scheme. Usually, it takes the form of a number followed by a suffix. Tax codes are used by your employer or pension provider to calculate how much income tax to deduct from your pay or pension.

Each year, you should check your tax code to ensure you are paying the correct amount. You may be entitled to a refund if your tax code is incorrect. By writing to HMRC, you can request a refund.

Pension scheme

Most people who work for an employer have a pension already set up, but that doesn’t mean you can’t contribute to it yourself. Before you pay tax, your contributions will also be deducted from your gross pay. Additionally, the government adds tax relief to your pension, giving you an extra free retirement bonus.

Open an ISA

There are many tax advantages to opening an ISA. You can earn tax-free interest on your cash savings or investments in an ISA. Additionally, children under 18 years of age can save tax-free through junior ISAs.

Use your Personal Savings Allowance

An individual who pays the basic rate of tax can earn interest up to £1,000 per year tax-free. Higher rate taxpayers can earn up to £500 per year tax-free. As a result, most people will no longer pay taxes on saving interest and banks and building societies will no longer deduct taxes from your account.

Choose the best employment status

Are you self-employed? There are some considerable advantages to being self-employed in terms of tax planning, however, this can also have some disadvantages. For example, it can limit the tax relief available on pension contributions. It’s advised you get expert advice to determine the most suitable employment status for your situation.

Claim tax relief on charitable donations

Donations are simple to do online these days and donating through Gift Aid can mean charities can claim an extra 25p for every £1 you give. As with pension contributions, you can get additional rate tax relief when you declare them in your tax return. So it’s important to make sure you keep records of your charitable donations each year and enter the amount you paid to the charity on your tax return.

If you require qualified taxation advice it is always best to speak to a taxation specialist or a taxassist chartered accountants bangor for any additional information about how you can save money on your taxes.