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Top 10 Tax Saving Tips

Ten Simple Steps To Saving Tax

Practically every employee and almost every pensioner has a tax code. This tax code is usually made up of Three Numbers and One Letter. Assuming your code is a 3 digit number followed by a single letter, simply multiply the number by ten to give you your personal tax allowance. This is the amount you may earn tax free and everything after this amount is taxable.

The letters have various meanings, they are quite simple in reality and you can find out their meanings here.

HM Revenue and Customs frequently assign tax codes incorrectly as you may have read in the news lately see our article on their latest PAYE system in turmoil blunder. Make sure that yours is correct in order to avoid paying too much tax.

1. Check You Have The Correct Tax Code

Thousands of tax payers are eligible for a tax rebate and completely unaware of it or what is available.

If you have ever been taxed at the Emergency Rate, there is a high probability that the tax office owes you money.

2. Check Out Possible Rebates

Most folks are automatically given their personal allowance (PAYE Tax Code) for income tax and National Insurance. But, there are many, many other allowances which you may not have claimed and are entitled to. Just one example is mileage allowances for business use of your car can significantly reduce your tax liability.

3. Check To See If You Use All Your Allowances

HMRC currently offer around £3.7 billion of TaxCredits, a good deal of it goes unclaimed.The current (2010) Tax Credit system can often seem rather obtuse, many people simply fail to understand what they are entitled to.See if you are eligible here You’ll need to answer a few simple questions regarding your personal circumstances and you can do this online.

4. Be Sure To Claim Tax Credits

Inheritance Tax (IHT) is probably the most despised and arguably most expensive forms of taxation. The miniscule number of folks who make any effort to reduce their Inheritance Tax liability is therefore somewhat surprising. Simple things like making a Last Will and Testament can drastically reduce an IHT bill, and require very little work.You can get some great FREE advice here

5. Be Sure You Plan For Inheritance Tax

If your spouse does not earn, or earns less than their personal allowance, you should consider moving any income generating assets to them. They will still qualify for their personal allowance regardless of whether or they are earning or not. Taking advantage of this has the potential to save you thousands annually.

6. Get Non-Earners Allowances Working For You

Many savings schemes are a marvellous method of reducing your tax liability with the added benefit of building a future nest egg. Easy measures like using up your ISA allowance can cut significant amounts off your tax liabilities. You should also consider a company share scheme if this option is open to you, they tend to be highly tax efficient and often involve discount shares.

7. Select Tax Efficient Savings Plans

If you are a self assessment taxpayer, early completion of your return can result in savings too. Firstly, getting your return in by the end of October means HMRC will calculate your tax for you. But missing the 31st January deadline, you get fined £100 automatically, however if you are not due to actually pay any tax, it is possible to get the fine reduced or even waived but you will have to request it.

8. Get On Top Of Your Self Assessment

You pay no tax on Pension contributions as they are exempt. Stuffing more money into your pension will reduce your income tax bill as the money will be deducted from your pre-tax income.

9. Use Your Pension

Using a good accountant is going to save you money, especially if your tax affairs are in any way complex. At first glance their fees can seem expensive, but a knowledgeable tax expert will pay for themselves many times over. If they don’t? …. Get a better accountant!

10. Use The Services Of An Accountant

Summary

Take a pro-active approach to tax, there is no reason why you can’t make significant savings.

Summary

Given the general distaste for tax, it is a source of never ending frustration to me how few people actually take even the simplest steps to reduce their bills, especially given the copious amounts of advice that most reputable accounts will provide for FREE!

Summary

If you are a Contractor of Consultant considering or currently working through an Umbrella Company or MSC you can get some specialised information from Contractors Tax

To find out how TaxSaving101 can help you stop losing money to the tax man and leverage you into a more prosperous future, complete our Call Back Form at www.taxsaving101.com and we’ll call you back for a confidential free consultation.

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