There are plenty of ways we can be reducing our tax bill legally, whether you’re self-employed, an employee, investor, pensioner, or landlord. Sometimes this can be remarkably simple, boosting the earnings you take home with a minimal amount of effort on your part, while taking advantage of government schemes or tax reliefs. Here we outline ten of the best tips to help you save on tax in the coming year.
Check tax code
First and foremost, let’s start simple! Your tax code will indicate how much of your tax will be collected by HMRC from your overall salary. You will be able to find it somewhere on the payslip you receive from your employer.
By checking your tax code every year, or while changing jobs, you can make sure it’s correct for your given situation. This is important because if you happen to be using the wrong tax code, you may be entitled to pay out far less tax than you already do in the following months, or receive a healthy refund based on the preceding years.
Claiming tax credits
Tax credits will provide additional money to those who are looking after children, low-income workers, or disabled workers. There are two main types you could be claiming, which are child tax credits and working tax credits.
Bear in mind that if you already receive universal credit, you cannot claim tax credits in this way.
Contributions to the pension scheme of your employer can be taken from your overall gross pay before the charging of any tax. The government will then top up your pension with any tax relief that you may be allowed to receive, giving you a free, nice bonus for saving for your retirement. You can use a tax relief pension calculator here to work out how much could potentially be saved.
Couples where one of you earns less than the other could be allowed a personal allowance. If you’re a part of a civil partnership, or married, you can transfer any personal allowance that is unused from the lower-earning individual to the higher-earning individual. As much as £1,260 can be transferred in the 2022-23 year, meaning that you could potentially save as much as £250.
Tax return deadline
If you are someone who needs to submit a tax return through self-assessment, make sure that you do not (whatever you do) miss the deadline, as this could be an easily avoided (and costly) mistake. For online submissions, you will have until 31st Jan 2023 to send in the 2021-22, so plenty of time, but more people miss it than you can imagine!
Maximise personal savings
In the 2022-23 year, you could earn an extra £1000 of interest on tax-free savings if you happen to be a basic rate taxpayer. If you are a higher rate taxpayer, this could bag you a tax-free allowance of £500. You will therefore only pay your tax on the savings that exceed this particular threshold.
Everyone can be taking advantage of an annual Isa allowance that is tax-free. For 2022-23, you can deposit as much as £20,000 into your Isa accounts. This is unchanged from the year of 2021-22.
Capital gains (in this context) is the profit that you make from the sale of particular investments, including things like art, homes, shares, and antiques. Capital gains reaching to £12,300 are tax-free in the 2022-23 year. Civil partners and married couples can claim a double allowance up to £24,600 if they jointly own assets.
Makinson & Co. are your local accountant team situated in the Forest of Dean. We have over 40 years’ experience in all tax matters, and work with small to medium sized companies in and around Gloucestershire. If you would like to know more information about what we do and how we can help, take a look at our website www.makinsonandco.co.uk or give us a call on 01594 842188 – we’d be happy to help!