It’s Tax Season: Read this Before You File to SAVE Money

Genuine UK Work From Home Jobs

Beat the taxman– Here are 10 of the simplest, jargon-free money-saving tips to save tax on your earnings.

Reduce your tax bill without breaking the law –

Boost your take-home earnings with minimal effort, and take advantage of tax reliefs and government schemes.

There are lots of ways to reduce your tax bill legally, no matter your financial situation. Here are 10 simple tips and tricks that can help you cut your tax bill to put more pounds in your pocket.

Check your tax code.

You should double-check your tax code each year, or after changing jobs, to make sure you aren’t on the wrong one, as you may then be paying too much to HM Revenue & Customs. 

Your tax code indicates how much tax HMRC will collect from your salary. You can find it on your payslip. If you’re on the wrong code, you may be entitled to pay less tax in the coming months, or receive a refund for previous years.

Pay into a pension scheme.

Contributions to your employer’s pension scheme (including any additional voluntary contributions you make) can be made from your gross pay, before any tax is charged.
The government will top up your pension with tax relief, giving you a free bonus for saving for retirement.

In addition, pension freedom laws introduced in 2015 allow anyone aged 55 or over to take all of the cash from their pension savings for the first time. Pension rules say you can take 25% of your pension pot as cash in one lump sum, or multiple withdrawals, tax-free, but any more than that and you’ll be charged loads in tax fees. 

READ
Grocery Price Comparison Websites

Benefit from marriage allowance.

Marriage allowance is a tax perk that benefits couples wherein one partner earns less than the personal allowance. To qualify, the higher earner must be a 20% taxpayer.

If you’re married or in a civil partnership, you can transfer any unused personal allowance from the lower-earning partner to the higher earner. Up to £1,250 can be transferred in 2020-21, potentially saving you up to £250. FYI the funds are technically considered a “gift,” so if you split you can’t seek to be reimbursed. 

Reclaim overpaid taxes. 

If you are a non-taxpayer, or your income unexpectedly falls during a year, you may find that you’ve been taxed more than you should have done, as HMRC assumes your personal allowance is equally used each month.  To reclaim, fill out form R40 from HMRC, or call them. 

Claim tax-free childcare.

Under the tax-free childcare scheme you can claim back 25% of your childcare costs – up to £500 every three months. You’ll have to meet set criteria, including having a child under 11 and earning less than £100,000.

Tax breaks for the self-employed.

Expenses incurred while running your business can be deducted from your profits, reducing your overall tax. This could include things like fuel (and in some cases your mode of transportation), phone costs, or running costs for your home office.

Use the Rent-a-Room relief.

The Rent-a-Room scheme allows you to receive up to £7,500 in rent each year from a lodger, tax-free. This only applies if you rent out furnished accommodation in your own home, and you’ll need to live in the property as well. If two people who share a property take advantage of the scheme, they can only claim £3,750 each (this is reduced proportionally according to the number of people owning the home). Private landlords can also claim for things like agent fees, maintenance, repairs, services like a gardener, legal fees and direct costs such as phone calls, stationery and advertising for new tenants.

READ
How to start a monthly subscription business

The Government has also caught up with the growth in popularity of eBay, Gumtree and similar sites, with the launch of two tax relief schemes for the ‘sharing economy.’

The first £1,000 you make from selling your old stuff online, or items you’ve made, is now tax-free – beyond that, you’ll have to pay income tax.

Additionally, the first £1,000 you make from your property, for things like renting out your driveway, is tax-free.

That’s on top of the aforementioned Rent-a-Room scheme if you’re eligible. 

Make a charitable donation.

Making donations to charity is tax-free. Either yourself or the charity can claim the tax back through Gift Aid. If you pay higher or additional-rate tax, you can also claim back the difference to the basic-rate on any Gift Aid donations. 
To do this, you need to claim on your self-assessment tax return or ask HMRC to adjust your tax code. Make sure to keep records showing the date and amount you have donated. 

Avoid rip-off charges.

If you’re one of the 12 million people who need to submit a self-assessment tax return, make sure you meet the tax return deadline.
If you miss it, you’ll be hit with an instant £100 fine, and more charges will be levied the longer you leave it.

Bonus: Claim the benefits you’re entitled to

Tax credits provide extra money to those looking after children, disabled workers and other workers on low incomes.
There are two main types you can claim: working tax credits, and child tax credits (just keep in mind that you can’t claim tax credits if you already receive Universal Credit). 

READ
Easy Money Making Hacks for 2020

For further benefits, whether you’re a new parent, a carer, live with someone with autism, or over 60, there are benefits you should be claiming.

Some of these include tax reductions – older people with limited savings, for example, could get money off Council Tax.

Not claiming these benefits could be effectively costing households thousands of pounds.

0 Shares:
Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like