Five clever (but completely legal) ways of cutting your tax!
Did you know that every year savers lose £1.3 billion a year by failing to be tax efficient! There are some tricks you could be missing if you feel like you are paying way too much of your money to the tex man. Have a look through these top five tips on how you can save some money on your taxes.
1. Claim Expenses
Are you self employed or a private landlord? Well if so, you are expected to deduct legitimate business expenses before paying your tax which some people aren’t aware of so make sure you take advantage of this!
If you are self-employed, then you can claim for things such as running a car, stationary, computer equipment and other office services.
2. Switch savings to your partners name
One of the most effective ways to save big money on tax, is to switch savings to your partners account. This will only work if your partner pays a lower rate of income tax than you, and remember once you do this, the money technically belongs to them. Instead of potentially losing 40p of every £1 interest to tax, you would only lose 20p.
3. Don’t forget about capital gains
Everybody is welcome to take capital gains worth up to around £10,900 without paying any tax, however it is the most under-used tax allowance. The only time you should have to pay Capital Gains Tax is if your gain exceeds your annual tax-free exemptions.
If you are in a couple the you could save even more by using BOTH of your allowances.
4. Use your tax free allowances
If you aren’t using your children’s tax free allowances, then you are unnecessarily handing your money over to the tax man. You can pay up to £3,720 into a Junior ISA this year for tax free returns!
5. Top up your pension
The more you pay towards your pension, the less tax you will pay. You can get tax relief of up to 45 percent on your pension contributions. You can even claim tax relief you have missed out on in the last few years!
Remember, non working wives, many pensioners and children should usually not be paying tax on their savings interest at all! Neither should those with a low income below £9,440!