Despite the protestations of just about everyone regarding tax avoidance and loopholes, we would all like to pay less to HMRC. And, the good news is there are some easy – and entirely legal – ways of doing so. If you want to reduce your tax bill next year, read on.
We’ve put together a few ideas that will save you a few bob. And, you can try them out without fear – or guilt. Let’s get started with one of the most obvious tips.
Hire an accountant
If there’s one thing you should do to protect your income from taxes, it’s hiring an accountant. They will talk you through your options and keep on top of your finances a lot better than you can.
Yes, they will cost you a fee – monthly or annual. But, when you consider the amount of money they can save you it’s well worth the initial expense.
Your accountant will likely suggest all of these tips – and much more beyond. And, they will ensure that you never have to answer any uncomfortable questions from the tax authorities when you fill in your next return.
Pay more into your pension
If you pay more money into your pension each year, you will pay less tax. It’s that simple – so think about reorganising your finances so that you use your savings in a wiser manner.
The good news is that the more you earn and put away in your pension, the more you will save in tax payments.
So, as you progress through your career, always consider topping up your pot a little more with every pay rise and promotion.
Keep it in the family
You can also consider spreading your income throughout your family. Every member of your family is entitled to a personal allowance. You could hire, say, your unemployed partner to do your admin if you are self-employed.
There will be no taxes for them to pay, and it is an allowable expense for you. You will have to pay their national insurance, of course. But still – it’s far cheaper to do this on a low wage than it is to pay your full tax.
Use capital gains tax
Everyone is entitled to £11,100 capital gains tax allowance. You won’t pay tax on any capital you sell until you go over this amount.
In theory, this means that you can give gift assets to your spouse up to this amount so that they won’t pay any money on it.
Keep better records
Finally, make sure you are keeping perfect records for all your income and expenditure. Even if you use an accountant, they will expect all your accounts to be in perfect order. If they aren’t, your accountant will charge you to sort them out. While you will still make a saving on your tax bill, it won’t be quite as much.
As you can see, there are plenty of clever ways you can save on your next tax bill. And, to be honest, this is just the tip of the iceberg. Feel free to share your thoughts in the comments section below.
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