One of the certainties in life is Tax. There is no way around it and chipping in your share is something that we all have to do. Every payday, an amount is taken from our hard earned paychecks which go directly into the government’s back pocket. That cannot be avoided, but what can may surprise you. Legal ways which you can decrease the amount of tax which you pay are out there and all it takes is finding them out. Find out how you could save money by paying less tax and keep the money in your back pockets.
To keep it simple, the more you pay into your pension, the less tax you owe. This can take form in a few different ways. An example is if you have an occupational pension that deducts pension payments from your pay before tax is taken. This means that whatever is deducted from your yearly salary for your pension, only what is left of your yearly will be tax deductible. So if you earn £30,000 and £1,000 is paid a year into your pension, only £29,000 will be taxed. This could add up over a sustained period of time. The more paid into your pension the less tax is taken from your salary.
Moving savings to a spouse is an effective way of paying less tax from which you may usually owe. Married Couple Allowance is when an individual moves their savings into the name of their spouse. This would be useful if the spouse paid a lower rate of tax. An easy to understand example would be that if one pays a higher rate of tax, savings could be transferred under the name of the spouse that pays a basic rate of tax. HMRC estimates that savings of up to £800 could be made by taking advantage of this allowance.
Certain individuals are not expected to pay any tax on the income they earn. Anyone earning an income below £11,000 p.a is not required to pay tax. An example of this often appears with students who are in full-time education but hold a job of some sort. As long as they are making under the personal allowance, they do not need to pay tax on their income.
Getting money back on deductions is a great way of saving tax. Claiming back on business expenses is a perfectly legal way to do so. Whether its travel, office equipment, stationary, the list goes on. This is useful if your work involves travelling a fair amount. Not only can you claim on the miles you travel, but once you get to your destination, your savings can continue. Having lunch with a client? Keep the receipt of your meeting and the tax is deductible from your meal. Another great way of saving money and keeping your tax bill on the right track.