There are many ways to save money on your taxes and receive a large return without committing money laundering or fraud. The necessary knowledge can enable you to make simple checks and give you the ability to maximise your returns. One very simple way to ensure you’re getting back as much as you can is to see how many tax credits you are eligible for. But that’s just the beginning. The following are five easy ways to maximise your tax returns and get the money back that you deserve.
Make Sure You Get the Right Tax Code
This may sound obvious, but each year the numbers and letters on your payslip may change. This is a common mistake. If you inputting the wrong code on your taxes, you could be paying too much or paying last year’s taxes.
Make the Most of ISA
It is absolutely imperative to use your tax-free ISA allowance. According to Money Pug, a site commonly used to find the best ISA provider, the annual tax limit is £20,000. While this can all be put in a cash ISA, in a stocks and shares ISA, or split between them.
Maximise Personal Savings Allowance
The first £1,000 of interest you receive from savings is without tax. That is if you are a basic-rate taxpayer. For a higher-rate taxpayer, the threshold is £500. When your savings income exceeds the allowance, there will be a tax due on it. No longer is this deducted at the source, if taxes are due on it you can use a self-assessment and deduct it through an adjustment in your tax code. You can also reduce taxes by putting money into a pension.
Cash-flow Boost for Self-Employed
Business owners can choose when the accounting year ends. But if you are setting up your taxes as a self-employed person, you should choose when it ends very carefully. Selecting the end of the accounting year early, you will have more time to pay tax on profits. As they increase, your tax bill will rise slowly. Typically speaking, you the more time you have, the less likely it is that you will fall susceptible to fines for late assessments on your taxes.
Saving on Property Income Taxes
Renting out a room can be used in an optional scheme allowing you to receive up to £7,500 in tax relief. This applies when you rent out furnished accommodation in your home. Two people who share property and take advantage of the scheme can only claim £3,750 each. This is reduced proportionally according to the number of people who own the home. You have to live in the property to get a rent-a-room allowance. If you own the home but don’t live there, you won’t be able to benefit from the tax-free savings. Your financial advisor can also help you understand potential tax minimising structures across your income and assets.
Tax-Free Charity
Giving to charity is always tax-free. Either you or the charity can claim taxes back through what they call Gift Aid. If you are paying higher taxes or an additional-rate tax, you can claim the difference between basic and higher rate income taxes on any Gift Aid donation. In order to get this done, you need to file this claim through your self-assessment tax return or ask HMRC to adjust the tax code. It is always important to keep records showing the date and amount you donated.
Employee Benefits
There are many employee benefits that help workers get the most out of their taxes. For commuters, you can check to see if your employer will provide a tax-free loan to buy a season ticket. People who work and are forced to pay for childcare while they are at their job, it is possible to see if your employers have a childcare scheme. These salary sacrifice childcare schemes are easy and can help save substantial amounts for the employer and the employees. A company car can be a tax-efficient way to take a cash equivalent in pay instead. Finally, if your company car is low emission, it is intelligent to consider a low-emissions model. These are taxed at lower percentages on the price list than cars with a high CO2 rating.
There are so many ways to save money on your taxes and maximise your refund. All you need to do is make sure that you’re doing your research and you will find that you’ll be saving money in no time, relieving stress and helping you out in the day-to-day.
