Getting your head around tax can be overwhelming and you may be tempted to bump it to the bottom of your to-do list. But, as this could mean you end up paying more than you need to, it’s important you take the time to tackle your tax. So, we’ve put together our top tips on making sure you’re not overpaying tax in the UK.
- Understand your tax code. This is your personal tax code; the number tells your employer how much tax they need to deduct from your pay. If you’re unsure of your tax code, you’ll find it on your payslip or your personal tax account. Alternatively, contact HM Revenue and Customs (HMRC), and they can tell you.
- Claim all your tax breaks. There are lots of well-known and lesser-known tax breaks available for UK taxpayers, such as the personal allowance, the married couple’s allowance and the child tax credit.
- Make use of tax-efficient savings and investments. UK taxpayers may be eligible for certain tax-efficient savings and investments, like ISAs, pensions and National Savings & Investments (NS&I) products.
- Get professional help if you need it. If you’re unsure about anything to do with tax, whether you’re self-employed, employed or the owner of a business, we can help you understand your tax obligations. We can make sure you’re not paying you more than you need to so you’ll have more money to spend on growing your business.
Extra tips to avoid overpaying on your tax
Here are some extra tips that may help you reduce your tax bill:
- Gift money to charity. Donations by individuals to charity or to community amateur sports clubs (CASCs) are tax free.
- Make a pension contribution. Top up your pension fund and get tax relief on your contributions. You’re allowed to save up to £60,000 per year into a personal pension in the UK.
- Invest in shares. Think about investing in shares through a stocks and shares ISA or a SIPP. These investments can grow over time and potentially provide you with a tax-free income in retirement.
- Take advantage of tax breaks for businesses. If you’re self-employed or run a business, take advantage of the tax breaks available. These can help reduce your tax bill so you can keep more of your hard-earned money.
As you can see, there are lots of ways to make the most of your money when it comes to reducing the amount of tax you have to hand over. If you’re finding your tax complicated or don’t know what tax breaks might apply to you, for example, get in touch today.