Are you tired of seeing a significant portion of your hard-earned money go towards taxes? Don’t worry; you’re not alone! Thousands of individuals across the UK are constantly looking for ways to maximise their take home income.

That is why we have crafted this blog with the help of our expert reporting accountants, here at Accountants Solutions, where we’ll explore 25 tax saving secrets. Whether you’re an employee, self-employed, a landlord, investor, or retiree, these tips and tricks will help you legally reduce your tax bill, putting more money in your pocket. So, let’s begin!

Tax Saving Secrets From Expert Accountants:

Check Your Tax Code

Your tax code shows the amount of tax that will be deducted from your salary. Our experts suggest reviewing it regularly and correcting it whenever necessary to ensure that you’re paying the right amount. In case you’ve failed to correct your code and paid more than what you’re owed, you can claim a refund from HMRC.

Claim Tax Credits

Tax credits offer you additional financial support for specific circumstances, such as childcare or old age. For those with a lower income status, our tax experts advise getting a clear understanding of the eligibility criteria and the application process so you can take advantage of all eligible tax credits and optimise your income.

Contribute To A Pension Scheme

As another useful tax saving secret, our taxation experts suggest investing in your employer’s pension scheme. Pension schemes not only help to secure your financial future but also make you eligible for tax relief from the government, which essentially means you get a bonus for saving for your retirement.

Marriage Allowance

If you’re a married couple, you can benefit from the marriage allowance, which allows the transfer of 10% of the personal allowance from the lower-earning partner to the higher-earning partner. This tax saving secret can help you make substantial savings as a couple, provided the higher earner is a basic-rate taxpayer.

Meet The Tax Return Deadline

If you submit a self-assessment tax return, missing the deadline can lead to unnecessary fines, reducing your take home income. To minimise your tax liability, make sure you stick to the deadline. The last date for paper tax submission is October 31st, while that for online submission is January 31st. If you’re struggling with on time tax submission, our bookkeeping and payroll accountants offer complete accounting solutions that can help you calculate your taxes accurately and ensure timely submissions, avoiding penalties.

Reclaim Overpaid Taxes

This tax saving secret is useful for people who do not qualify as a taxpayer and for those experiencing a sudden drop in income during a financial year. If you fall into one of these two categories, you might find yourself taxed more than you should be at the end of the year. According to our experts, you can reclaim the overpaid taxes by filling out HMRC’s R40 form or contacting them directly.

Get A Season Ticket Loan

Some employers offer tax-free loans to employees for purchasing season tickets, potentially saving individuals hundreds of pounds on travel costs. Ask your employer if they offer such a scheme in order to take advantage of this opportunity.

Claim Tax-Free Childcare

This tax saving secret is beneficial for those with children. The tax-free childcare initiative gives you the opportunity to reclaim up to 25% of your childcare expenses from the government. To begin the process, you must establish an online account and manage all payments to your childcare provider through that account. The government contributes £2 for every £8 you deposit, with a maximum limit of £500 every three months, or £1,000 for households with a disabled child.

In order to qualify for this scheme, your child has to be under the age of 11, and your annual earnings should be below £100,000.

Consider Company Car Alternatives

For individuals that have the option to use a company car, opting for a cash equivalent in salary might be a more tax-efficient choice, according to our tax experts. Access which is the best choice for your unique circumstances and take the decision accordingly.

Switch To A Low-Emission Car

If you’re changing your company car, our experts suggest choosing a low-emission model to save money on taxes. Such vehicles are currently subject to a lower percentage of taxation based on their list price compared to cars with higher CO2 ratings.

Maximise Personal Savings Allowance

Another tax saving secret provided by our taxation experts is to take advantage of the personal savings allowance. In the UK, it allows basic-rate taxpayers to earn £1,000 of interest tax-free, while higher-rate taxpayers can enjoy a £500 tax-free allowance.

Utilise Your ISA Allowance

Our experts also suggest leveraging the yearly tax-free ISA allowance to reduce your tax liability. This versatile allowance, set at £20,000 for the 2023-24 tax year, can be allocated to cash ISA, stocks and shares ISA, or a combination of both, providing flexibility in optimising your returns.

Claim Tax-Deductible Expenses

If you’re a self-employed individual, you can deduct various business-related expenses from your profits, reducing your overall tax liability. Common deductions include fuel, phone costs, and home office running costs.

Offset Annual Losses

Claiming offset annual losses is a useful tax saving secret for business owners who have experienced a loss in a tax year. According to our experts, you can carry the loss forward and adjust it against the profits made during more successful years, thus reducing your taxable income.

Adjust Payments On Account

Self-employed individuals typically make advance tax payments in January and July based on the previous year’s tax bill. However, if you anticipate lower earnings in the current tax year, our experts recommend submitting the form SA303 to HMRC to mitigate the financial burden.

Capital Gains Tax Allowance

Capital gains tax (CGT) is incurred when you sell certain investments, such as second homes, art, antiques, and shares. Each year, the government allows individuals the opportunity to enjoy a certain portion of this income as a tax free allowance; however, this amount has to be used within a year or it is lost forever.

For the 2023-24 tax year, this allowance stands at £6,000 for individuals and £12,000 for married couples and civil partners. Our experts advise using this opportunity to make tax-efficient investment decisions to maximise your take home income.

Transfer Assets To Your Spouse

This is another tax saving secret shared by our experts that can reduce the tax liability for married couples. By strategically transferring assets to a spouse, you can not only avoid capital gains tax at the time of transfer but can also enjoy more favourable income tax rates as the lower-earning partner.

Explore Junior ISAs

When making gifts to your children, our experts recommend taking advantage of the Junior ISAs to enjoy tax savings. This strategy allows you to contribute towards your children’s financial future while benefiting from the £9,000 annual allowance permitted by the HMRC for the 2023-24 tax year.

Switch To Capital-Boosting Investments

If you’re an investor seeking to optimise your tax efficiency, our experts suggest switching to investments that focus on capital growth. This strategic shift, combined with the annual capital gains allowance, offers you a dual advantage, saving you a significant amount of money on taxes.

Invest In An Enterprise Investment Scheme

Another tax saving secret for investors recommended by our experts is investing in the Enterprise Investment Scheme (EIS). Investing in your early-stage business through the EIS, allows you to claim a 30% deduction from your income tax bill for the amount invested, potentially saving you up to £300,000 each year.

Venture Capital Trusts (VCTs)

Similar to EIS, investing in VCTs also offers you 30% tax relief, as per our experts. Managed by fund managers, VCT is a specialised investment trust where you can invest up to £200,000. To qualify for the relief, you have to buy shares at launch and hold them for at least five years.

Company Share Schemes

Our experts also suggest investing in employer-approved share schemes, such as the Share Incentive Plan, Company Share Option Plan, or Enterprise Management Initiative Scheme, that offer tax-exempt values for shares. However, since capital gains tax may apply when selling the shares, it is essential to plan strategically to enjoy an overall tax saving.

Utilise Rent-A-Room Relief

The rent-a-room scheme is a useful tax saving secret for those who want to reduce their property tax. This scheme allows you, as a homeowner, to receive up to £7,500 of rent tax-free when renting furnished accommodation in your own home. To become eligible for this scheme, you have to live on the same property.

Tax Relief On Buy-To-Let Mortgages

Our experts suggest securing tax relief on buy-to-let mortgages for landlords. With a 20% tax credit on mortgage interest, this strategic move ensures that financing rental properties aligns with your overall tax-efficient financial plan.

Make Charitable Donations

Lastly, our experts recommend contributing to charitable causes, which can be reclaimed through Gift Aid, saving you money on taxes. Higher or additional-rate taxpayers can also use this opportunity to claim back the difference to the basic rate on Gift Aid donations when filing their tax return.

Conclusion

By incorporating these 25 tax-saving secrets into your financial plan, you can save a significant amount of money on your taxes and maximise your take-home income. While these tips can provide you with valuable insights, it is essential to seek advice from professionals who provide comprehensive accountancy solutions by tailoring these strategies to your unique situation for compliance with HMRC.

Optimise Your Finances With Accountants Solutions’ Accountancy Services

If you’re looking for trusted accountants that can reduce your tax burdens, we are here to help you! Here at Accountants Solutions, our managing partner, Ms. Christine Adedokun, is a seasoned professional in accountancy and taxation matters with over 30 years of expertise and has helped hundreds of businesses across the UK optimise their finances.

Contact us today for accountancy services that will help you legally reduce your tax bill, putting more money in your pocket.