It is 230 years since Benjamin Franklin wrote to a friend saying that nothing can be said to be certain, except death and taxes, and yet his words from all those years ago ring true today. Whilst the former is inevitable, who would not want to reduce the impact of the latter?
The good news is that there are lots of ways of maximising your income and savings and reducing your tax bill. Some are straightforward to access, whilst others may need professional advice and some will depend on your employment status. Here are six ways to reduce your tax bill.
1. Standard savings accounts offer paltry interest rates in the current economic climate and so tax-free savings accounts should be considered. The current tax-free levels for personal savings are just £1,000 if you pay basic rate tax and £500 for higher rate payers. Cash ISAs offer a better home for your savings and details can be found at the government’s own website.
2. If you have decided not to take advantage of the new rules on accessing your personal or company pension, and are working past retirement age, you may consider paying more money into your pension scheme and reducing your net income which is used to calculate everyone’s personal allowance.
3. Using Gift Aid to donate to charity will also influence your tax bill as it will also affect your tax-free personal allowance
4. Transferring income-producing assets to a non-tax-paying spouse or civil partner could reduce your tax bill.
5. Although investments which generate high dividends may seem an attractive option, capital growth assets may be better in terms of taxation, given the £11,700 annual capital gains tax allowance available if an investment is cashed in. A profit claimed during 2019-20 will realise a £12,000 tax-free sum.
6. If you are self-employed, make sure you are taking maximum advantage of business expenses.
Although the above may seem obvious, it is important to consider professional advice. Wherever you are looking for accountants Cheltenham, Chelsea or Chorley, you will find them online at sites such as Randall and Payne.
The intricacies of UK taxation can be complex, but a reliable accountant will be able to ensure that you maximise your income and savings, and hopefully ensure that Franklin’s prediction can be proved wrong.