Let us have a quick look at some strategies that can help you save chunks out of your tax bill.
Business taxpayers can claim a number of deductible expenses against the purchase of common items, such as travel expenses, business operations-related expenses and bills (rent and heating), business equipment and materials expenses, certain employee-related expenses (social and Christmas functions), employee salaries and bonuses, National Insurance Tax, insurances and financial services-related expenses and marketing expenses. Not just business entities, individuals can also claim expenses such as donations to charities, income related to properties and healthcare-related purchases. A drawback is that most individuals fail to claim everything and end up paying unnecessary taxes. Therefore, plan in advance, retain purchase receipts and monitor expenses to be tax-ready for this new financial year.
Allowances for spouse
This is a commonly ignored tax strategy, but one that we highly recommend. However, it only applies to spouses that are business owners or self-employed. The optimum scenario is if there is only one earning partner, although it is not necessary. What is essentially done is that one partner is introduced as a business partner. This helps split earnings so that, technically, both spouses become equal earners, which assists in saving more taxes.
Pensions and savings
Private pension plans are great tax savers as the contributions made are not taxed by the government. Thus, what you spend to secure your future later also helps you save money now. Savings accounts can also help save taxes, especially individual savings accounts (ISAs). ISAs are free of income and capital gains tax. Investment and capital gains made through ISA contributions are non-taxable. Moreover, even the interest earned on ISAs is tax free. Though there is a £20,000 limit on ISA contributions, these can help build large-scale investments in the long term.
National Savings and Investment (NS&I) and single premium bonds
Though NS&I premium bonds do not provide a steady return rate, they are tax free and can even help you win £1 million. The more you invest in these bonds, the more likely you are to
win. On the other hand, single premium bonds assist in deferring income to subsequent periods wherein payments are taxed at a lower rate.
Other tax-saving means
Apart from the above-mentioned strategies, there are also a few other means that can help you save taxes.
- Venture Capital Trusts (VCT)
- VAT claims
- The Enterprise Investment Scheme (EIS)
- Paternity pay
- Seed Enterprise Investment Scheme (SEIS)
Bookkeeping service provider who also take care of services like offshore accounting in UK and tax return online are another options that can help save money by managing books accurately.