10 Tax Saving Opportunities
Take advantage of these 10 Tax Saving Opportunities before 6th April 2016. If you would like to take advantage of these tax saving opportunities or discuss how we can help you to minimise your tax liability, please call us to evaluate how we can help you.
1. Top Up Your Pension
Any contribution you make to your pension will be topped up by the Government. In addition, your basic tax band is extended, bringing more of your income into the BASIC RATE, rather than the higher rate.
There are limits to the amount that can be paid into your pension, and this is expected to be HIT in the March 2016 Budget. If you have funds available, it would be worth considering a contribution in 2015/16.
2. Invest in an ISA
You can invest up to £15,250 in an ISA in 2015/16. This is TAX FREE and is not included on your Tax Return.
Use your ISA allowance earlier in the tax year, April if possible, to earn an EXTRA 12 MONTH’S TAX FREE GROWTH AND INCOME.
3. Marriage Allowance
Did you know that you may be eligible to transfer part of your tax allowance from your partner/spouse and receive a £212 tax reduction?
Your spouse/partner could work for you, creating a potential tax saving. However, this must be bona fide work, paid at a commercial rate.
4. Tax-Free Child Care
The current childcare voucher will be coming to an end, and no new entrants will be able to join from 2017. The new Tax-Free Childcare Scheme will give you up to 20% off your annual childcare costs. This could mean up to £2,000 per child for those eligible, including the self-employed. This scheme will be rolled out in 2017.
5. Bank and Building Society Interest
Normal accounts paying out interest are usually paid net of basic rate tax. If you are a higher tax payer, you will be paying EXTRA TAX on interest received through your tax return. If you have a partner/spouse in a lower tax band, or is a non-taxpayer, consider switching your assets to them.
NOTE: From 6th April, savers can benefit from up to a tax-free allowance of £1,000 on the interest earned on their cash. This falls to £500 for higher rate tax payers.
6. Rent a Room Relief
Let a room in your only or main home, and receive up to £4,250 TAX FREE! This is increasing next year to £7,500. Further details can be found by contacting HMRC or by clicking here.
7. Capital Gains Tax (CGT)
For most people, this would relate to assets such as property or shares. The capital gains allowance in 2014/15 is £11,000 per person. For higher rate tax payers, it may be that assets should be in joint names (if the other tax payer is in a LOWER TAX BANDING), or held entirely in their name.
If you are considering disposing of part of your portfolio and your gain is likely to be close to this allowance, it may be worth considering a part disposal, over a number of years. There is no CGT on ISA disposals.
8. Estimate Your Income
You should have an idea what your income is going to be for the current tax year, and how much surplus ‘cash’ you have for any tax saving opportunities. For example, a small pensions contribution might change your tax band, or move out of a higher tax band altogether, and in most cases will REDUCE YOUR TAX BILL. Get to grips with the annual allowances, and know where your income level falls.
By taking advantage of our quarterly VAT Return Service, which is provided FREE when you join us, you will already know in advance your estimated annual income and tax.
9. Self-employed or employed?
If you are employed and self-employed in the SAME TAX YEAR, you may have overpaid National Insurance.
You can check by calling HMRC on 0300 200 3500.
10. ‘January is Tax Return Month’ – A Myth!
The ONLY person who benefits from you leaving your tax return completion and filing until January, is the taxman. The longer you leave it, the longer you extend the taxman’s window of opportunity to investigate your tax affairs.
All the advantages for YOU are when you file your tax return SOONER; HMRC agree your tax figures, you know your future tax bill and can allocate funds. We may also be able to reduce your 31st July tax payment.