The new tax year in the UK began in 6 April. As we’re heading into this period, we thought we would take a few moments to consider tips for a more successful tax year. So with that in mind, here are a few ways that you can get the new tax year off to a roaring start:
- Know what your allowances are.
Your allowances determine how much income you are allowed to earn without having to pay personal income tax on it. Furthermore, different income brackets are awarded different tax rates. With that in mind, it’s best to double check and ensure that you know what your prescribed tax rate is based on your income. It’s possible that the taxes you paid are too high for your actual income, so do make a point of checking. You can claim any overages back from the local HM Revenue and Customs office. - Open a private pension.
This is an outstanding way to keep a bit more of your income in your own hands. For every £80 you put into your pension, you get another £20 back in taxes, meaning that you can save more than you’re actually putting away. In the future when you retire, about a quarter of this savings can be withdrawn tax free, though you’ll still pay taxes on the remainder. However, considering the fact that about 20 per cent of what was deposited in there was free, and another 25 per cent was withdrawn tax tree, then it’s safe to say that you’re making out fairly well in the process. - Double check your tax code.
Like it or not, the reality is that Britons overpay millions in taxes each year. This is money that is not owed to the government in any way, shape or form. Instead, it’s only handed over because the citizens in question were filing under the wrong tax code. HMRC will deduct the value of your tax code benefits from your personal allowance. The best way to make sure that you have the right code is to check in with a third-party firm such as Nunn-Hayward, Sterling or even Associate Services. They’ll all help you determine how much you should really be claiming. - Make the most of charitable contributions.
This is an important consideration for higher income earners in particular. Using Gift Aid accomplishes two things. To begin with, it boosts the amount of your donation to the charity. However, it may also allow you to claim some of your donation back in the form of tax. It’s a simple and relatively straightforward way to make the most of your donation while enjoying a bit of a tax break at the same time.
Understanding tax and how it affects you is complicated business, and you could easily devote your entire life and career to the endeavour. The best thing you can do is charter the assistance of an accounting firm that can help you navigate these complicated financial areas.
