Six Accessible Ways To Pay Less Tax ways to pay less tax
"In this world nothing can be said to be certain, except death and taxes." Never a truer word spoken than this well known saying by Benjamin Franklin, so how do we pay less tax without being arrested for tax evasion I here you ask? Well firstly always speak to a professional financial advisor but to give you some ideas here are our top six suggestions to help you in 2011.
1. If you think you're going to die, get ready for it (p.s. unfortunately we all die): An odd one to start with but basically if you die then your loved ones could be burdened with probate cost and Inheritance Tax. Get professional life insurance advice to ensure your loved ones get what they deserve. Basically if you die and you leave more than 325,000, inheritance tax is payable on any amount above this at a current rate of 40%. A will also makes sure the people you want to benefit, actually do benefit.
2. Take advantage of a tax free savings account (ISA): Individual Savings Accounts, or ISAs, are a fantastic way of saving money that is not tax-deductable. If you are a regular saver and hold a standard savings account, it may be worth considering an ISA as you will currently be taxed on your savings. For the tax year of 2010/11, an ISA allows you to save up to 5,100 annually, although this is increasing to 5,340 for the 2011/12 tax year.
3. Are you driving you car for your business? Do you have to make regular long journeys for work? Not to and from work but for work? Whether that's to travel for meetings or delivering goods to clients or customers, you may be able to claim some of your costs back through the HMRC if your employer does not fully compensate you currently under HMRC guidelines. Many employees are not aware that they are eligible for these claims, so it is worth checking if you do qualify. Claiming back these expenses can help massively with fuel costs and can help cover car depreciation. Contact HMRC for more information.
The amount you can claim depends entirely on how many business miles you drive, how regularly you make it and what vehicle you drive. HM Revenue and Customs have a comprised list of 'mileage rates' for different vehicles which you can easily find online. When calculating exactly how much you can claim, you must determine how much your company pays in expenses and it is also important to recognise that simple commutes to and from the office are rarely classed as business mileage.
4. Fully utilise your CGT (Capital Gains Tax) allowance: CGT is a tax on profits made from assets that you have sold, such as shares, for instance buy 1,000 shares at 1 each and end up selling them when they are valued at 5 a share, will see you make a tidy profit of 4k.
So how do we reduce our CGT liability. Firstly there is a CGT threshold and that stand this year at just over 10k. So if your profits on capital sales during the year are below 10k then you will not have to pay CGT. So keep your profits on assets sales below this each year by spreading sales over a longer period of time. It is also handy to know that your spouse will have the same CGT threshold!
5. Save the world, donate to a registered charity: Not that we give to receive but it just so happens that we can. Donating to a registered charity can attract preferential tax treatment. The gift aid scheme also allows charities to claim the tax back you have already paid on the cash you donated.
Higher rate taxpayers can claim back the difference between the higher rates and the basic rate of tax on the total value of the donation to the registered charity.
6. Landlords can claim tax back on property expenses: If you are a landlord and rent a property, there are various things that you can claim for - often much more than people expect! For example, council tax, letting agent fees, maintenance and repair costs, utility payments and home insurance. To find out what your rented property can claim for, do some research, you could end up saving much more than you originally thought.
Debi writes for Just Life Insurance the UK's No1 website for Free Life Insurance Advice, Over 50's Life Insurance, and market leading Life Insurance Quotes.
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