With the increasing focus on tax bills and their check and balances of them, the tax margin has become very slim in the UK. However, individuals who are in a working role in the UK are looking for possible ways that can pursue the dream, of paying less tax on their earnings. This is mutual among people whether they are associated with a company as an employee or are the owner themselves. There is no denying that there is a flexible way that can help you to be more tax efficient and manage your tax affairs in such a way that you will reduce the tax burden on your shoulder. People often as about the legal ways of doing it.
This is because of the fact that where on one side people want to reduce their tax bills, they want to avoid any unfavourable circumstances too. So that they are not stuck with anything that goes against the legislation. This guide will help you to gather information about popular ways that will help you to reduce the tax burden. This discussion could possibly involve how reducing income tax can help, employee tax benefits will play a role, how to pay less tax as a self-employed individual, how to cut tax on your savings, and how to cut the investment tax bills. Let us dig deeper to develop a better understanding.
How to Reduce the Tax Burden on Salary in the UK?
The most popular and straightforward way is possible to reduce your tax burden. It is when you focus on claiming all the possible tax reliefs that you are eligible for. In the case of being self-employed and carrying out your own business activities, you should always seek help from your financial advisor and follow the steps to deduct the business expenses to be more tax efficient. This will allow you to pay exactly what you owe to HMRC in form of tax. So that you are in a better position to avoid tax penalties or fines for late filing.
Moreover, for people who are of pension age, you will have to deal with tax liabilities because they will have to pay tax on the income they are getting. If this is more than the amount of personal allowance in the UK. Even the pension payment or the state pension is not spared from the tax bills. So it is imperative to be aware of the tax reliefs you are eligible for. This way you will be able to claim the tax relief and save on tax payments. The most popular area where people often forget to pay attention is the expenses of your job. It is when you buy something for your job and then forget to claim tax relief. The possible tax could be related to equipment like personal protective equipment (PPE), the maintenance of the uniform, professional practice fees, and expenses. This can be done in the backdate for a period of four years.
1- Reduce Your Income Tax
As we all know that the annual personal allowance is received by the individuals who qualify for the criteria. This amount of personal allowance is tax-free. You can use your tax code to have an idea of whether you are getting complete benefits from your amount of personal allowance. This is mandatory because if you are having the wrong tax code, you are paying the wrong amount in tax bills which can be more than you owe to HMRC. In such a case always take the help of your financial advisor and be the most tax efficient to save more on your income without paying any extra tax.
2- Company Tax Benefits for Employees will Help
You will have to be considerate about the employee tax benefits while you are filing the tax returns. The benefits from your company could include loans, pricing with advantages, accommodation, and company cars. These benefits will require tax deductions and your employer is paying these taxes from your salary. How much tax you will have to pay is all about the number of benefits that you have availed. Your employer normally works on these details about the tax and benefits. You can check your payslip for the details. You can even check online. This will make you sure that you are not overpaying the tax.
3- Are You Self-Employed? – Pay Less Tax
Being in the role of a self-employed individual, you should get involved on a personal level to check how much tax you will have to pay. Because when you are a self-employed individual you are free to decide how to do a self-assessment tax return, and what business expenses you want to deduct. This will save you from paying the penalties on incorrect tax returns and filing. However, getting guidance from a financial advisor is always helpful to avoid any mistakes and confusion.
4- Tax Cuts on the Savings
You do get a tax-free amount of personal allowance every year. You also get a tax-free allowance on the interest that comes because of your savings. The starting rate is a tax-free amount of £5,000. You can make better decisions about the saving cuts to be more tax efficient.
5- Cut Your Investment Tax Bills
Now when it comes to your investment tax bills, you can make cuts on the capital gains taxes. This should be the best use of your investment earnings. This will again be a good move to being a tax-efficient individual to reduce your tax burden.
The Bottom Line
Now that you have gathered a fair amount of information about how to reduce the tax burden, we can bring the discussion towards wrapping up. There is no denying the fact that tax bills are a great burden on the earners in the UK with a very slim margin. However, your tax advisor can be a great source of help who will guide you towards the ways of being the most tax-efficient and avoiding paying overpayment of tax in the future.
If you seek professional help and learn more about how to reduce tax burden, why wander somewhere else when you have our young and clever team of professionals at CruseBurke?
Disclaimer: The information about how to reduce tax burden provided in this blog includes text and graphics of general nature. It does not intend to disregard any of the professional advice.