70 Ways To Save Tax
Did you know that a person earning the average salary of £25,000 in the UK pays nearly £734,000 of tax in their lifetime?
Well this tax busting checklist will only take about 25 minutes to complete and will start cutting your tax bills down to size. All you need to do is answer each of the questions yes, no or not applicable.
The checklist is divided into four sections and you only need to complete the sections which are relevant to you.
The first section is all about ‘your small business’ and looks at all the areas where you can save tax if you own a business or limited company. This is the area where most people can save the most amount of tax so I would spend the most amount of time concentrating on this area.
The second section concentrates on ‘your employees’. It is just as relevant if you own your own limited company. Obviously, if you help your team members pay less tax, those savings can be passed on to you. If you are an employee yourself, then this section will help you keep more of your salary.
The third section focuses on ‘your family’ and the taxes they pay. Not only does it look at your personal situation but also your children and your parents. Significant tax savings can be made across generations so it's worth spending some time here. You might also want to pass a copy of this checklist to your parents so they can make sure that they are minimising their liabilities.
The final section looks at ‘your investments’ to make sure you're maximising your return on money you've already earned. This section is particularly pertinent to people who are retired or are close to retirement. At this stage in your life it is important that you maximise the return on all of your assets.
If you answer no to any of the questions you need to speak to us to make sure you fully understand your position. It is important that you take financial advice before you make any decisions based on the information that you learn in this checklist because although every effort has been made to make sure the checklist is accurate it cannot be tailored to your individual personal circumstances.
So if you've got any questions, just give us a call on 01202 048696 or email me at [email protected].
And to download the guide, just click here.
Calculating your personal tax liability
Sole Trader
If you're trading as a sole trader and you'd like an estimate of your tax liability for the current tax year you can download a personal tax calculator here.
Limited company
If you're running your business as a limited company and you'd like an estimate of your tax liability for the current tax year you can download a personal tax calculator here.
HMRC Penalties for late filing of 2022-23 tax returns
Your 2022-23 tax return is due for filing by 31st January 2024 in order to avoid any penalties. And if you don't file your 2022-23 tax return by that date you will rack up some quite hefty penalties.
And the penalties you’ll be liable to are as follows:
• Not filed online by 31 Jan 2024 - automatic £100 penalty (even if you’ve overpaid tax)
• Not filed by 30 April 2024 (3 months late) then daily penalties of £10 per day up to a maximum of £900
• Not filed by 31 July 2024 (6 months late) the greater of 5% of the tax due or £300
• Not filed by 31 Jan 2025 (a year late) additional penalty being the greater of 5% of the tax due or £300
Not only that, but HMRC will charge penalties for not paying your tax on time which could be as much as 100% of the tax due if you’re particularly badly behaved, plus interest will also be charged on late payment.
Student loans
If you have a student loan balance, then you may have some repayments to make through your personal tax return (self-assessment).
There are now two different types of student loans: Plan 1 and Plan 2
If you lived in Scotland or Northern Ireland when you started your course, or you lived in England or Wales and started your course before 1 September 2012 then you have Plan 1.
If you lived in England and Wales and started your course on or after 1 September 2012 then you have Plan 2.
For 2023/24 you pay back 9% of your income over the thresholds of:
- £22,015 for Plan 1
- £27,288 for Plan 2
Your salary and dividends will count as earnings for student loan repayments. So for example if you are on Plan 1 and you have salary and dividends totalling £43,000, this will mean £1,888.65 of repayments for 23/24 (£43,000 less £22,015 = £20,985 * 9%).
Child benefits
If you or your partner have individual income of £50,000 or more and you are receiving child benefit then you’ll start losing this benefit. Also, if you your partner have individual income of £50,000 or more income then the benefit will be completely removed.
If your income is between £50,000 and £60,000 you will face a claw back of 1% of benefit for every £100 of income over £50,000. It is the partner with the highest income who will need to declare the receipt of child benefit on their tax return.
So if you are receiving child benefit you may want to consider staying below the £50k threshold so you don’t have this additional ‘tax’ to pay.