Tax saving tips
While tax evasion is illegal and can result in heavy penalties, there are also legal and acceptable allowances, reliefs and planning steps that you can take to make the most of every penny and minimise the tax that you need to pay.
Transferring savings and investments
If you're married or in a civil partnership and one partner is in a lower tax band than the other, you may benefit from transferring your savings and investments into their name to pay less tax.
However, you should be aware that if you take this approach, the higher rate tax-payer will be giving away legal control over savings which they may well have contributed to. You should make sure you're both comfortable with this arrangement.
Get your tax code right
If you're employed, double checking that you're on the correct tax code can help ensure that you are paying neither too much nor too little UK Income Tax. Paying too little might sound like a lucky mistake, but HMRC will claim back the money eventually so it's better to be upfront about it to avoid surprises later.
Protect your savings and investments with an ISA
ISAs protect your savings and investments from UK Income Tax and Capital Gains Tax. For more information, read our ISA tax savings guide.
Meet your tax deadlines
While not strictly a tax saving tip, meeting your tax deadlines can help you avoid costly penalties. Most people pay tax through PAYE, but if you need to complete a self-assessment tax return the deadlines for this year are:
- Register by 5 October 2016
- Submit paper tax returns by midnight on 31 October 2016
- Submit online tax returns by midnight on 31 January 2017
- Pay the tax you owe by midnight on 31 January 2017
Plan ahead to protect your estate
If your estate is worth more than £325,000 when you pass away, inheritance tax can quickly eat into what you leave behind. Careful planning can help reduce the impact of inheritance tax on your estate.
Set up a pension
Money paid into a pension qualifies for 20% government tax relief. This means that for every £80 you put in, your fund is effectively topped up to £100 by the government. If you contribute to your pension directly from your salary before tax, your contributions reduce your taxable income.
For more information or advice on planning your finances tax efficiently, you may want to seek tax planning advice from an financial adviser.
Last updated: 06 April 2016