TWD Accountants tax tips

Self assessment - 11 top tips to reduce your tax

TWD Accountants have put together a quick guide with 11 top tips on how to reduce your tax. If you have any tax questions please visit our website at www.twdaccounts.co.uk/policelife

1) Check your tax codes- The tax code determines how much tax is deducted from your salary or pension income. If this is incorrect, you could be paying too much tax. You need to check what is shown on the tax code notice and query anything you don't understand. If you leave your job and don't start claiming unemployment benefit, you may be entitled to a repayment - keep your P45 and ask your tax office for repayment form P50.

2) Make use of your personal allowances -All taxpayers have a personal allowance. Those under the age of 65, for example, are currently entitled to the first £6475 of income tax-free - so make use of it. A higher rate taxpayer can take advantage of their spouse's unused personal allowances if they have little or no income, by transferring investments into their name. This will also save tax being charged at higher rate.

3) Are you eligible for tax credits? -Tax credits totalling £2.9bn are up for grabs from Her Majesty's Revenue and Customs and the Department of Work and Pensions, according to financial advisers' organisation IFA Promotion. Check whether you are entitled to pension credit, child tax credit and working family tax credit.

4) Avoid the inheritance tax trap -The inheritance tax threshold is £325,000 above which estates are taxed at 40 per cent. But, given that modest houses can swallow this up, now may be the time to start gifting money - up to £3,000 a year - to minimise the tax burden on your heirs.

5) Use ISA's -Savers can shelter £10200 (up to £5,100 in cash and £5,100 in riskier stocks and shares, or the whole lot in stocks and shares) from the taxman by using ISA's.

6) Claim tax back on bank interest -Non-taxpayers can register to receive interest on savings gross - ask your bank or building society. You can also claim back tax on interest already paid.

7) Make pension contributions - Make pension contributions. Basic rate taxpayers putting £80 into a scheme will have it made up to £100; higher rate payers need only put in £60 to get £40 tax relief.

8) Give to charity in a tax efficient way -If you give to charity, you could do it tax efficiently. According to IFA Promotion, £808m more could go to good causes by using tax-efficient means such as a deed of covenant, Gift Aid or payroll giving.

9) Rent a room tax-free - If you rent a furnished room in your main residence you can received up to £4250 in rents without paying a penny to the taxman.

10) Use your CGT allowance - You can minimise capital gains tax by using your tax-free allowance - currently £10,100 - efficiently. Spouses/civil partners can transfer assets between them to make the most of their combined allowance

11) Make a will - It's the only way to be sure your loved ones don't miss out on their inheritance, as well as limit the tax paid on your estate.

Would you like to find out more?

For any additional tax and accountancy advice or services you can either call Sarah Bryan on 0800 093 9433 or visit www.twdaccounts.co.uk/policelife