In these difficult economic times, it's no surprise that more and more people are looking for ways to pay less tax. The UK has one of the highest tax rates in the world, so most people are looking for ways to legally reduce their tax bills.
However, if you're not sure this tax year what's deductible and what isn't, ask one of our tax accountants at MH Services in Manchester!
These are the following tips you can apply before your tax return to pay less tax in the UK. Plus, we have a bonus paragraph of how to find an accountant or bookkeeper?
Back to basics. How to pay tax? Our tax advice is, first check your tax code and ensure it is correct, otherwise you could face a higher tax bill. If you get it wrong it could end up costing you over £100 a month.
There are a number of tax allowances that you may be able to take advantage of in order to avoid paying too much tax, which may include the personal allowance, the marriage allowance, the capital gains tax allowance etc. Also, check out the article about Quick Self Assessment Tax Return Tips.
3. Pension contribution
Paying more pension contributions is one of the best ways to save tax. By contributing to a pension, you can take advantage of tax relief on your contributions, which means you pay less tax overall.
In addition, many employers offer matching contributions, so you can get even higher value for your money.
4. Charity or gifting
Giving to a charity does more than make you feel good; it also saves tax money and lowers your self-assessment tax return burden, however it is only accessible by adding Gift Aid on the donation. In addition, you must keep all records of the charitable donations to reduce your taxable income.
5. Sacrifice income
If you're looking for a way to pay less tax this year, sacrificing salary might be an option and it is absolutely legal. There're many different types of arrangements in which employers and employees can agree upon so that both sides could benefit without having any financial loss e.g. medical insurance, gym membership, child care or car leasing etc.
Contact your payroll department for more details or an accountant for tax planning.
6. Employ a companion
In the UK, the personal allowance (£12,570) is a limit on how much you can earn to not pay taxes. If you are a self-employed or business owner and your spouse or partner doesn't work or they're unemployed you might consider employing them and divide the salary of 'Yours' between the two people. Doing that, you can reduce your tax bill.
Income tax is paid at a rate of 20% for most people. This means that for every £1 that you earn, you have to pay 20 pence in tax. However, higher earnings will result higher tax payments.
When it comes to accounts and bookkeepers, it's important to find professionals who can help you keep your company finances in order.
Here are a few tips on how to find a good accountant and bookkeeper:
1. Check with the Better Business Bureau to see if any complaints have been filed against potential accounting or bookkeeping firms.
2. Interview several accounting or bookkeeping firms before making a decision. Be sure to ask about their experience and what services they offer.
3. Make sure the bookkeeping or accounting firm is licensed and insured.
4. Ask for a free consultation so you can get a feel for how the bookkeeping or accounting firm works.
5. Make sure you are aware of and understand the firm's fees and billing practices before starting work.
In this article, we’ve outlined several ways that you can pay less personal tax in Manchester or in the United Kingdom. These include taking advantage of tax allowances, making pension contributions, donating to charity, and sacrificing income tax.
We’ve also provided tips on how to find a good tax accountants or bookkeepers. By following these tips, you can save yourself hundreds or even thousands of pounds each year. Let us know in the comments if you have any questions about tax planning or how to reduce your tax bill.
MH Services Manchester is an expert accountancy firm and tax advisors with many years of experience in accounting, tax and financial services. Contact us today for a free consultation.
Tax Service, Self Assessment
You can rest easy knowing that MH Services in Manchester have everything under control and will take care of all your accounting services so you don't have to worry about it anymore!
18 JAN, 2022 . 8:00 PM
Few basic tips, however very useful. Managed to reduce my tax income by contributing more into my pension plan, plus have kept my bonus tax free too. win win!
20 DEC, 2021 . 10:10 AM
Keep up the good work MH Services Manchester!
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