February 08, 2021
Saving money on taxes is always a top priority for small and medium-size enterprise owners. After all, who doesn’t want to become a wealthy entrepreneur? And always remember that without knowing what you can and can’t do it is difficult to get through legally! Now your search for free tax tips ends here as our tips for small business owners are here to enlighten you about some of the major concerns you should be considering. Make sure your tax code shows how much tax HMRC will collect from your income. You can check it on your payslip. Check your tax code every year, or after changing the jobs, to make sure it's accurate as per your situation.
Claim tax credits: Tax credits offer extra money to those looking after children, disabled workers, and other workers on low incomes. Mainly there are 2 types of claims: working tax credits and child tax credits. You should keep in mind that you can't claim tax credits if you are already receiving the Universal Credit.
You can choose to pay into a pension scheme contributions to your employer's pension scheme which can be made from your gross pay before any tax is deducted. The government will top up your pension with tax support, giving you a free bonus for saving for your retirement.
The benefit of Marriage Allowance: A marriage allowance is a tax benefit that saves tax to couples where one partner earns less than the personal allowance. If you're married or in a civil partnership, the unused personal allowance from the lower-earning partner to the higher earner can be transferred. Up to £1,250 can be transferred as per the recent limit, which can potentially save you up to £250. To qualify, the higher earner must be a taxpayer and paying at least 20%.
You can get back overpaid taxes if you come into a non-taxpayer category, or your income unexpectedly falls during a year, you may come to know that you've been taxed more than you should be paying, as HMRC assumes your allowance is equally used each month. To reclaim this, fill out form R40 from HMRC, or call them to resolve your query.
You can consider claiming tax-free childcare under the tax-free childcare plan, you can claim back 25% of your childcare expenses, up to £500 every three months. You'll have to meet certain criteria, including having a child under 11 and earning less than £100,000. On the other hand, your employer may start up a salary sacrifice childcare scheme. These are easy to set up and can result in significant savings for employees and employers as well.
You can also use the starter rate for savings if you get an income from a job or a pension which is below the £12,500 in the year 2020-21, but you earn income through interest on your savings, you may also be eligible for the starter savings allowance. Any interest you earn up to £5,000 annually is considered tax-free. This will be in addition to your personal savings allowance, meaning you could earn as much as £18,500 before paying your tax. You pay less tax if you come into the category of self-employed people who work for themselves. They can benefit from a range of tax perks.
These tips will help you claim every bit of tax relief to which you are entitled and essential in the current trying times of uncertain economic climate. Many of the tax planning strategies contained in the article are not widely known. Even those with extensive knowledge will uncover lots of priceless tax-saving gems that will help them pay less.