30 ways to save tax
• Advice to help save you money on your tax bill
• Income tax advice for employees, the self-employed and pensioners
• How to save on capital gains tax
• Tax and your children, tax and your partner and tax on your property
Tax codes, allowances and deadlines
Review your tax code each year (this is your personal allowance i.e. 647L). If the tax code is incorrect, you might be paying more tax then you should be.
Capital gains tax allowance
Don't forget that any gains under £10,100 are free from tax. Also Assets owned jointly Married couples and civil partners can claim a twice the allowance of £20,200. standard rate taxpayers pay 18% tax on any Capital gains, whilst high rate taxpayers are charged 28% CGT. Therefore plan you the disposal of any assets carefully and make sure to use your annual allowance of £10,100 each before the 05 April each year.
Tax return deadlines
The filing deadline for paper tax returns is the 31 October. Don't forget you can also complete your tax return online up to 31 January 2011. Therefore avoid the late filing penalty of £100 and don't miss the deadline.
Annual investment allowance
If you are self employed or a landlord, you can utilise the annual investment allowance (AIA) to claim reduce your tax liabily by claiming for capital expenditure on items such as computers and equipment. The relief available to claim is up to £50,000 per annum.
How to pay less tax if you're self-employed
If you run your own business, don't forget to claim all your tax-deductible expenses, including cash expenditure where eligible.
6Self-employed car costs
If you run your own business, you can also claim the running costs of a car, but not the cost of buying one. If you use the same car privately, you can claim a proportion of the total costs.
7Cash-flow boost for self-employed
If you are setting up as self employed, you may be able to improve your cashflow by choosing an accounting year that ends early in the tax year. This maximises the delay between earning your profits and your final tax demand.
If you are self employed, you can carry forward losses from one year and offset them against profits from the next. See our page on when the self-employed pay tax for more.
9Payments on account
If you are self-employed and expect to earn less in 2010-11 than you did the year before, apply to reduce any payments on account that HMRC ask you to make.
Saving tax on property income
10Rent a room
Rent a room relief is an optional scheme that lets you receive up to £4,250 in rent each year from a lodger, tax-free. This only applies if you rent out furnished accommodation in your own home.
11Landlord's energy-saving allowance
If you rent out property you can claim special tax allowance of up to £1,500 for insulation, draught proofing and installing a hot water system.
If you rent out property, you can deduct a range of costs before declaring your taxable income. These include the wages of gardeners and cleaners, and letting agency fees. Use the Which? tax calculator to see how this can save you money.
13Tax relief on your mortgage
You can claim tax relief on the interest on a mortgage you take out to buy a rental property - even if it the rental property is abroad.
14Reduce capital gains tax on a rental property
Landlords are normally liable for CGT when they sell a rental property. If it has been your main home at some time in the past, you can claim tax relief for the last three years of ownership.
Pay less tax on savings and investments
Use your tax-free Isa allowance. This year, the overall limit is £10,200, of which £5,100 can be put into in a cash Isa. See our guide to tax on savings and investments for more details.
16No CGT on shares held in an Isa
There is no capital gains tax to pay when you sell shares or units held in an Isa. For more details see Tax on savings and investments.
17Child trust funds
Use child trust funds (CTFs) or Children's Bonus Bonds to avoid being taxed on gifts you make to your own children.
Transfer savings and investments to your husband, wife or civil partner if they pay a lower rate of tax than you do. See our guide to tax and your partner for more information.
Stop children being taxed at source on their savings by completing a simple form (R85) on their behalf.
Tax savings for older people
If you are aged 65-plus you may be eligible for an increased personal allowance. This means you pay a lower income tax rate. See Tax and allowances for older people.
Make sure you stop making National Insurance contributions if you carry on working beyond state retirement age (currently 60 for women and 65 for men).
If you are over 65, making donations to charity through Gift Aid can reduce your taxable income to below the threshold at which you start to lose out on age-related allowancesage-related allowances. Use the Which? tax calculator to figure out if this will work for you.
Tax relief on gifts
If you are in a higher tax bracket, you can claim back the difference between the basic and higher rate of income tax on any Gift Aid donations.
Lifetime gifts are not normally counted as part of your estate for inheritance tax purposes if you live for a further seven years after making them. Known as potentially exempt transfers (PETs) they can reduce your residual estate significantly.
Tax savings through employee benefits
Season ticket loan
If you are a commuter, review to see if your employer will give you a tax-free loan to buy your season ticket.
Use a pool car for occasional business travel, if your employer provides these.
Childcare schemes and tax credits
If you are an employee and pay for childcare, ask your employer if they have a childcare scheme. Salary sacrifice childcare schemes are easy to establish and can result in substantial savings for both employees and employers. For more details see working for an employer. Child tax credits can also save you money.
If you are entitled to a company car, consider whether it would be more tax-efficient to take a cash equivalent in pay instead.
If you are changing your company car, consider switching to a greener car. These are now taxed at a lower percentage of their list price, than cars with a high CO2 rating.
Pay in to a pension scheme
Contributions to your employer's pension scheme (including any additional voluntary contributions you make) can be made from your gross pay, before any tax is charged.