15 straightforward ways to cut your tax bill ahead of January 31 deadline
WITH just two weeks left to complete your tax return ahead of the deadline on January 31st, there are a number of ways you can cut your bill.
Using various tax codes, allowances and rebates, you can reduce your tax bill, and you don't need to break the law to do it.
Remember, if you miss the deadline for submitting your tax return, you could face a £100 fine.
1. Marriage tax allowance can save you £220 a year
If you're married or in a civil partnership and you are a low earner (i.e you pay no tax because your income is less than the £11,000 personal allowance), you can transfer £1,100 of your personal allowance to your partner if they are a high earner and pay tax (at 20 per cent).
This can save couples up to £220 a year, and the allowance can be backdated meaning some couples are owed more.
Despite this, only a quarter of married couples have claimed the marriage tax allowance. That means 3.2 million married couples are missing out on the extra cash and you could be one of them.
For more information and to apply for a marriage allowance, go to .
2. Take advantage of double allowance on capital gains tax
This one if a bit complicated...but stay with us. Capital Gains Tax (CGT) is a tax on any profits made when you sell investments or a property.
If you sold your home in the 2016-17 tax year (April to April), then you'll be liable to pay on the total taxable gains made by selling the property.
If this comes to more than your annual allowance (£11,100), you must pay tax on everything earned above that.
Basic rate taxpayers pay CGT at 18 per cent, while higher rate taxpayers pay 28 per cent.
But, bear in mind that married couples and civil partners who own assets jointly can claim a double allowance of £22,200 - don't miss out on this shared allowance if you're liable to pay the tax.
3. Annual investment allowance for landlords
If you are a landlord or run your own business, you can take advantage of the annual investment allowance to claim for capital expenditure on items such as tools and computers.
From January 2016, you can claim relief on up to £200,000 a year, consumer group Which? said.
For more information visit .
4. Self-employed tax-deductible expenses
If you're self-employed, there are certain expenses you can claim for on your tax return.
Expenses that are typically tax-deductible include travel and accommodation, rent and energy bills for business premises, or bills including heating, council tax and water if you work from home.
You can see a full list of qualifying expense claims on the .
5. Earn up to £7,500 in tax-free income on Airbnb
If you rent out a room in your house on Airbnb or privately to a student or lodger, you can earn up to £7,500 in income tax-free before it has to be declared to the taxman.
The amount is halved if you share the income with a partner or someone else.
More information can be found here:
6. Reclaim thousands on running car costs
If you're self-employed, you can claim against the running costs of a car but not the cost of buying one.
On the first 10,000 miles you can claim 45p per mile, and after 10,000 miles it's 25p per mile. For motorcyclists it's a flat rate of 24p.
So if you have driven 15,000 miles over the year for work, you can claim back £5,750 (£4,500 at 45p + £1,250 at 25p)
7. Charitable donations for higher rate taxpayers
If you are a higher rate taxpayer and you gave to charity this tax year, you can claim back income tax on the donation.
This can be used for money spent on National Trust or English Heritage membership, as both are charities.
If you gave £100, for example, and added gift aid (£25), you can claim back £25 if you paid tax at 40 per cent.
8. Amending your tax return
You may be unaware that you can amend your tax return after it has been submitted, even if this is after the January 31st deadline.
If you have made a mistake which could cost you, you can update your return within 12 months of the original deadline.
Although HMRC has the right to penalise you for supplying incorrect information in the first place, if a mistake is a big enough one that could prove costly, it might be worthwhile changing it.
9. Reclaim tax on professional/union fees
You can reclaim tax paid on fees or subscriptions to some professional organisations or unions - but only if you must have membership for your job or it’s helpful for your work.
You can find a list of , whose fees you can deduct from your income before tax.
The National Union of Teachers (£177 a year) is on the list, while The National Union of Journalists (£180 a year) isn’t.
10. Get a tax rebate on work uniforms
If you wear a uniform at work, and have to repair or replace it yourself, you can reclaim money back from the taxman.
The tax rebate applies to a number of different professions, including police officers, nurses, cabin crew and more.
To be eligible for the rebate, you must be required to wear the uniform while you're working and you have to purchase, clean, repair or replace it yourself.
The standard flat rate expense allowance for uniform maintenance is £60 – so basic-rate taxpayers can claim £12 back, and higher-rate payers £24, according to MoneySavingExpert.com.
11. National insurance beyond state retirement age
If you're still working beyond state retirement age (63 for women and 65 for men), make sure you stop making National Insurance contributions.
You only pay income tax if your taxable income - including your private pension and State Pension - is more than your tax-free allowances.
If you think you should be paying tax, speak to HMRC.
12. Get a cash flow boost if you're self-employed
According to Which?, if you are setting up as self-employed, you may be able to improve your cash flow 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.
You can choose when your accounting year ends – and change your year-end date if you want to.
For example, if your accounting year ends on April 5th, in 2016-17 you are taxed on profits for the year to April 5th 2016.
13. Reduce payments if you're income was lower this year
If you are self-employed and expect to earn less in 2016-17 than you did the year before, you can apply to reduce any payments on your account.
Either log into your online account and click 'reduce payments on account' or send form SA303 to your tax office.
14. Check your tax code to make sure you're not paying too much
Before you start on your tax return, you should always check that the tax code on your payslip is correct. If you're on the wrong code, you could be paying too much tax.
Once you know your tax code, you can check to see if you're paying too much by using .
If you think you're paying too much or too little, simply call HMRC on 0300 200 3300.
15. Pay less tax on savings
If you're a basic rate taxpayer, the first £1,000 of interest you earn from savings is tax-free. If you are a higher rate taxpayer, the limit is £500.
This means that most people don't need to pay tax on savings interest, as banks and buildings won't deduct it from your account.
If you’re a basic rate taxpayer and have savings income of more than £1,000, you’ll have to pay tax, but HMRC will normally collect this by changing your tax code.
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