With money being tight for everyone at the moment, there are many things that we can all do to reduce our personal tax bill, and it’s not as difficult as you might think. With many companies being able to offer refunds in the thousands, it can only take an hour of your own time, not theirs, to claim back more than you could ever expect.
One of the easiest things to do is check your payslips to make sure you’re getting full use of any personal allowances that you may have, of which the 2011/12 allowance for earners under £100,000 is £7,470. This can be important if you’re earning just over this amount, as your allowance will be reduced by £1 for every £2 you earn, which if earning between the £100,000 threshold and £115,000 could mean that you are paying more tax than you should be, technology doesn’t always get it right. To be given an extra £7,470 on top of what you were expecting can mean a huge difference between that new car or luxury holiday and not being able to afford it.
It’s also important to check your tax code, which for most in the last year should be 647L. If you’ve been paying National Insurance at BR (Basic Rate), it’s important to lodge a claim as soon as you can to refund any extra that’s been paid. This is especially important if you’ve switched jobs within the tax year, or run two jobs, which is becoming more and more popular. BR should be an emergency tax code, and you should always make sure that you’re placing a claim for the part of the year that this was used.
If you’re a non-taxpayer, it’s important to give any financial institutions that you work with an R85 form, which should be sent back to HMRC. This will ensure that you’re not paying tax on any interest that is earned from any accounts. It is also worth making sure that you take a separate letter to banks or building societies asking the assistant to check the forms and sign to say that they have been received, just incase the form goes missing.
If you have paid out expenses for the company, for instance petrol for business travel or professional membership fees and these haven’t been reimbursed, it’s important to make sure that this is noted on your tax return, as you are entitled to claim the tax back for this. This can even include the ‘extras’ such as business car insurance, which can almost double a premium, as the extra expense can be claimed. The mileage rates are 40p per mile for the first 10,000 miles, then 22p after this, which can add up surprisingly quickly.
If you’re over 65 and still working, it’s important to make sure that any extra allowances, such as age allowances and marriage allowances have been added to your allowances. You should also be paying no National Insurance. If you’re under 65, you should be paying no tax or NI on any money that you’re saving into a pension, which with the HMRC extra allowances, it’s double important to make sure that you’re saving the most for your future.
Although it may seem a long way off, it’s worth making sure that you pay as little inheritance tax as possible, of which many people are now finding that the value of their property alone can be worth more than the threshold. It’s worth paying to seek independent financial advice on this from a qualified IFA, as they will be able to guide you best in your own circumstances.