Top Tips To Save Tax In The UK in the New Tax Year when Tax Reliefs Are Frozen Or Halving

With the COVID-19 pandemic causing economic uncertainty around the world, many countries have been forced to make changes to their tax systems. The UK is no different, and in recent months, the UK government has announced a number of changes to tax reliefs and deductions.

For example, the government has announced that it will be freezing or halving a number of tax reliefs, including the married couples’ allowance, the inheritance tax threshold, and the capital gains tax exemption.

Despite these changes, there are still a number of ways in which UK taxpayers can save money on their taxes. In this article, we will share with you some of the top tips to save tax in the UK.

Utilise tax reliefs

While some tax reliefs have been reduced, there are still many available. For example, you can claim relief for charitable donations, pension contributions, and business expenses. Make sure to keep records of any allowable expenses throughout the year.

Make the most of your personal allowance

Each UK taxpayer is entitled to a personal allowance, which is the amount you can earn before you start paying income tax. For the current tax year, the personal allowance is £12,570. You should make sure to use your personal allowance by taking advantage of income-splitting opportunities with your spouse, claiming any tax reliefs that apply to your situation, and ensuring that you use your full personal allowance.

Consider tax-efficient investments

There are many tax-efficient investments available in the UK, such as ISAs and Venture Capital Trusts (VCTs). These investments can offer protection from income tax, capital gains tax, and inheritance tax. Make sure you speak to an expert on the tax implications of different investment options before making any decisions.

Plan for inheritance tax

Inheritance tax can be a significant expense for many families. You can minimize your liability by gifting money or assets to your loved ones during your lifetime, setting up a trust, or purchasing life insurance. Make sure to speak an expert before making any significant gifting decisions.

Use a pension to reduce your tax bill

Contributions to your pension are tax-free, which means they reduce your taxable income. Make sure to take advantage of any employer contributions, as well as any allowable personal contributions. Additionally, you may be able to carry forward unused pension contributions from previous years to reduce your tax bill for the current year. In conclusion, there are still many ways to save tax in the UK despite the recent changes to tax reliefs and deductions.