TAX SAVING TIPS 2021 FOR YOU AND YOUR BUSINESS

Due to the global coronavirus pandemic, various uncertain things are prevailing in the economy. The consequences of coronavirus shaken the economy, but concerns about finances, health and even jobs have also increased.

Business owners and Entrepreneurs are responsible for paying income tax on the revenue created by their enterprise. It can be a large amount, and they are still on the lookout for deductions and exemptions to minimize their tax outflows.

If you’re self-employed, an employee, a landlord, pensioner, or an investor, there are plenty of ways to minimize your tax bill legally.

Here are the quick tips and tricks that will help you bring more pounds in your wallet by cutting your tax bill.

  1. Maximize your personal savings allowance

If you are a basic-rate taxpayer, you will receive £1,000 interest on savings tax-free. Your tax-free allowance, if you fall under higher-rate taxpayer band, is £ 500. Income that exceeds this threshold would be taxable.

It will not be automatically deducted by the savings provider anymore. You’ll need to pay it by self-assessment or have it removed via PAYE if tax is due. Bear in mind that you may not have a savings allowance as an additional-rate (45 per cent) taxpayer.

  • Transfer assets to your spouse

When you transfer assets to your spouse or civil partner, you get an exemption from paying capital gains tax. So, it might be worth transferring savings & investments to your husband and wife if they pay a lower tax rate than you do.

  • Fulfil the deadlines

Ensure that your submissions with HM Revenue & Customs sent and paid on time. When things don’t go as the way you would like them to be, this isn’t always straightforward, but even when they aren’t, coping with something as quickly as possible gives you & your advisor time to deal directly with them & reduce any fines or interest you can suffer.

  • Capital gain tax (CGT) allowance:

The profit you earn from the sale of certain investments, such as art, antiques, second homes and shares, is called capital gains. In 2020-21, capital gains of up to £12,300 were tax-free.  Civil partners and married couples who hold properties jointly can get a double allowance of £ 24,600.

Always remember, if the usage of allowance is not done during the tax year, an individual will lose it forever.

  • Claim tax-free childcare

You can claim back 25 per cent of your childcare expenses under the tax-free childcare scheme, up to £500 every three months. To be eligible for this, you would need to satisfy certain conditions, including having a child under 11 and earning less than £ 100,000.

Alternatively, an employer launches a salary sacrifice childcare scheme. These are simple to create and can result in considerable savings for employers and employees.

  • Self-employed vehicle costs

 Generally, you can demand the operating costs of a car you use for company purposes (though not the cost of buying one). You will claim a proportion of the overall cost if you use the same vehicle in your private life. For doing this,

  • You need to add up all the motor costs for the year and measure the percentage of business miles you have made,
  • Or you can claim a fixed rate mileage allowance for work travel.
  • Claim for little things

From the last few months, Uk citizens remained at home to help fight the coronavirus’s spread on 23 March 2020. It has indicated that many people need to work from home. You will claim back tax on extra home expenses if this happens to you. For example, if your bills for heating or electricity are rising due to working at home, you can save some money.

If you have to work from home, your employer could opt to pay you an extra £ 6 a week (£ 26 a month) tax-free to cover your added costs. But, if they’re struggling like many firms, you might opt to directly demand back tax relief on the £ 6 of revenue from HMRC.

  • Investment in shares through the business

If your employer offers the right to buy shares through a government-approved scheme at discounted rates, such as the Company Share Option Plan, Share Incentive Plan,  or Enterprise Management Initiative Scheme, the value of shares exempts from income tax and National Insurance.

It’s not entirely tax-free, though. When you do sell your shares, you will undoubtedly need to pay capital gains tax.

Winding-up

If you are still uncertain about paying taxes, then take a step back and talk at the earliest possible opportunity with your tax advisor.

They will ensure that you have thoroughly considered your choices as your trusted business advisor, and will ultimately help optimize and secure your wealth for the long term. Sophia is a full-time financial writer at experlu. she is a passionate blogger and love to share her knowledge on various subject. Content created by Experlu UK– are loved, shared & can be found all over the internet on high authority platforms.

https://experlu.co.uk/

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