Whether you’re self-employed, employed, a landlord, an investor, or a retiree, there are several legal methods to lower your tax payment. It has never been more crucial to understand the tax laws and preserve your money because the allowances for capital gains tax & dividends tax are shrinking. The following four strategies can help you avoid tax increases in 2023 and save money on taxes. In addition to the strategies, you can consult expert tax advisors Allen & Atherton.
1. Meet the due date for filing your taxes
Ensure you don’t miss the deadline if you’re one of the 12 million individuals who must file a self-assessment tax return: it’s a costly and preventable error. You have till January 31, 2023, to file your 2021–2022 return. However, you must submit it by October 31 if you wish to file on paper. Even though you do not owe any tax, there is a £100 automatic punishment if the deadline is missed. There are further penalties if your submission is six or twelve months late and you have not paid your tax bill on time. After that, the penalty is £10 per day until you hit the £1,000 threshold.
2. Claim a reduction in your council tax
It’s no secret that this year’s council tax has increased dramatically (pretty much with every other thing within England). There are two potential council tax savings strategies:
· Council tax reduction
· Council tax rebate
Your circumstances will determine the decrease in council taxes. Your bill might be lowered by up to 100% if you are:
· A low earner (If your weekly income is less than £95).
· Claiming benefits
Other elements considered include:
· Your residence
· Your earnings
· Your place of residence
Secondly, the UK government was finally compelled to tackle the cost-of-living situation, which is when the council tax refund went into effect.
To qualify for the £150 credit, you must ensure the following:
· Your primary residence’s council tax is paid by April 1.
· Your residence is in bands A–D.
You could also qualify if you’re:
· A scholar
· Having a serious mental impairment brought on by a condition like Alzheimer’s or Parkinson’s
· Having to keep a dependent relative in an annex.
3. Utilize The Starter Rate To Save Money (If Applicable)
You may be eligible to get interested in any savings up to £5,000 without paying taxes if your income is less than £17,570.
Consider this simple example:
You work part-time at the neighbourhood coffee shop and make £12,000 annually. Due to your lower income than your allowance allocation of £12,570, you can collect interest on savings of up to £5,000 without paying taxes.
You won’t be eligible for the starter rate for savings if your income exceeds £17,570. The following guideline is applicable if your salary is less than this:
· Your starter rate for savings is reduced by £1 for every £1 of other income (wages, pension, etc.) beyond your allowance (£12,570).
4. Consult Professionals For Help With Tax Planning
Seek financial and tax counsel in 2023 if you’re determined to improve your financial situation. Consulting expert tax advisors Allen & Athertoncan be a great move for you. The Allen & Atherton team comprises exceptional individuals across accounting, finance, and law in five countries and territories, with over 200 employees. Gaining more money goes hand in hand with minimising your tax by utilising as many tax breaks and allowances as possible. Because it may not appear immediately advantageous to do so, many people ignore readily accessible tax relief alternatives like collecting child benefits. However, using these tax planning tactics collectively quickly adds up. You should talk to an accountant to learn how to minimise any capital gains tax if you’re selling assets. As an alternative, tax-free investment programs like SEIS and EIS can be ones to investigate and further examine if you want to invest.
The four methods listed above are ways you may cut your tax bill this year. Try to finish one or two, or take on the task of completing all four. You will undoubtedly be pleased with your choice if you take that action.
