Tax might seem like the cross we all must bear, but there are ways to lighten the load.
By being strategic with savings and investments, it is possible to reduce your overall tax bill while staying fully compliant with HMRC.
Here are our three top tax tips that will ease your burden.
- Make the most of allowances
Whether it’s understanding your personal savings allowance or knowing how much to fill up your ISA, having a robust working knowledge of tax-free allowances can let you spread your money wisely.
Basic rate taxpayers can receive up to £1,000 tax-free interest per year on savings and higher-rate taxpayers can receive up to £500.
Meanwhile, ISAs offer a £20,000 tax-free allowance. However, this allowance is set to change for under-65s in 2027, so that tax relief is only available on cash up to £12,000, with a further £8,000 allowance for stocks and shares.
- Work alongside your significant other
Your wedding vows may have included the sentiment ‘for richer or poorer’, but by working together, you can ensure that it is the former.
If your spouse pays a lower rate of Income Tax than you, it may be worth moving some of your taxable savings to their name.
This will ensure they are taxed at the lower rate paid by your spouse.
You can also use two sets of dividend allowances, two annual capital gains exemptions and two ISAs to really become a financial power couple.
- Keep your options open
Rather than just putting all your eggs in one basket, it is worth utilising the full scope of saving and investment strategies that lie before you.
This may mean paying more money into your pension so that your wages do not get hit by as much Income Tax, or gifting money to children and grandchildren, potentially into a child’s junior ISA, to lower your Inheritance Tax bill.
Being smart when disposing of assets, such as spreading sales across multiple tax years, also means that you are less likely to incur higher taxes.
Talk to our team
There is a lot to consider when trying to save and invest in a tax-efficient way.
For help keeping your tax bill under control, speak to our team today.