How do I save income tax?

In reality, there are only five ways to save income tax


In reality, there are only five ways to save income tax:

1. Think ahead

If you want to keep your tax bill to a minimum, ongoing tax planning can make a big difference. So make sure you talk to your accountant or independent financial adviser in good time.

2. Minimise your taxable income

You can reduce your taxable income in many ways – such as leaving your income in a trading company or borrowing against it, managing your benefits efficiently, or moving your capital to an investment company.

3. Maximise your reliefs, allowances and reductions

Gifts to charities and pension contributions are just two of the best-known payments that can generate tax relief. But there are many more. These include capital and lease allowances, and expenditure on R&D, land remediation or low emission cars.

4. Calculate your tax properly

No amount of minimising your taxable income or increasing allowances will help if you fail to complete your tax return properly. Keeping good records and getting the order right will help. In most cases, it’s best to use an accountant.

5. Avoid the Traps

There’s a long list of common mistakes claimants make. Transferring income to others, especially minor children, overpaying gift aid or using assets that have been given away are among them. There are many more, but most important of all is to ensure you file on time and pay on time.