Posted: 23. October 2019 by: Rupert Tennant

How to Save on your Taxes

No one likes paying their taxes even when they understand that they pay for the much needed public services. That’s why you should take the time to learn about all the ways you could save on taxes early on and put them to use when it comes to your financial plans and accounting practices.

These tips will help you save on taxes while remaining within the rules of the tax code and not having to pay any additional fees or any additional services for the accounting services.

Charitable donations

There are a few reasons why you should donate to charity and taxes are the least of your concerns. The main reason to give to charity is that you think it’s a worthy cause and you want to help those in need. While doing so, you could also get a break with your tax payments.

The tax donation you’ve given to charity will simply be deducted from your taxes for the year. This is only the case if the charity you’ve donated to is actually registered as such with the proper authorities.  There’s also a limit when it comes to an amount.

Buying shares

Buying shares and having a passive income stream is one of the most responsible things you could do to improve your finance. However, the income made from shares is taxed differently than ordinary income, and there are additional expenses for managing your portfolio.

One of the ways to avoid these is to buy shares through your business. That means that you get the managerial scheme that has a large organization behind it, and you don’t need to be worried about dealing with your portfolio. These funds are also only taxed when you take the money out of them.

ISA

ISA stands for an individual savings account, and it’s a great way to protect your savings from taxation. The money that you put into the ISA funds isn’t taxed until it reaches a certain amount and then you only pay it when you take the money out of it.

There are also niche ISA funds that are there to help with a particular purchase or with a particular type of client using them. These include ISAs made to help you buy a home and a junior ISA that will allow you to start saving money for your kids.

Losses

When a company makes a loss, it can be deducted from yearly taxes as well. That’s the way for the government to help the companies that are going through a rough time not to get closed the first time they go into the red.  The amount is simply deducted from your yearly bill unless it’s over a certain amount.

This is where you need to keep track of your records and to be able to prove that you have actually lost money during this year and that your business can still be profitable if you get this break.

Marriage allowance

The marriage allowance is a tax break for married couples, but it isn’t as simple as it sounds. It sounds as if you get a tax break for being married, and that’s not what the actual policy is about. Instead, this is an allowance anyone else gets, but it can be shared between married partners.

There are, however, quite a few rules that you need to follow in order to use this allowance. Firstly, you need to earn below a certain amount, and you need to transfer the allowance from the partner who earns more to the one that earns less.

Pay on time

This may sound like the simplest advice on our list, but it’s rather an important one, and you should stick to it no matter what. There are a few reasons to do so. Firstly, it means that you don’t have to pay additional fees and taxes that are added if you’re late.

Secondly, and possibly more importantly, when you keep paying your taxes on time, you’ll set up a good working relationship with HMRC, and you’re late in the future HMRC could end up being on your side and give you some extra time.

Conclusion

There are many ways to save on your taxes. Most of them are just about knowing the tax code and following the rules when it’s important to. It’s also useful to have an accountant to help you along since they are the ones who are the most familiar with the tax systems.

Some of these are rather simple since they are just about following the rules and using all the allowances that you have the right to. Others, however, are more complex and are mostly about making sure your streams of income are diversified in terms of how they are taxed.