How to Save Tax
How to Save Tax
Tips Straight from the Accountant's Mouth
We all have to pay taxes. But what if we told you there are several strategies you can adopt to help reduce the amount of tax you pay?
Have we piqued your interest yet? Good! Because we are sharing six tips to help you save tax and get the most for your money!
1. Hire an accountant
First and foremost, we strongly recommend hiring an accountant. Their specialist advice can help you identify inefficiencies, develop scalable strategies and (of course) save on tax. So don't try and go it alone! Instead, let the experts oversee your books so you can spend your time streamlining your business and generating profits.
2. Travel tax-free
There are a couple of ways you can save on tax whilst travelling to and from work.
Firstly, by adopting the Cycle2Work scheme. The Cycle2Work scheme allows you to pay for a bike (and any other necessary equipment) directly from your gross salary. As a result, you pay less tax and national insurance on your monthly salary (with savings from 33.25% to 48.25%) whilst also purchasing a tax-free bike!
However, if cycling isn't for you, you always have the option to invest in a company car.
By purchasing a company car, you can put all running costs through the business and gain tax relief on required services like road tax, insurance and repairs. Plus, if you opt for an electric vehicle, you can enjoy up to 100% relief on your corporation tax! All this to say - it pays to be environmentally friendly!
3. Split your household income
Splitting your household income is an incredible tax-saving strategy. Why?
Because it allows you to reduce your personal income! In turn, you can maximise your personal allowance, reduce your national insurance and enter a lower tax bracket.
But how does it work?
When you employ a spouse or family member (who lives in the same household), you both contribute to income tax. In turn, you pay a lot less tax and national insurance than if you made the same amount of money independently. Of course, this is only applicable if your spouse or children play an active role within your business. However, it is well worth it if you're able to delegate some of your duties.
4. Maximise your business expenses
You're afforded business expenses for a reason. So, use them to your advantage!
Some allowable expenses include:
- Travel: including business trips and the expenses incurred throughout (i.e., food and accommodation)
- Equipment: such as stationary, software and printing equipment
- Communication expenses: including phone and broadband bills
- Insurance policies (i.e., public liability insurance)
- Household expenses
- Printing, Postage and Stationery expenses
If you're ever unsure about a business expense, make sure you speak to your accountant.
They will tell you exactly what you can and cannot claim, so you can maximise your business expenses without breaking any rules.
5. Take advantage of employee benefits
Employee benefits offer further tax relief for employers and employees.
You see, by deducting these expenses before tax, you can enjoy the additional perks without paying tax on them. (Not to mention, you're reducing your income tax once again!)
Some examples of tax-free benefits include:
- Work phones
- Office parking
- Pension advice
- Life insurance
- Cheap or free canteen meals
- Childcare arrangements
6. Invest in your pension
Pension schemes allow you to invest in your future whilst avoiding additional income tax.
Again, this is because your pension deductions are made before you pay your income tax.
So, although you cannot access the money straight away, by paying into your pension, you are getting more bang for your buck.
Oh, and don't forget - you can withdraw up to 25% of your savings in a tax-free lump sum!
So don't worry if you need to release some capital when you retire. You can still enjoy your hard-earned money without being taxed.
Get more from your money!
Remember, when it comes to taxes - your accountant is your best friend. So don’t underestimate their abilities! Instead, seek their advice and use their knowledge to your advantage.
Together, you can develop tax-efficient strategies that will ensure you get the most for your money whilst always complying with tax legislation.
