Top 10 Tax Tips - Keep more of your money and give less to the taxman!

Whilst tax is inevitable, there are some tax breaks that you can take advantage of to ensure that you don't pay more than you have to. A recent report (website unbiased.co.uk) shows that the average UK taxpayer wastes £186 a year in unnecessary tax payments.


Check out the below tax tips so that you can save as much money as possible rather than giving it to the taxman.


Tip 1: Check your tax code
Check your tax code. 4.3m employees were over-charged tax in the last 2 financial years because of problems with HMRC IT system. You can claim overpaid tax for up to 6 years, although this will reduce to 4 years in 2012. Check your tax code by looking at your payslip or your coding notice.


Tip 2: Cash ISA
Interest received on Cash ISA's is tax-free. If you can, pay the maximum (2010/2011 - £5,100)/ (2011/2012 - £5,340) into a Cash ISA. 


Tip 3: Pension Payments
Use your pension. Reduce your income tax by making a pension payment. The pension contribution will reduce your pre-tax income. Pension contributions tend to be deductible expenses for the company. Generally speaking, individuals will receive £25 from the taxman for every £100 paid into a pension scheme. Higher paid employees might want to consider a salary sacrifice and receive extra pension payments.This will save both tax and NI. It depends whether the individual can afford to give up the salary.


Tip 4: Mileage allowance 
Claim 40p per mile (first 10,000 miles) for any business mileage that you do in your private car. Keep a log of your business mileage to support your claim.


Tip 5: Working from home
If you work from home, you can claim a 'use of home tax allowance'. HMRC allow a modest £3/week without any evidence. This still represents a tax saving of over £60 per year. You may be entitled to claim a larger allowance.


Tip 6: Tax credits
It is estimated that there is £3.9billion of unclaimed child and pension tax credits. Nine out of ten families with children are entitled to child tax credits. A benefit checker such as Turn2us can help you check your entitlement (turn2us.org.uk).


Tip 7: Loss relief
If you are a sole-trader, there are a number of options available to you. You must use your loss relief to maximise tax relief. Companies have less flexibility, however, they can still carry forward/back losses.


Tip 8: Annual Investment Allowance
If you are thinking of investing in plant & equipment check to see whether you are eligible for the Annual Investment Allowance. Reduce your tax by claiming the Annual Investment Allowance (£100,000 2010/11).


Tip 9: CGT Allowance - Profit on sale of shares
If you have made a profit on selling your shares don't forget to use the CGT allowance of £10,100 (2010/11). Gains on shares are tax free below this limit.


Tip 10: Mobile phone costs
Make sure that your mobile phone is in your business name and you can claim all of your mobile phone costs as a deductible business expense.

If you would like any advice in this area or any other areas of accounting or tax, please contact me on 07834988638 or mail@sjhaccounting.co.uk, www.sjhaccounting.co.uk. Sarah Hamilton takes every. care in preparing material to ensure that the content is accurate and up to date.  However, no responsibility for loss to any person acting or refraining from acting as a result of this material can be accepted by Sarah Hamilton. You should always ask your accountant to give you specific advice which is tailored to your personal and business circumstances