Simple Tax Savings Tips

1. Use your tax allowances: Everyone, regardless of age or status has a tax free personal allowance for income tax purposes (currently £7,475 minimum in 2011/12).  Also, if your spouse/partner isn't using all of their personal allowance, look into whether some of your joint incomes (such as savings or rental receipts) can be allocated to them to minimise your tax exposure as a couple.


2. Claim tax refunds: Most people who are due a repayment of tax are not aware that they are able to claim one.  This could be a result of having the wrong tax code applied to your earnings, or having tax deducted from savings.  If the latter simply filling in an HMRC R85 form can ensure you get your interest tax free.


3. Check your tax code: If you are employed or have a pension, HMRC will issue you with a tax code based on the information that they hold for you.  Your employer or pension provider uses this to calculate the amount of tax they deduct from your earnings.  If HMRC's information is incorrect, you could be paying the wrong amount of tax, so check it out and report it to HMRC if there is an anomaly.


4. Tax efficient savings and investments: Savings schemes are a great way to minimise your exposure to income tax. Simple steps like using up your ISA allowance can cut significant amounts off your tax liabilities. There are also other insurance backed investment schemes that can be used to draw a tax free "income" and minimise your exposure to income tax.


5. Do you have a pension: Contributions into pension schemes are tax exempt. Therefore, by putting extra cash into your pension, or starting one if you don't already have one can reduce your income tax bill.


6. Selling assets and investments: Transfers between spouses and civil partners are tax neutral, so before you sell assets that are likely to realise a capital gain (i.e. shares and property), look at whether it is worthwhile sharing that gain with your spouse/civil partner by transferring ownership of the assets.  As you both have a capital gains tax annual exemption of £10,600 (2011/12) you could easily save almost £3,000 in tax!


7. Making gifts from income: A lot of inheritance tax planning can be, or at least seem, complex.  A simple tip though, is that where you have income above and beyond that which you need to maintain your standard of living you can give it away completely free of inheritance tax, there isn't even a minimum amount of time to survive after making the gift.


8. Claim tax credits: If you have children or work on a low wage, then you could be entitled to claim help from the £3.7 billion of tax credits on offer.  To see if you are eligible, check this out http://bit.ly/7sJH4e


9. Sort out your tax return: Under the self assessment regime, if you have not filed your paper tax return by 31 October or electronic tax return by 31 January following the end of the tax year you will receive a £100 penalty fine, followed by another £10 per day thereafter that it remains outstanding even if you don't owe any tax!


10. Get a Tax Adviser: Using a good Tax Adviser is going to save you money, especially if your tax affairs are in any way complex. At first glance it can seem expensive, but a knowledgeable tax expert will pay for themselves many times over.