Most likely, you’re saying to yourself, “This seems too good to be true.” It’s fine, that. That is what I would also assume! However, there are completely legal ways for individuals to organise their finances and pay less tax. Let’s look at legal ways to lower your tax bill.
Legal Ways To Lower Your Tax Bill – Tax Relief
Most contributions to work pensions should be tax deductible, depending on your tax rate. Since 20% should be automatically added at the source, you only pay £80 for every £100 you contribute to your pension. You might be eligible to receive this money back if you pay a higher tax rate (40 percent).
As a result, you may have to pay less tax if you contribute more to your pension (up to a specific amount). Additionally, you’ll probably have a bigger pension pot when you retire, which is always a plus!
Options For Couples
Unless you earn more than the Personal Allowance of £11,850, you are not required to pay income tax. Since the government may increase it further, expect the amount to increase with each passing tax year. If you earn this much or less and are married, you can divide your tax-free income with your spouse.
Couples who are married or in a civil partnership are eligible for what is known as the Marriage Tax Allowance. In the event that one of you earns less than £11,850 and the other less than £46,350, you are able to transfer 10% of your personal allowance to the higher earner. The allowance has an annual value of up to £238. For the prior three years, you can make a claim for back taxes.
Legal Ways To Lower Your Tax Bill – Spare Space?
You may make £7,500 annually tax-free if you rent out your extra room. You must pay tax if your income exceeds this amount.
Tax-Free Earnings
For instance, if your annual eBay earnings are less than £1000. Additionally, dividends received as a director may be declared as such and subject to a 7% tax rate. Winnings from gambling are not regarded as taxable income. Not that you should waste your money, mind you. Instead, think about matched betting, which enables you to profit without taking any risks by utilising bonuses provided by bookies. This is how a lot of individuals support themselves full-time, and none of it is taxed.
Self-Employment
You can deduct all expenses from your profit for a tax year, which lowers your tax obligation. Make sure you file claims for all of your legal entitlements.
