£9.3bn wasted on tax: can you pay less?
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| Tax return form (C) Rex Pictures |
We’re set to waste a record £9.3bn in tax this year by failing to plan and take full advantage of tax allowances. Find out how you can reduce your tax burden and only pay what you owe
1. Claim your tax credits
More than £3.7bn of “free money” is up for grabs from HM Revenue and Customs (HMRC) and the Department for Work and Pensions (DWP), in the form of Working Tax Credits, Pension Credits, Child Tax Credits and Working Family Tax Credits.
If you’re in work but on low pay, you can apply for Working Tax Credit to top up your earnings. You can claim this whether you’re employed or self-employed.
Nine out of 10 families with children qualify for Child Tax Credits. How much you get depends on things like how many kids live with you and your income. You may also be entitled to Working Family Tax Credits if you’re responsible for at least one child.
The Pension Credit guarantees a minimum level of income above the basic state pension for everyone aged 60 and over. According to Age Concern almost half of all pensioners are entitled to this benefit.
For more information on tax credits contact the HMRC helpline on 0845 300 3900.
2. Plan your inheritance
A growing number of people are being hit with IHT as the housing market boom pushed them beyond the £300,000 threshold. Yet an extra £1.9bn could go to chosen heirs if we plan properly to avoid IHT liabilities.
IHT is often lost through not writing life assurance policies in trust, not thinking about inheritance tax allowances and, worst of all, by not making a will at all.
3. Give to charity
Up to £936m more could go to good causes by using tax-efficient means of charitable giving, such as using a deed of covenant, Gift Aid or payroll giving – all of these mean the charity usually won’t have to pay tax on your donation.
For example, if you use Gift Aid you get tax relief of 20%, so for every £1 you donate the charity gets £1.30.
