How to Save Money on Taxes in the UK
It can be frustrating to think that you have all your taxes in order and then receive another bill. The UK has a wide range of taxes that we have to pay each year. Many of these taxes are heavily influenced by our lifestyles.
There are many legal ways to lower your tax bills and cut expenses like council and road taxes. This article will give you some ideas on how to save money on taxes in 2022.
How to Save Money on Taxes in the UK
Hire An Accountant
It is the best way to save money on taxes. Taxes can be confusing so it is worth hiring a tax accountant to make sure that your finances are in order.
This is particularly important if you own a business. You could be subject to penalties or fines if you fail to declare your taxes correctly. A professional can help you manage your finances and ensure that you don’t overpay or miss a tax payment.
Drive an Electric Vehicle
You can reduce your road tax costs by driving an electric car.
Because they are zero-rated, driving a fully electric vehicle means you don’t have to pay road tax. This is part of a government initiative to encourage more people to drive fully electric vehicles.
Electric vehicles in London also enjoy exemption from congestion zone fees – this discount is known as the “cleaner vehicles discount” and is given because EVs don’t emit any CO2.
You will still need to pay road tax if you drive a hybrid car, but you can get discounts if you use electric energy primarily.
It’s never been more affordable to buy an electric vehicle than now, with petrol prices rising and EV tax discounts growing.
Move to an Area with a Lower Council Tax Bracket
Council Tax is one of the most expensive taxes that you will have to pay. If you already pay a lot for rent, another big bill could be devastating.
Your property’s value is usually a measure of the amount of council tax you pay. If your property is worth a lot, or you rent it, your council tax will likely be higher. Council tax is used for putting money back in your community. It pays for services such as bin collection and public transport.
You might consider moving to an area with lower council tax if you are open to moving. You might find an area that is as beautiful, if not more so than your current residence, with a lower council tax rate. It can save you a lot of money on council taxes if you are willing to downsize.
You can reduce your tax if you are self-employed or own a business. This allows you to deduct expenses you incur while running your business. These expenses are called ‘tax-deductible expenses’. They include phone service costs, wifi costs, fuel costs, and home-office costs. You can save money by identifying tax-deductible expenses that you can then reinvest in your business.
Claim Tax Credits
Tax credits are useful tools to help reduce taxes and give money to people who might need it. Most tax credits are now replaced by Universal Credit, which can be applied online. If you are eligible, you can still apply to certain tax-free credit programs.
If you receive universal credit or other benefits, you can apply for a tax exemption from the council. This can be done online at the UK Government website. It will tell you if you are eligible.
The UK Government announced in 2022 that a tax-free childcare program would be launched to assist eligible families with childcare funding. For each child, you could be eligible for up to PS2,000 per year to help pay for their childcare (nursery or after-school club, etc.). If a child is a disabled person, this credit may be available to them up until age 17 or 11.
Donate To Charity
Donations to charity are exempt from tax in the UK. Give back to your community by using the Gift Aid program. You or the charity can get the tax back via Gift Aid. This is a great way for you to help others and also save money.
Monitor Your Finances
Although it may seem obvious, knowing your monthly incoming and outgoing financial information is crucial to managing taxes. You won’t feel so overwhelmed by taxes if you are able to plan your finances well. Although you can reduce your tax costs gradually by using the tips above, money management is crucial to achieving the desired results.