Want to pay less or get more back?

How to reduce the tax burden

12:17 26 March 2013

There are several ways you can reduce your tax burden or get more money back in a rebate. Ever wonder why big business contributes to charities? Part of the reason is tax deductions and the same rules can help you reduce your tax debt to the government, or get more back for yourself.

 

• The rule is that for each amount you give to each charity or a cause that is registered, you will receive a 25per cent reduction on your taxes. 

 

• So if you made a total contribution to registered charities of £1,000 a year, you will get back £250 or reduce your debt by that much. 

 

• This rule also applies if you are filing in the 40per cent tax rate.

 

• You can file this year even if you are not in the percentile as long as you were in the rate the previous year.

 

• You can also request to reduce your instalment payments if your income has dropped.

 

• Just be realistic about how much you should drop based on the difference from your past tax returns.

 

If you have children 18 or over you can give them income-producing gifts which also reduce your tax amount. They will end up paying the taxes on the gifts instead of you.  Don’t be scared though because you can give them a gift up to £8,105 as long as they have no other income while in school.

 

Want to give them more? They will only pay 10per cent on a gift up to £10,545. You can give more but the tax goes to 20per cent then and eventually after that it will go to the 40per cent rate.

 

Lastly double check your tax codes and penalties, if any, since they have changed from the previous year. If you didn’t notify the HM Revenue & Customs about an important change, such as starting self-employment, selling a house or letting a house out, but have not earned any profit then there is no penalty anymore.