Tax Savings

Would you like to save money before the end of the tax year? Read on…

1. Income tax

Check your tax code.
Your tax code indicates how much HMRC will collect from your salary or pension, looking at it another way it indicates the amount on which you do not pay tax.

Claim tax credits!
Tax credits provide extra money to disabled workers, other workers on low incomes and those looking after children. The two main ones are working tax credits and the child tax credits. You can look up the criteria for claiming these at the HMRC website.

Pay into a pension scheme.
If you are employed or retired make contributions to a pension, it is incredibly tax efficient. The government will top up your pension contribution with tax relief giving you a free bonus for saving! Ask a financial adviser how.

Reclaim overpaid taxes.
If you’re a non-taxpayer or your income has fallen significantly during the year you may find that you have been taxed more than you should have done, to reclaim fill out form R40 from HMRC.

2. Cut taxes on your savings

Maximise your personal savings allowance.
Currently a basic rate taxpayer can earn £1,000 of interest tax-free, for a higher rate taxpayer the limit is £500. Discuss with a financial adviser all the options because large cash deposits might be put to better use.

Make the most of your ISA allowance.
Everyone has an annual tax-free ISA allowance, currently this is £20,000. It may be spread over a cash and stocks & shares. Independent financial advice can be helpful in making good decisions here as well.

3. Cut your investment tax bill

Dividend allowance.
Each year you can earn a certain amount of income from dividends before paying tax. Currently you can still earn up to £2,000 in dividend income without paying tax each year.

Capital gains tax allowance.
Capital gains is the profit you make from selling certain investments, including second homes, art, antiques, and shares. Gains of up to £12,300 are tax free in 2020-21. Married couples and civil partners who own assets jointly can claim a double allowance of £24,600.

For help with Investment and Savings and Financial Planning, call us on 01733 314553 or email us at info@brookswealth.co.uk.