Are you someone looking to reduce your tax bill this year?! Make sure you know about some of the allowances that can reduce your personal tax bill for the year!
Get ahead this year – it’s never too late to be tax savvy!
How can Pension Contributions reduce my tax bill?
When you make pension contributions to a private pension scheme, you get basic rate tax relief.
So here’s an example – if you pay £80 into a pension, the government pays £20, to top it up to £100 in your pot.
If you’re a higher rate taxpayer, you pay tax at 40% when your total income goes over £50,270. If you make pension contributions, this limit goes up so that you can get the extra tax back!
So if you earn over this limit, it might be worth thinking about making an extra pension contribution to bring your tax down for the tax year!
How can Charity Donations reduce my tax bill?
When you make a charity payment with gift aid, the government tops the payment up by the basic rate tax rate. Similar to pension contributions; if you are a higher rate tax payer you can get the relief on the gift aid.
If you are a HR taxpayer then contributions made will attract 20% tax relief by extending your BR band.
How can a Capital Gains Tax Annual Exemption reduce my tax bill?
Every tax year, everyone gets a tax-free annual allowance called an annual exemption to use against any capital gains in the year.
This is £3,000 for the 2024/25 tax year, which is a reduction on last year’s, so it’s important to use the larger allowance this tax year if you can.
This allowance applies when you sell things like a second home or shares, so if you can work the timing of the sale well, you could pay less tax on the gain.
How can ISA Allowances reduce my tax bill?
Each tax year, you have a £20,000 tax free allowance to put into an ISA.
There are different types of ISAs such as cash ISAs, stocks and shares ISAs, innovative finance ISAs and Lifetime ISAs. The £20,000 can be put into one of these types of ISA or it can be split between them. Take a look at our ISA blog for more information and guidance on which savings account might be the right match for you and your tax bill! https://future-cloud.co.uk/blog/choosing-the-right-individual-savings-account-for-you/
These are just a few ways you can reduce your personal tax bill. If you need guidance or feel you have any questions – please get in touch with us! Our email is info@future-cloud.co.uk. For more videos and information on tax head to our Instagram @futurecloudacc!
