The tax office always wants people to pay their tax as at when due. However, do you think you are paying too much to the taxman?
It’s natural that we are all looking for ways to save money and keep our money out of the taxman’s reach.
I am yet to see people willingly wanting to pay the taxman more than their fair share of the tax, even though millions of people are indirectly paying more than expected.
If you think you’re paying too much tax, the best thing to do is to find out how some of the money you are paying as tax could be legally kept away from the tax office in order to ease your tax burden.
How to avoid paying too much to the taxman
Meanwhile, don’t ever think you can ease your tax burden by hiding, evading, dodging tax, or hiding from HMRC behind your sofa, chances are you will be caught and probably end up in jail.
But, luckily, there are easier, legally and morally acceptable options that could save you money and spare you jail.
#1). Check on your tax relief entitlement
Do you know that around a quarter of a million taxpayers are missing out on the extra 20 per cent tax relief they are due? This is why it’s very important to check if you are entitled to any tax relief.
Tax relief entitlements could help you save some money. Make sure you look out well. You can get this by simply writing to your local tax office.
#2). Check on tax claim or tax refund
A tax refund will enable you to reclaim tax if you have overpaid through your job. Some people are paying too much tax because they didn’t know, and when they eventually discovered it, many don’t bother to claim their money back from HMRC.
A tax refund can help you claim some money back from the tax office. You can end up claiming thousands of quids that can be used or spent on other stuff like family holidays.
Tax refund is sometimes called accidental overpayments and perhaps, it is the easiest way to enrich the HMRC if left unclaimed. By doing this, you stand a better chance to claim back what’s yours.
#3). Check on whether you are not overpaying
It is possible that you are currently overpaying the HMRC as a result of system errors. In 2011, a system error at the HMRC caused hundreds of thousands of taxpayers to be sent incorrect codes, which means that they were left paying the wrong amount.
This is why it’s important for you and every tax payer to always make sure they check they are on the right code as soon as possible. This will enable you to claim back any overpayments.
#4). Pension saving
Pensions are also a way of making the taxman pay you. For instance, if you pay £800 into your pension, the taxman has to add £200. At retirement, you can take 25 percent of your fund as a tax-free lump sum.
#5). Interest management
Managing the interest on your savings will also reduce the amount you pay as tax. Millions of non-taxpayers have income tax reduced from the interest paid on their savings.
Ask your bank or building society to pay interest without deducting tax in future.