Could you save on tax?
If you’re inclined to ignore your finances, Faith archer is here with tax-year tips to help you get the most from your money
tips to help
you get the most from your money
sIX taX Break tIps
hang on to more of your money by snapping up tax breaks on offer. get a shift on because the tax year ends, Cinderella style, at midnight on 5 april…
1stash up to £20,000 in an individual savings account (Isa). your money can then grow free from income tax or capital gains tax, but you can whip it out whenever you want. If you don’t use your allowance before 6 april, you’ll lose it – and have to use next year’s allowance instead.
2pop money in a pension. most people can salt away up to £40,000 a year including contributions from your employer.
For every £1 you put in a pension, the taxman will add 25p on top. higher-rate taxpayers can also claim back another 25p in tax relief on their tax return.
3give generously while you’re alive. If you’re worth more than £325,000 when you die, your nearest and dearest could end up paying 40% inheritance tax (Iht) on anything extra. the taxman will look closely at any gifts in the last seven years, but you can give away £3,000 a year free from Iht. If you didn’t use this “annual exemption” last year, you can even carry it forward to give away £6,000 this year. any gifts to your spouse or civil partner, charities, political parties and small gifts from your normal income also avoid Iht. plus you can make wedding gifts up to £5,000 to your children and up to £2,500 to grandchildren or great-grandchildren.
4Make money from a spare room. you can earn up to £7,500 a year tax free by letting out a furnished room in your home. If you earn less than this rent a room relief limit, you don’t even have to put it on your tax return.
5save for your children. you can put up to £4,260 a tax year in a tax-free Junior Isa, where it’s locked away until the child reaches 18.
6give a leg up on the property ladder. parents and grandparents can help fund help to buy or lifetime Isas, where the saver gets a 25% government bonus if the money is used to buy their first home. save up to £4,000 a year in a lifetime Isa, or up to £200 a month in help to buy Isas.