Tax planning often becomes a daunting task for a professional, and they may cram during the last time. As the financial year ends, more people start to find an effective strategy to save tax and clear all their dues.
Many people also take help and suggestions from experienced tax planning services to get the best possible solutions. Suppose you need an effective approach with holistic solutions. In that case, you can also approach Pearl Lemon Accountants, one of the most reputed tax consultants in the UK. They offer personalized tax planning for professionals.
But, doing a few home works will help you remain notified about the tax services and offer you better insights. Are you ready for effective tax planning? Here are a few strategies-
Get a Pension Scheme
Effective tax planning also includes future planning. As a sincere person, you need to save for your post-retirement life and get good returns. Having a pension scheme helps you save taxes and ensures you continue to live a secured life even after retirement. You can avoid the marginal tax rate up to 60% with a pension scheme if your income lies within £10000 to £12500. Here, the limit is the lower limit of your annual income of £40000.
It lowers your annual income and also prevents high tax charges, including some much-needed tax relief.
For example, suppose you earn £1000 annually and contribute £100 into the pension scheme. In that case, you will get a basic-rate tax relief of £20. This way, you have to pay only £80 towards pension contribution per annum.
However, you have to ensure that your Annual lifetime Allowance remains under £1073100. Contributing more will cause you extra tax charges from your pension scheme. You can contact reputed tax planning services for more information and proper pension scheme planning.
Always Submit On Time
Another effective tip is to submit on time. If you need to file a self-assessment tax return at the end of the financial year, be on time. Missing the deadline can cause you extra fines and more tax charges. Hence, instead of last time hurries, go for proper planning beforehand, and submit at least a week before the deadline.
Use Tax Credits Tax Relief
A few savings goes a long way. The authorities offer a tax credit facility for those who have young and dependent children. Besides that, professionals with disabilities and lower annual incomes can also request tax credits.
For example, those who have a child below the age of 11 years and annually earning less than £100000 can claim relief on the 25% of the childcare costs. The highest relief amount is £500 for every trimester.
Rent out Your Property
Do you have a spare room or a spare apartment? Then you can use it to get some relief on taxes. You can rent out your property or a part of it if it is fully furnished, and it should be lent out for personal use.
Owners who are paying the loan must get permission from their lending authority to rent it out. If you are the sole owner, you can receive the tax relief of £7500 per annum on the annual rental income. In the case of twin shared properties, each shareholder can claim tax relief of £3750.
There are many other strategic approaches to save on taxes and prevent extra charges. You can consult further with your accountant or consultant for more details and beneficial tips.