10 tax-saving tips in the UK
It’s no surprise that the rules around tax tend to change all the time. And the tax year 2019-2020 is no different. This can make it incredibly difficult to know what you can and cannot claim.
Here’s a detailed review of the top 10 tax-saving tips that apply to the 2019-2020 tax year.
1. Use your ISA allowances
There’s no UK income tax on assets that are held in an ISA, which makes it one of the best tax-efficient ways of saving money.
2. Use your pension allowance
Your pension is an enormously tax-efficient way of saving for your future. Plus, you get up to 100% tax relief on all your pension contributions.
3. Use your partner’s pension too
If your partner is a non-earner, you can use this to your advantage. Non-earners under 75 can make up to £2,880 in pension contributions even if the individual doesn’t pay tax.
4. Capital gains also have an allowance
You can earn a significant amount in Capital Gains Tax. You can also execute a ‘Bed & SIPP,’ which protects any gains that you make within the wrapper.
5. Transfer assets to your spouse
This can be beneficial if your spouse pays less tax or no tax at all. You could save a lot on valuable allowances every year.
6. Use any available carry forward
Take advantage of any unused annual pension allowances that have accrued over the years. This can effectively increase your allowances as well.
7. Divvy up your dividends
You can save up to £2,000 in taxable dividend income, which is usually free. Therefore, if there are two of you, then you can enjoy up to £10,000 annually without paying tax.
8. Always be aware of any updates on your personal savings allowance
Ensure that you make use of the £1,000 savings income on tax, which is often tax-free. This includes interests accrued from peer-to-peer loans and corporate bond funds.
9. Benefit from the marriage allowance
If you are married, you can transfer your unused personal allowances from the low-earning partner to the high-income earner. The only catch is that the higher earner must already be a 20% or more taxpayer.
10. Register losses: use them to offset gains
After registering your losses, you can use them to offset any gains in the future. This will effectively reduce any future capital gains and tax liabilities.
The way tax charges are applied depends more on individual circumstances and is often subject to change. The 2019-2020 tax year comes with even more rules and allowances that aren’t guaranteed and may change at any point in time. You must, therefore, keep yourself updated by following the tips and tricks mentioned above to save on tax in 2020.