New Government Guidance Issued: Minimising your Tax Bill

With the cost-of-living crisis worsening, the government is reminding taxpayers to take advantage of reliefs, allowances and support from HMRC. Here’s what they’re recommending.

Minimising your Tax Bill

(4 minute read)

Today’s tax tip explains:

  • The new guidance to lower your tax bill
  • How you can access tax support
  • Minimising the sting of taxation

What’s in the News?

HMRC isn’t often a taxpayer’s first point of call when battling financial difficulties. But with the cost-of-living crisis putting increasing strain on individuals and businesses, it’s wise to consider all sources of relief.

The government has recently issued some advice for taxpayers to remind you of ways to alleviate your tax burden.

They highlight some less-frequently claimed ways to reduce your tax bill as well as ways to make paying your bill easier.


Marriage Allowance

Marriage Allowance is a simple way to lower your tax bill.

You can transfer 10% of your tax-free Personal Allowance to your spouse or civil partner if you earn less than the threshold (£12,750). Your partner can also make the transfer to you.

This means you could, as a couple, save hundreds on your tax bill.

To be eligible for this allowance, the lower-earning partner must be a non-taxpayer and the higher-earning partner must be a basic rate taxpayer.

Once you’ve set up the transfer, it will be applied year after year automatically unless you stop it. There’s no need to reapply each year.

You can also backdate your claim by up to four years, giving you an extra financial boost.


Childcare Support

For those with children, don’t forget that you can claim Child benefit if you’re raising a child who’s under 16 (or under 20 and in approved education or training).

There’s no limit on the number of children you can claim for, but only one parent/guardian can claim.

You can also claim Tax-Free Childcare, allowing you to receive £500 every three months (or £1,000 every three months if your child is disable) to help with childcare.

Although the name suggests that Tax-Free Childcare is a tax relief, which may be responsible for low uptake, it’s actually a state benefit. This benefit can cover school care, breakfast club care, regular childminders, nannies and nurseries.


Savings

Contributing to your savings may be difficult right now, but HMRC has highlighted schemes that can make saving easier. In particular, Child Trust Funds and Help to Save.

If your child was born between 1st September 2002 and 2nd January 2011, you can set up a Child Trust Fund for them. This helps you put money away, tax-free, for your child.

For those entitled to Working Tax Credit or who are claiming Universal Credit, you could benefit from Help to Save. Help to Save is simple. For every £1 you save, you receive a 50p bonus.


Paying Tax in Instalments

Many taxpayers panic when receiving a big tax bill, feeling pressure to pay it all off immediately. Although paying your tax bills straight away is ideal, there are options for you if it isn’t possible.

You should call HMRC right away to set up a Time to Pay agreement and pay in instalments and spread the cost and alleviate the pressure. If you’ve got an accountant (like us!) we can do this on your behalf.


What Now?

If you aren’t sure that you’re making the most of your allowances and tax reliefs, now’s a great time to review and adjust!

We can help you with all things tax to make sure your bill is as small as possible.

Call us today at at 01772 788200, or WhatsApp us out-of-hours at 07787 010190. Sending an e-mail is simple too, just fill out the short form below and we’ll get back to you!


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