Five ways to save hundreds on your tax bill this year as millions face paying more

The Sun

8 hours ago

MILLIONS of workers are set to pay more tax on their earnings in the coming years because of frozen tax thresholds.
It's estimated an extra 4.1million more workers will be dragged into higher tax bands by 2027-28.
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Income tax thresholds have been frozen since 2022, meaning that as wages have increased more people are being forced to pay extra.
The previous Conservative Government had frozen income tax thresholds until April 2028, and it's now rumoured this could be extended.
The higher rate tax band is frozen at £50,270, which means any earnings over this amount are taxed at 40%.
Meanwhile, the additional tax band is currently fixed at £125,140, beyond which any earnings are taxed at 45%.
There are some things you can do to cut your tax bill, though. The Sun explains…
Apply for tax relief
You can cut your tax bill by claiming relief on your job expenses. This means you'll take home more of your income and pay less in tax.
To be eligible, you must use your own money for things you need to buy for your job and that you only use for work.
This could include things like uniforms, work clothes, tools, vehicles you use for work, travel and overnight costs.
It can also include the costs of working from home.
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You can't claim tax relief if your employer pays for any of these things or offers you alternative equipment.
But if you are eligible, you'll get the relief based on what you've spent and the rate at which you pay tax.
So if you claim £60 of tax relief and usually pay tax at 20%, you'll get £12 back.
For more information and to make a claim visit gov.uk/tax-relief-for-employees.
Use salary sacrifice
You can top up your income without paying any tax by using salary sacrifice.
This lets you exchange some of your wages for a different benefit from your employer, such as a company car, childcare vouchers or pension contributions.
Of course, your salary will then be reduced by the cost of any benefits you choose.
But as your salary is lower you will pay less tax and National Insurance.
So if you were on the UK average salary of £37,430 and you sacrificed £200 a month into your pension, you would save around £480 a year in income tax.
You would also save nearly £200 in National Insurance, taking your total saving to £672.
Not all employers will offer salary sacrifice so you should check with them.
This method won't boost your take-home pay but it will cut your tax bill and make your money go further.
Claim marriage allowance
You can claim this if you're married or in a civil partnership.
Every worker has a personal allowance of £12,570, which is the amount of money they can earn each year before they start to pay income tax.
Marriage Allowance is a special tax rule that lets you transfer £1,260 of your personal allowance to your husband, wife or civil partner.
Your income must be below £12,570 and your partner must pay Income Tax at the basic rate, which usually means their income must be between £12,571 and £50,270.
Many couples haven't claimed because they don't realise it exists, but it can be backdated for up to four years.
The fastest way to apply for the allowance is online and you should get an email confirming your application within 24 hours.
You can also claim Marriage Allowance by post using the MATCF form.
For more information visit gov.uk/apply-marriage-allowance.
Pay more into your pension
Simply upping your pension contributions is another way to cut your tax bill.
At the moment you're entitled to income tax relief on your pension contributions, so a standard-rate taxpayer will get 20% relief and so on.
Some schemes will let you get all your tax relief automatically but with others you will need to claim higher or additional-rate tax relief from HMRC.
If you have a defined contribution pension, which is most likely if you're in the private sector, you can choose to increase your pension contributions and you won't pay income tax on the extra amount you pay in.
If you have a defined benefit pension, which you likely do if you're in the public sector, you won't be able to change your contributions in the same way.
However you can still look at buying added pension within your scheme or make use of additional voluntary contributions.
Open an ISA account
People with savings could end up paying income tax on the interest they earn.
Most people have a personal savings allowance of £12,570 that you won't need to pay tax on.
But if your total income - including savings interest - is between £12,570 and £50,270 then you will need to pay income tax if you earn over £1,000 in savings interest.
If you earn between £50,270 and £125,140, you owe tax on the amount earned over £500.
For people earning over £125,140, you can't earn any interest without paying tax.
However, everyone can cut their tax bill by putting their money into an ISA.
These are like normal savings accounts but you don't have to pay tax on interest earned if you put in up to £20,000 a year.