How to legally pay less tax on your income as millions hit with stealth taxes
Around 4.1million extra workers will be dragged into higher tax bands by 2027-28, according to the most recent figures from the Office for Budget Responsibility.
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Income tax thresholds are frozen until April 2028, which means that more people could find themselves pushed into higher tax bands through a concept called fiscal drag.
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%.
But there are things you can do to prevent a surprise tax bill from landing on your doorstep.
Here we explain how you can reduce your tax bill and avoid the tax trap.
Apply for tax relief
One way to reduce your tax bill is to claim tax relief.
You can claim the relief on your job expenses, which means you will take home more of your income and pay less tax.
To be eligible you must use your own money for things that you need to buy for your job and you only use for work.
You can claim for items including working from home, uniforms, work clothes, tools, vehicles you use for work, travel and overnight costs.
You cannot claim tax relief if your employer gives you all the money back or alternative equipment.
You will get the relief based on what you have spent and the rate at which you pay tax.
For example, if you claim £60 of tax relief and usually pay tax at 20% then you will get £12 back.
The exact amount you could get depends on what you are claiming for.
For more information and to make a claim visit gov.uk/tax-relief-for-employees.
How do I check my tax code?
YOU can check your tax code on your personal tax account online, on any payslips or on the HMRC app.
To log in, visit www.gov.uk/personal-tax-account.
If you have one, you can also check it on a "Tax Code Notice" letter from HMRC.
Bear in mind that you might need your Government Gateway ID and password to hand to log in.
But if you don't have this you can use your National Insurance number or postcode and two of the following:
A valid UK passport
A UK photocard driving licence issued by the DVLA (or DVA in Northern Ireland)
A payslip from the last three months or a P60 from your employer for the last tax year
Details of a tax credit claim if you have made one
Details from a self assessment tax return (in the last two years) if you made one
Information held on your credit record if you have one (such as loans, credit cards or mortgages)
Claim marriage allowance
If you are married or in a civil partnership then you may also be able to reduce your tax bill by claiming Marriage Allowance.
Every worker has something called a Personal Allowance.
This is the amount of money you can earn every financial year before you start to pay Income Tax.
For the current tax year the Personal Allowance is £12,570.
If you earn less than this then you usually do not have 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.
It is free to apply for and can reduce your tax bill by up to £252 every tax year.
To be eligible you need to be married or in a civil partnership.
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.
Ian Futcher, financial planner at Quilter, said: 'Many eligible couples haven't claimed this, often because they simply don't realise it exists.
'It can be backdated for up to four years if you're eligible.'
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.
Make use of salary sacrifice
Salary sacrifice is a great way to top up your income without paying any tax.
It lets you exchange some of your wages for a different benefit from your employer, such as a company car, childcare vouchers or pension contributions.
Your salary is then reduced by the cost of any benefits you choose.
As your salary is lower, you will pay less tax and National Insurance.
For example, someone who earns the UK average salary of £37,430 could decide to sacrifice £200 a month into their pension.
Over the course of a year they would pay £2,400 into their pension.
By using salary sacrifice their wage would fall to £35,030 a year, which would save them around £480 a year in Income Tax.
They would also save nearly £200 in National Insurance, which means their total saving would be £672.
Salary sacrifice also saves your employer money on National Insurance.
Many employers will pass this saving on to you by paying more money into your pension.
As a result, your total pension contribution could be more than £2,700.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said it is worth checking if your employer offers salary sacrifice.
She said: 'It will not boost your take-home pay, but it will cut your tax bill and make your money go further.'
Pay into pension
If you are lucky enough to earn more than £60,000 a year then you may be able to get more Child Benefit with an under-used trick.
Child Benefit is paid by the government to parents or other people who are responsible for bringing up a child.
It is currently worth £26.05 for the eldest or only child and £17.25 for every additional child you have.
You get this full payment if you earn less than £60,000 a year.
But beyond this point you need to start paying the benefit back at a rate of 1% for every extra £200 you earn.
The payment disappears entirely once you earn more than £80,000 a year.
But you may be able to hang on to more of your Child Benefit with a simple trick, Ian Futcher explains.
He said: 'If your earnings are close to the threshold, using pension contributions or salary sacrifice to reduce your taxable income could allow you to keep more of your Child Benefit.'
For example, if you earned £61,000 a year then paying £1,000 into your pension would allow you to keep all of your Child Benefit.
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