So you didn’t realise that 5 months of your working year was spent battling your way through life for no benefit for yourself. Of course this is an average across the UK taxpaying public. So is there anything that can be done to manage our pay and tax for our benefit rather than HMRC’s?
They are part of everyday life, some people are totally reliant on them! However an employer provided mobile telephone, used privately, does not attract a benefit in kind and is therefore free of income tax and National Insurance. Furthermore, your employer can offset the costs of the telephones against their profits. A win win position.
Sacrificing salary, doesn’t sound like a tax saving scheme? Think again. A Salary Sacrifice allows an employee to obtain tax and NIC relief for pension contributions, childcare voucher, cycle to work schemes and other employment benefits that may ordinarily be paid for out of their own money. For a basic rate taxpayer there will be an immediate saving of 20% in tax and 12% National Insurance.
As an example a pension contribution of £100 through a salary sacrifice, paid over to the pension company by the employer, will on cost £68.
How can a tax code issued by HMRC save tax? Recent publicity has shown that HMRC have issued thousands of incorrect tax code notifications. A simple check of the tax code, and HMRC’s explanation of the code, will reveal any errors of the code number. Errors will affect the amount of tax that is deducted and can run into hundreds of pounds. A simple check, a simple remedy!
Working from Home
Do you work from home? If the answer is yes; did you know that you can claim a weekly allowance of £4 to cover the costs? The claim is quick and simple, a call to HMRC claiming the allowance. It may only amount to £208 per year, but that is a £41 tax saving for a basic rate payer.