Paying taxes is a necessary part of life, but nobody wants to pay more than they have to. The good news is that there are many ways to save in a tax efficient manner in the UK. By taking advantage of tax reliefs, allowances and exemptions, you can legally reduce your tax bill and keep more of your hard-earned money.

Here are six ways to save in a tax efficient manner:

1. Invest in an ISA

Individual Savings Accounts (ISAs) are tax-efficient savings and investment accounts that allow you to save money without paying tax on the interest or returns earned. There are several types of ISAs available, including Cash ISAs and Stocks and Shares ISAs. You can save up to £20,000 per year in an ISA, which means that you can save a significant amount of money tax-free over time.

2. Contribute to a pension

Pensions are a great way to save for your retirement and reduce your tax bill at the same time. You can contribute up to £40,000 per year to a pension, and you will receive tax relief on your contributions. This means that if you contribute £10,000 to your pension, the government will add an extra £2,500, bringing your total contribution up to £12,500.

3. Use your Capital Gains Tax allowance

If you sell assets such as shares, property or other investments and make a profit, you may be liable to pay Capital Gains Tax (CGT). However, you are entitled to an annual Capital Gains Tax allowance of £12,300 for the tax year 2021/22. This means that you can make a profit of up to £12,300 without having to pay any CGT.

4. Claim tax relief on charitable donations

If you make donations to charity, you can claim tax relief on your donations. This means that the charity can claim back the basic rate of tax on your donation, which is currently 20%. If you are a higher or additional rate taxpayer, you can claim back the difference between the basic rate of tax and your higher rate of tax.

5. Claim tax relief on work-related expenses

If you incur expenses as part of your job, you may be entitled to claim tax relief on these expenses. This could include things like travel expenses, uniform costs and equipment costs. You can claim tax relief on expenses that are necessary for your job, and that your employer has not reimbursed you for.

6. Make use of the Marriage Allowance

If you are married or in a civil partnership, you may be entitled to the Marriage Allowance. This allows you to transfer 10% of your personal allowance to your partner, which can help to reduce their tax bill. To be eligible for the Marriage Allowance, one partner must be a non-taxpayer, and the other partner must be a basic rate taxpayer.

What next?

There are many ways to save tax efficiently in the UK. By taking advantage of tax reliefs, allowances and exemptions, you can legally reduce your tax bill and keep more of your hard-earned money.

It’s important to seek professional advice if you are unsure about any tax-saving strategies, as there may be complex rules and regulations that you need to be aware of.

If you would like to discuss your pension options and start planning your retirement, please do get in touch with us by telephone on 02920 782330 or via email at theteam@uniqfamilywealth.co.uk. Our lines are manned Monday-Thursday, as we operate a four-day working week.