No one actively seeks to pay more tax than is necessary and especially during this post COVID-19 environment it is important to save wherever possible. Without proper self-assessment and tax planning you may find yourself paying more than you need to. 

 

The key to minimising your tax liability is reducing the amount of your gross income that is subject to taxes. This simple guideline provides you with four basic steps you can take to help minimise your tax liability. 

If you have not already, this is a must. A professional will be best able to guide and advice you on the most suitable course of action for you and/or your business. They will be knowledgeable regarding up to date tax rates, allowances, and legislations, as these change every year. Currently, the UK Government is doing much towards helping businesses and individuals with concessions and initiatives. For instance, the HMRC has set up a dedicated helpline to support businesses and self-employed people concerned about not being able to pay their tax due to coronavirus. With proper tax advice you should be able to enjoy a reduction on your tax liabilities. 

Your annual income tax payment is based on your gross income and an easy way to reduce your figure is by contributing to an employer-sponsored retirement plan. If you are still employed post COVID 19 then do continue to contribute to your retirement accounts. It may seem difficult at present, but you will benefit in the long run. This is actually a good time to start contributing. 

If you have investments that have declined in value since purchase, you can help towards reducing your tax liability by selling off the investment. This is called tax-loss harvesting because these losses can be written off against your investment gains, up to a certain limit; a limit that changes each year. 

By making contributions to qualified charitable organisations you can not only reduce your taxes, but you can also do your part towards uplifting society. Your donations can be done through cash or goods. However, check with your accountant regarding the minimum donation value and on obtaining a receipt for it to be a valid deduction. 

 

Another way to do this is through the Gift Aid scheme, where you can give to charity and the charity in turn can claim back the tax you have paid on this money, directly from the HMRC. This happens because Gift Aid donations are considered as being paid from your income, after the basic rate tax of 20% has been deducted. 

 

Get further insight into the above tips and strategies on reducing your tax liabilities by consulting a professional accountant or accounting firm today, to gain proper advice and guidance on self-assessments, tax advice, company taxes and other essential areas. Moving on after the global pandemic, it is imperative that you make use of all the concessions that you can to help you and/or your business thrive moving forward.