(CTN News) – Are you tired of paying high taxes and want to reduce your tax liability in the coming year? The good news is that there are legal ways to minimize taxes and keep more of your hard-earned money. This article will discuss various strategies and tips to help you pay less tax in 2023-24.
Understanding the Tax System
Before we delve into the strategies, let’s understand how the tax system works. In the UK, taxes are collected by HM Revenue & Customs (HMRC). Your tax amount depends on various factors, such as your income, residency status, and tax allowances.
Take Advantage of Tax Deductions
Tax deductions are expenses that you can subtract from your taxable income, thereby reducing your tax liability. Some common tax deductions include charitable donations, mortgage interest, and business expenses. Keep accurate records of your expenses and claim all eligible deductions to lower your tax bill.
Maximize Your Tax-Free Allowances
In 2023-24, the tax-free personal allowance is £12,570. This means you can earn up to this amount without paying income tax. In addition, there are other tax-free allowances, such as the annual ISA allowance, which allows you to save up to £20,000 per year tax-free. Take advantage of all tax-free allowances to minimize your tax liability.
Consider Tax-Efficient Investments
Investing in tax-efficient products can help you save on taxes. For example, contributions to a pension scheme are tax-deductible, meaning that you can reduce your taxable income by the amount you contribute. In addition, certain types of investments, such as ISAs and VCTs, offer tax benefits such as tax-free dividends and capital gains.
Plan Your Capital Gains
If you sell an asset that has increased in value, such as property or shares, you may be subject to capital gains tax (CGT). However, there are ways to minimize your CGT liability. For example, you can use your annual CGT allowance, which in 2023-24 is £12,700, to offset your gains. You can also time your sales to take advantage of tax rates and allowances.
Consider Incorporation
Incorporating your business can help you save on taxes if you are self-employed. By incorporating, you can pay yourself a salary and dividends subject to different tax rates. In addition, you can deduct certain business expenses, such as office rent and equipment, from your taxable income.
Be Aware of Tax Avoidance Schemes
While there are legal ways to minimize your taxes, avoiding tax avoidance schemes is important, which are illegal and can result in severe penalties. These schemes often promise to help you avoid taxes by exploiting loopholes in the tax system. However, HMRC is cracking down on such schemes and can impose hefty fines and even criminal charges.
Conclusion
In conclusion, paying less tax in 2023-24 is possible if you take advantage of legal strategies and plan your finances wisely. Make sure to maximize your tax deductions and allowances, consider tax-efficient investments, plan your capital gains, and be aware of the tax implications of your business structure. Avoid tax avoidance schemes and consult a tax professional if you need tax help.
Related CTN News:
Unveiling The Truth Behind KWFinder Review: Is It Worth The Hype?
How Does WhatsApp Make Money? Explained In Detail
Health Information Technology: The Future Of Healthcare
Post Disclaimer
This article contains sponsored content any opinions expressed in this article are those of the sponsor and not necessarily reflect the views of CTN News- Chiang Rai Times. For detailed information about sponsored content policy click here.