When we believe we’ve sorted out all our taxes and then find out we’ve overlooked something else, it can be very frustrating. There are many taxes we pay every year in the UK, and many of them are influenced by our lifestyle.
Several legal methods exist to lower your tax bills and save on expenses such as council taxes and road taxes. There are a few ways in which you can save money on taxes in 2022 that will be discussed in this article.
What Are The Best Ways To Save Money On Taxes In The UK?
Get an accountant to help you
The best way to save money on taxes is to make sure you do them correctly. A qualified tax accountant can ensure that you handle all of your finances correctly as taxes can be confusing.
Running a business is especially crucial if you are self-employed. In the event that you do not properly declare your taxes, you may fall subject to fines and penalties. If you wish to ensure you are not overpaying taxes or missing payments, entrust your finances to a professional.
Get behind the wheel of an electric vehicle
Are you aware that you can save on road tax if you drive an electric vehicle?
You won’t have to pay road tax if you drive an electric vehicle because they are zero-rated! Efforts are underway to encourage drivers to switch to fully electric vehicles and reduce their carbon footprint as part of the government’s initiative.
The London congestion zone also exempts electric vehicles from certain charges – this is known as the “cleaner vehicles discount” and is given because electric vehicles emit no CO2.
Generally, hybrid vehicles will be required to pay road tax, but you may be eligible for a discount if they run primarily on electricity.
There has never been a better time to switch to electric vehicles than now, with gasoline prices rising and tax incentives for EVs increasing.
Reduce Your Council Taxes By Moving To A Lower Council Tax Band
You may have to pay council tax every year, which can be one of the most frustrating taxes you have to pay. You don’t want to be hit with another large monthly bill on top of the one you already pay for housing.
Council tax is usually based on the value of the property you own or rent, so if you own or rent a property worth a lot of money, your council tax will be higher. In addition to paying for services such as bin collection, public transportation, police forces, public parks, and extra support for vulnerable people, council tax contributes to the economy of your area.
Depending on how much you want to save on council tax, you may want to consider moving. Occasionally, you’ll find an area with a reduced council tax rate that’s just as nice – or even better – than where you’re staying. Often, downsizing can save you money on council tax if you’re willing to move to a smaller house.
Expenses that are tax deductible
By deducting expenses incurred while running your business from your profits, you can lower your overall tax burden if you’re self-employed or run a business. There are many types of expenses that can be deducted from taxes, such as phone service costs, wifi, fuel, and costs associated with running a home office. It will save you money in the long run if you identify tax-deductible expenses, which you can then re-invest into growing your business.
Take advantage of tax credits
In addition to helping to reduce taxes, tax credits can be used to boost the finances of those who might need it. The federal government is replacing most tax credits with a new program called Universal Credit – which you can apply for online as of 2022. It is still possible, however, to apply for some tax-free credits if you are eligible.
In the case of universal credit and benefits, you may be eligible for a council tax exemption. The UK Government’s website will tell you if you qualify on this page.
The UK Government announced in 2022 that tax-free childcare would be available to help eligible families fund childcare. You can receive up to £2,000 per child a year towards childcare (nursery, after-school clubs, summer holiday clubs, etc.). Disabled children can receive this credit up to the age of 17 or 11.
Become a charity donor
Donations to charities in the UK are tax-free. Donate to a charity using the Gift Aid scheme and you or the charity can claim a tax refund. In the end, it’s a great way to save money and do something good.
Last but not least, keep an eye on your finances
Knowing how much money you are bringing in and spending each month is the most important part of handling taxes. Keeping your taxes within a budget will allow you to avoid feeling like such a massive expense when the time comes. In order to achieve the desired results, you’ll need to manage your money well to reduce your tax expenses gradually.