4 Simple Tips to Save on Tax
With taxation and levies eating into many people’s incomes, a lot of families can struggle to make ends meet. So how can taxpayers save on their tax bills?
Here are four simple tips to save on tax and reduce your tax bill.
1. Pension
By transferring money into a pension scheme, you may be able to claim tax back. Firstly, you need to review your cash flow situation. If you can afford to put some money into a pension fund, you will be able to claim the tax back of up to 41%, depending on your tax bracket. You can still create a tax refund for 2012 by putting money into a pension scheme and submit a claim to the Revenue before 31st October 2013.
2. Splitting income
For a married couple, income splitting could increase your standard rate tax band, currently 20%, and reduce your Universal Social Charge levy. For spouses not working or on low incomes this is very tax efficient. For example: If you are married and have a property in your own name with a rental profit, and your spouse is not working, you could put the property into joint names and split the rental profit. The tax rate should effectively go down and thereby reduce your tax liability.
3. Formalise a family business
For those who are self-employed, formalising any work done by other family members can save a family on tax. If you are paying tax at the high rates and your spouse has no income, by officially treating your spouse as an employee and paying them a salary, they may get taxed at a lower rate. This could save you money in the long run, as long as your spouse is genuinely working in the business and you pay them a fair wage.
4. Health Insurance
If your medical insurance is paid through your employer, you may be able to make a claim to the Revenue for a tax refund. You can effectively get your medical insurance relief allowed to you personally because you pay benefit-in-kind on the full premium. You will get 20% of your premium. If you are on the top rate of tax your employer should have taxed you on the gross premium at 41%. And remember you can claim back for four years.
ACTION
If you are an owner or director of a business, if you are self-employed or run a family business, come and talk to Elma.
Elma can help you structure your financial affairs which will save you money and tax in the long run. Contact Elma today.
