Tax Saving Tips

Avoid Penalties

Avoid incurring a penalty. If you fail to file your tax return (and pay any tax due) by 31 January following the end of the tax year to which the tax return relates, you face an automatic fine of £100. This is also the case if you become self-employed, and you fail to register with the Revenue within three months from the end of the month in which you started working for yourself.

Check Your PAYE Code

Check your PAYE tax code, which appears on your payslip. If it is wrong, you could be paying too much - or too little - tax. If you have not received a coding notice and leaflet P3(T) PAYE: Understanding your tax code, which explains how your code is worked out and what the letter in your code means, request these from your tax office.

Check Your Advance Payments

If you are asked to make tax payments on account - advance payments against tax to be paid at the end of January and July - check that you are not paying more than you need to. The amount you have to pay is based on last year's tax bill, so if your income has gone down, the amount of tax due will also fall. You can request that the Inland Revenue reduce the amount of payment required.

Open an ISA

Make the most of your ISA allowances. Keeping cash in an ISA rather than in an ordinary bank or building society account increases the interest you get by 20%. If you prefer to invest in equities, you get back the 10% tax that is deducted from the income from equities - and there's no capital gains tax to pay when you finally cash in your investments.