Following a busy Christmas spent celebrating and buying presents for friends and family, the month of January usually means a tightening of the purse strings for many across Northern Ireland, says Conor Walls, Managing Director at Exchange Accountants.
As thousands get ready to pay their January tax bills, a Belfast-based accountancy firm has come up with some tips to save on tax and make your hard earned cash go further.
Exchange Accountants provides premier accountancy services and tax advice to a wide variety of companies and individuals based in Northern and the Republic of Ireland, and according to Managing Director Conor Walls, we often miss out on saving money by not being aware of what we are entitled to.
“The start of a new year can bring financial stress for a lot of us, with debts built up before Christmas now needing paid off,” said Mr Walls. “However, there are a number of simple steps that we would encourage everyone to try that might help you keep a little extra from your pay cheque each month.”
Exchange Accountants have put together five handy tax tips for you…
Make sure your tax code is correct
If you haven’t checked that your tax code is correct, then you may be paying too much tax. You should check your tax code each year, particularly if your job or salary has changed during that time.
You can easily check if your tax code is correct by visiting the HMRC website. The process should only take around 15 minutes and could save you a significant amount over the year.
Check if you are eligible for tax credits
Tax credits are government payouts designed to help those who need it most, like those looking after children, disabled workers and people on low income.
The two main types are working tax credits and child tax credits. HMRC manages payments and can tell you if you are eligible.
It’s important to note that if you already receive Universal Credit then you cannot claim tax credits. For more information, you can contact HMRC on 0345 300 3900.
Use your company’s pension scheme
When you pay into your employer’s pension scheme your contributions can be taken from your gross pay, before any tax is charged.
This also includes any additional contributions you make towards your pension scheme and is a tax-free bonus towards your retirement.
Make the most of your savings allowance
If you are a basic-rate taxpayer, then in 2019-20 the first £1,000 of interest you receive from savings is tax-free, though the threshold is £500 for higher-rate taxpayers and there’s no allowance if you’re an additional-rate (45%) taxpayer.
Tax is only due on your savings when it exceeds this allowance, meaning any interest you accrue up to that point is untouched.
Love your marriage allowance
In 2019-20, married couples and civil partners can transfer up to £1,250 of their personal allowance – which is the amount of income you can earn before you have to pay tax – from a lower-earning partner to the higher earner. Transferring savings or investments to your partner can be a good way to save tax and is particularly worthwhile if one partner is a non-taxpayer because their income is below their tax-free personal allowance.
“These are just a few common examples of how you can reduce your tax bill and make your money go further this year,” said Conor Walls, “but there are plenty of other methods which may be open to each individual. Our best advice is to speak with a professional, take the time to understand what you’re entitled to, and know what you are potentially leaving on the table,” he concluded.
For more information on any of the above tax saving tips, call Exchange Accountants on 028 9040 7470 or send an email to [email protected].
Established in 2011 with offices near Belfast City centre, Exchange Accountants provides premier accountancy services and tax advice to a wide variety of locally based SMEs and individuals.
Over the past five years, the company has developed a specialism in digital and cloud accountancy services and was the first accountancy practice in Northern Ireland to be recognized as a Gold Partner with market-leading cloud accountancy software provider, Xero.