5 Tax Saving Techniques for Londoner with a Household Income of 20,000 GBP

As a Londoner with a household income of 20,000 pounds, you may be wondering if there are ways to save money on your taxes. Fortunately, there are several tax-saving techniques that you can take advantage of to reduce your tax bill and increase your take-home pay.

At Brayan and Spencer Associates, we’ve helped countless clients save money on taxes, and we want to share some of our top tips with you. Here are 5 tax-saving techniques that you can use to reduce your tax bill:

Take Advantage of Tax-Free Allowances

The first step in reducing your tax bill is to take advantage of tax-free allowances. The Personal Allowance is the amount of income you can earn before you start paying tax. In the UK, the current Personal Allowance is 12,570 pounds for the tax year 2021/22. If your income is below this threshold, you won’t have to pay any income tax.

In addition to the Personal Allowance, there are other tax-free allowances that you may be eligible for, such as the Marriage Allowance and the Blind Person’s Allowance. Make sure to check if you qualify for any of these allowances and claim them if you do.

Claim Tax Relief on Charitable Donations

If you make charitable donations, you may be able to claim tax relief on them. The tax relief is based on the amount of the donation and the tax rate you pay. For example, if you donate 100 pounds to a charity and you pay tax at the basic rate of 20%, you can claim 25 pounds in tax relief.

To claim tax relief on charitable donations, you need to keep a record of the donations you make and include them on your tax return.

Make Use of Government Savings Schemes

The government offers several savings schemes that can help you save money on taxes. The most popular savings schemes are the Individual Savings Account (ISA) and the Pension Scheme.

With an ISA, you can save up to 20,000 pounds tax-free each year. Any interest or gains you make on your savings are also tax-free.

With a Pension Scheme, you can save for your retirement and receive tax relief on your contributions. The amount of tax relief you receive depends on the tax rate you pay.

Use Salary Sacrifice Schemes to Reduce Taxable Income

If your employer offers a salary sacrifice scheme, you can use it to reduce your taxable income. With a salary sacrifice scheme, you agree to give up part of your salary in exchange for a non-cash benefit, such as childcare vouchers or a cycle-to-work scheme.

Because your taxable income is reduced, you pay less tax. However, make sure to check the terms and conditions of the scheme before you sign up, as some schemes may have drawbacks.

Claim Tax Relief on Work-Related Expenses

If you incur expenses as part of your job, you may be able to claim tax relief on them. For example, if you’re a cleaner and you use your own cleaning supplies, you can claim tax relief on the cost of those supplies.

To claim tax relief on work-related expenses, you need to keep a record of the expenses you incur and include them on your tax return.

In conclusion, there are several tax-saving techniques that you can use to reduce your tax bill and increase your take-home pay. By taking advantage of tax-free allowances, claiming tax relief on charitable donations and work-related expenses, and making use of government savings schemes and salary.