How can I avoid tax

System

Starting to get a reasonable list of possibilities here some of which have been helpful (so to gus and those that emailed me privately thanks). So far, and I have been assured that all of these are fine (maybe johnllew can confirm - or otherwise)

• Pension
• ISAs
• EIS/VCT (have been doing some reading on this)
• transfer savings into wifes name (we did it this weekend - just not letting her know the PIN number )
• Salary sacrifice scheme

KDH

ps: jg, I always like to keep my hands clean, avoids nasties like Norwalk etc.. If people die due to my hygiene, its not my fault ;D

Galstonian

You could earn less, that always results in a reduction in tax due


You may also find Community Investment Tax Relief useful. Basically you can get tax relief on savings in a quite different way from ISAs but you have to be prepared to deposit money for at least 5 years (IIRC).

This is also a good way to save ethically if that is something that appeals to you.

gus

There are more and more less risky VCT/EIS schemes around apparantly 8)

kchok

The amount of deductions from income that PAYE employees can deduct is restricted to expenses incurred in performing necessary duties of the job. Things are different for those who are self employed.

Of those things listed it is possibly a bit hasty to say it is tax evasion. Self emplyed traders who carry out work at home will be able to claim some expenses for a whole variety of home expenses as long as they relate to their trade or profession. If however someone is claiming something you know that is not related to their trade then they are putting themselves at risk and by all means alert the Revenue.

Ways to save tax:

Pensions
Gift Aid
Investment in EIS/VCT shares

I am in a quite a bit of deep !!!!!! with under paid tax from 2002/2003 about £1343.15. I earn £43000 pa with overtimes. I see £1343.15(£3357 before tax)making my tax code138L(4745-3357).which means i am paying  40%tax on the lot of the income.is it wise to pay that £1347.15 now,straight away as cash?its looking horrible.i got a pay slip for £50 last week. After tax I only got £24.50 more than 50% tax why I bother work?also i will be very grateful if you can explain in more detail how to  use that GIFT TO SPOUSE scheme to maximise the taxasion .Apart from usual- saving on wife,maximise pension contribution ,are there any other ways to cut down  income tax.please help

Aark

I am in a quite a bit of deep !!!!!! with under paid tax from 2002/2003 about £1343.15. I earn £43000 pa with overtimes. I see £1343.15(£3357 before tax)making my tax code138L(4745-3357).which means i am paying  40%tax on the lot of the income.is it wise to pay that £1347.15 now,straight away as cash?

I'm assuming you completed a Tax Return for 2002/03 and the Inland Revenue coded out the tax due in 2004/05. If so, rather than pay £1,343.15 due on 31/1/04, you are paying the same amount spread over 6/4/04 to 5/4/05. I would have thought that this would be better for you than paying in one go.

its looking horrible.i got a pay slip for £50 last week. After tax I only got £24.50 more than 50% tax

Without more details that's difficult to explain. I would have expected a tax refund in that week if you are usually a high earner but then only got £50 one week.

why I bother work?

To earn £43000 pa?

also i will be very grateful if you can explain in more detail how to  use that GIFT TO SPOUSE scheme to maximise the taxasion .

If your wife has not used her personal allowance (£4,745), or 10% or basic rate tax bands (and you pay tax at a higher rate) then you can save tax as a couple by transferring savings accounts etc. into accounts in your wife's sole name (N.B. this means your wife would actually own all this money). This will mean she has more income to use her available allowances and you have less income and therefore less tax.

bridiej

Yes, I can understand it is annoying that the taxman takes such a hefty lump, but be grateful you earn such a decent salary! >:(

My husband works over 60 hours a week at a highly skilled job and doesnt get half that...

Thankfully he has seen what a bunch he works for and is re-training as a sparky!

kchok

bridiej,
I am a spark actually.good luck to you .get him to become a gas engineer the money and job is even better.I do about 55 hours a week.

bridiej

hi there
His brother works for Transco, he did toy with the idea but preferred the idea of electrics.

Fingers crossed he makes the career move soon!

lyeping

We have absolutely no clue and after reading this site, is aware that there are legit ways to reduce the hefty chunk that the taxman takes out of hubby's pay. I hope to wrestle back every bit we can, and put this into some sort of saving account for our future because at the moment, we absolutely do not have any spare cash at all and I'm getting worried. I've been reading alot at this site and seems to have mis-interpret certain ideas, for example, I've got all excited thinking that if we can put some money(thinking of getting a personal loan) into the isas, we can reclaim back the tax paid on the GBP3,000! Eventually found out that this was not the case! I'm glad I did some further research before jumping in!!! How silly of me. It was only the income derived from the isas that's tax free, not the GBP 3,000 :-/

So, is there anything we can do to not pay so much tax? And does the 'spouse saving accounts' idea mean if hubby gives me money GBP 4000 to put in my account, he then can claim back the tax paid on this GBP 4,000 as he's on the PAYE scheme? How about for our 3 year old son? I understand he's got the same personal allowance as us adults. I can't work out this GBP1,900.00 amount to put into his savings account, and the "GBP100 rule"as mentioned in this site. Please help! ???

lisyloo

And does the 'spouse saving accounts' idea mean if hubby gives me money GBP 4000 to put in my account, he then can claim back the tax paid on this GBP 4,000 as he's on the PAYE scheme?

No that's not true.
The reason that putting savings into a spouses account is suggested is that the spouse may have a lower tax rate for the tax that is paid on interest.
It you husband is working then he will have to pay either 20% or 40% of his interest in tax.
If you are not working then you don't have to pay this tax.
You would need to fill out a form called R85 which the bank should be able to give you. Filling out this form means they won't take any tax from you (assuming you are a taxpayer).

There is one way to recalim tax paid and that is to put your husband money in a pension.
However you should be aware that you can't get at the money until he either dies or retires.
The government gives you the tax relief on the basis that you will save for your retirement so you can't get at it at all.