British Pensioners contribute around £17.5 Billion a year in tax, which is just over ten percent of all income tax paid in the country. If you are a pensioner you could well be paying more tax than you should. Here are some tips to help you reduce your tax and have a better quality of life.
Are you Paying National Insurance?
If you are of pension age and are still employed, you should be paying tax on your earnings, but not National Insurance. A common occurrence is that your employer deducts these as a matter of course. So check your payslip, and if you have been deducted NI, speak to your employer about getting it back.
Put Savings in the Name of the Lowest Tax Payer
If your savings and investments are in the name of the best paid, the chances are that they could be classed as income and taxed accordingly. You will probably find you are better off putting your savings and investments in the name of the lowest paid. This will keep the taxman’s hands at bay depending on the amount you have.
Reducing Inheritance Tax
Inheritance tax can catch you out if you are not prepared for it, and should you pass away whoever, is left may find they are left with a complicated mess of an inheritance tax bill. Should you or your partner die, whoever is left should inherit what is left tax free.
When you die your executor will need to know that they are claiming both inheritance tax allowances.
To reduce tax further, you can make a gift to reduce the size of your estate, and subsequently your inheritance tax bill. The key point is that you must live for a further seven years after making a gift for it not to be counted as part of your estate.
You can also make wedding gifts of up to £5000 each to each child, and regular gifts from your income.
Is your Tax Code Accurate?
Your tax code is HMRC’s way of determining how much tax you should pay. For many pensioners it is believed that the code is wrong in relation to earnings, and they are paying too much in tax. You can check your tax code either by calling HMRC or using an online calculator. It is recommended that you do.
Be Aware of Capital Gains Tax when Cashing Investments
Often when investments are cashed in they incur Capital Gains Tax. With careful planning it is possible to reduce the tax liabilities to nil. This brings with it obvious advantages and is in your best interests to do so.
Award Winning Financial Planning Advice
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