Make your pay jump and tax bill fall – here's our guide to beating Rishi Sunak's risesApril 4, 2021
BRITAIN’S 31 million workers can beat stealth tax rises taking effect from Tuesday – by swapping salary for pensions, childcare and holidays.
Chancellor Rishi Sunak will help pay for Covid by freezing for five years the starting rate of 20 per cent income tax at £12,570, and the 40 per cent threshold at £50,270.
As wages rise due to inflation in coming years, it means 1.3million part-time workers — often mums who are also juggling kids — will be sucked into paying tax.
And a million more will be pushed into paying 40 per cent tax, hitting better-paid office staff, builders, plumbers and electricians.
But every employee can dodge the backdoor tax rises by cutting their income and therefore their tax bill — but still receive the full value of their salary.
Millions could put more of their salary into pensions, parents could get tax breaks on childcare and commuters could save on bikes and season tickets.
Staff could buy more annual leave — and all could even give to charity.
Consumer champions Which? said: “There are many ways to legally reduce your tax, taking advantage of tax reliefs and Government schemes.”
If you remove £2,000 of your income from tax for each of the five years until the tax band freeze ends in 2026, the £10,000 you swap for a benefit will save lower-rate taxpayers £2,000 of tax, and higher-rate taxpayers £4,000.
If you don’t believe these tips apply to you, think again — there are tricks for every worker.
Just follow Sun Money’s guide to beating the taxman.
Remember, for every £100 taken from your income by using our tips, lower-rate taxpayers save £20 and higher-rate payers save £40.
Pay into a pension
PENSION contributions are taken from pre-tax pay, so chucking more of your monthly pay into your retirement pot means dodging income tax on the sum you put in.
And employees win out as, if it’s a company scheme, many firms will match your extra contribution.
Staff and self-employed workers can also pay into a private pension and claim the tax back on contributions via your self-assessment tax return.
Who can do it?
Everyone — from cleaners to bankers.
SWAP a slice of your salary for a non-cash benefit your employer may offer, such as a bike, rail season ticket, gym membership, mobile phone or health, life or critical illness insurance.
You can even buy more annual leave.
All these benefits save you tax.
If you fancy an extra week’s holiday and usually earn £750 a week, you will be paid £750 less but avoid paying £150 of tax as a basic-rate taxpayer.
Who can do it?
People who cycle to work, commute by public transport or can use their private phone for work.
Talk to your boss.
Bigger companies are more likely to offer gym and insurance schemes, but anyone can ask their employer to buy more leave.
Sole traders need to pay themselves a salary at minimum wage or higher through PAYE to use salary sacrifice.
CLAIM back basic-rate tax on costs for caring for each of your children, up to a maximum of £500 every three months or £2,000 per year per child.
Your income is not reduced, but you pay your childcare provider via an account which the Government tops up by 20 per cent.
Who can do it?
Anyone with a child under 12, as long as you and your partner earn between 16 hours a week at the minimum wage and £100,000 a year.
You can still claim if furloughed.
People without children or whose kids are aged 12 or over cannot claim it.
Use your marriage allowance
YOUR partner transfers you £1,250 of their tax-free allowance, raising the threshold at which you are taxed — saving you £125, or £250 for higher-rate taxpayers.
Who can do it?
Couples who are married or in a civil partnership with one partner earning under £12,500 and the other earning between £12,500 and £50,000.
If you earn more than this, you can’t claim it.
But if you are single or divorced, it’s not for you.
If you're self employed
CLAIM expenses including mileage and home office costs, which cut your taxable income.
Tradesmen and others running limited companies can slash their tax by taking lower dividends and using savings for living costs.
Who can do it?
Sole traders and limited company directors.
Give to charity
IF YOU can manage without some income, giving it to good causes means you don’t pay tax on the amount.
You can contribute through Payroll Giving or Gift Aid, and claim it back from HMRC.
Who can do it?
I’ll claim for home office and need to start pension
MUM Rachel Howseman’s bouncy castle hire business Meg-A-Bounce will be hit by the lower-rate tax freeze.
Rachel, 42, from near Metheringham, Lincs, is targeting an income jump from £12,500 to £15,000 a year after Covid as trade picks up.
She plans to trim her tax by paying via the childcare scheme for nursery for her son Alex, two, with husband Clive, 47, a chemical engineer.
She said: “Using the tax-free childcare allowance will reduce my tax.
And I’ll claim for home office expenses, which I haven’t done so far.
“I also need to start a pension, and I’d love to give money to charity – all of which would reduce my tax.”
Latest Alexa can be taken at face value
AMAZON’S latest smart display and speaker will follow you wherever you go – well, at least around the room it’s in.
The Echo Show 10 has an Alexa smart speaker as its base with a tablet-like display attached to it on a swivel.
A camera in the display can keep track of where you are and rotate to face you when you speak to it.
The twist has other uses too.
Another Alexa speaker?
Most people have used virtual assistants like Alexa, even if they don’t have a smart speaker.
They are becoming as common in homes as TVs.
You can tell them to play songs, answer trivia, tell you about the weather and control smart home gadgets like lights.
But this has more – it has a screen, and not just any screen.
It follows you!
At first, I thought the moving screen was a bit of a gimmick but it’s actually incredibly useful and a really slick feature.
The Echo Show 10 looks and sounds great on its own but the convenience of the screen moving to face you when you speak to it comes in handy more often than you’d think.
In fact, I soon wondered how I ever dealt with a static Echo Show.
The Show 10 is definitely a superior kitchen assistant to previous models.
Being able to refer to the recipe on the screen as you hop between the chopping board and hob is great.
This is handy because having Alexa read the recipe out step by step is often impractical, as she rushes through them.
You can also interrupt with questions like, “How many teaspoons are in a tablespoon?” and the Echo Show will split the screen to show you the answer while keeping the recipe in view.
When I was doing a particularly large load of dishes I said: “Alexa, show me Netflix”.
The screen rotated to face me and I was able to watch an episode of Arrested Development to make the washing up slightly less painful.
It’s a bright ten-inch touchscreen.
The sound on the speaker is great and was able to easily cut through my loud scrubbing and banging of pots and pans.
You can also use the Echo Show 10 as a camera to check in on your home when you’re out.
By opening the Alexa app on your phone and accessing the device as a camera you can view what’s going on live and swipe left or right to rotate the device for a complete view.
You can then access the microphone and speaker to talk to whoever is in the room.
This was great for seeing if our dog had broken into the parcel we left on the sofa before we popped out – he had.
The biggest drawback is the price at £239.99.
But you get a lot for the money – a speaker with cracking sound and a bright display, a virtual assistant plus a security camera.
The Echo Show 5 is £79.99 and the Show 8 is £119.99 – with smaller screens and less-punchy speakers.
Google is the only other firm to offer similar smart displays, with the £79.99 Nest Hub with a seven-inch screen and the £189 Nest Hub Max with ten inches.
But the Alexa gadgets have outsold them for good reason – they sound better and have more apps and services that work with them.
So consider the Echo Show 10 a speaker, spare telly for the kitchen and a security gadget and it’s decent value.
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