How to pay less tax

Apparently four out of five of us pay too much tax. As an average, it's around £155 for each of us.

I nipped down to ITN to film a little piece for Chris Choi and the ITV Lunchtime news. We talked to five people about their finances and sure enough, four of them were paying too much.

Now there are some complicated areas of tax where the super-rich take advantage. For you and me, there are some quick simple things you can do to make sure you are taking advantage of tax breaks - and not paying money to the Revenue that you shouldn't be. Start with these five points:

1. Savings and investments. Take advantage of your Isa allowance each year. See the Isa Centre and compare best Isa savings accounts. And if you're a pensioner and not an earner, then fill in the right forms to get your tax back - now is the time to claim it back.

2. Tax credits. If you have children and have a household income of less than £58,000, you are probably entitled to child tax credits and maybe working family tax credits. Read more. You may also be able to take advantage of childcare vouchers through your work (a type of tax break).

3. Pensions. If you're not paying into a pension, then change your wasteful ways. Basic-rate taxpayers get a 22% tax break from the Government (higher-rate bods get a 40% boost). See more in our pensions guides.

4. Check your tax code. Millions of us are on the wrong code - this one is a double-edged sword as you may be paying too little in tax. However, the Revenue will catch up with you eventually so best to get it sorted.

5. Inheritance tax.  With house prices surging, many more families face paying 40% tax on estates - it applies on anything above £275,000. There are steps you can take. And the best starting point is to write a will - see our Will Writing section.

To add to all this, don't forget there's lots of other ways of spending less money and making more of it.... This is Money can help.

- Andrew Oxlade, This is Money Editor

Related stuff...

The last time myself and Chris Choi gave some tax advice

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Comments

[jane barclay]

Because I stayed at home until my son was 10yrs old, I do not have a full pension ie.£73. My husband is due to retire in June this year. I enquired if I would get his married mans wife allowance to top up my pension but was advised only if my pension was below £50. I feel discriminated against and wonder why I bothered paying the "big stamp".

[Alan WIlliams]

There is other way of completely elliminating taxes and is adopted by a high percentage of the people in the northwest. They simply collect money from the dole system and work without reporting. Some don't sign on for government assistance but still don't report earnings.
A common phenomenon in a country where the taxes are way too high.

[Brian S]

I appreciate the need for a safety net, but at the moment it is hard to see the point saving, when those that don't bother will receive 'top-up' payments to put them in the same position for no effort.

I'm a very proud person so I fully intend to earn and save for my future - but sadly others are less conscientious.

nb: This isn't a dig at genuine cases who receive benefits, but is aimed at individuals who make no effort to provide for themselves and simply rely on benefits out of laziness.

[paul simons]

Please could anyone advise re reducing capital gains tax on a property that I lived in for 1-2 years then rented for 4 years, it is in both my wife and my names, (higher and lower tax rate payers). I have heard that the last 36 months are not liable to capital gains tax and presume that we both gate £8K relief each as tax free. Any suggestions how to lower tax please. Also how is the amount calculated if the last 36 months are exempt?

[A T Flynn]

You say "there are some complicated areas of tax where the super rich take advantage".
Those complicated areas are like that because you, the Taxpayer allows it.
As Taxpayers, the Employer and the Employee can execute a very simple manoeuvre and remove yourself from the jurisdiction of the Government and HMRC,so that legally, the only Tax you are obliged to pay is your Local Council Tax.
It is not proposed that Direct Taxation is abandoned altogether. It is proposed that the Taxpayers construct there own system of Taxation. Starting with a threshold of some £400 or £500 each week, and then a one off Tax of 10% on all other income.
There is more than that to it, but details are listed on a BBC Action Network site.
http://www.bbc.co.uk/dna/actionnetwork/2287
Or you can Google,-: Sovereignty Politics Taxation Economy The last time I looked, the BBC and my, "All Things Bright and Beautiful" ramblings, were second item on page one. Have a look.
Regards, ATFlynn

[PAMELA HOLTER]

I think it very unfair that just because I am retired and working part time I penalised with a high tax code. It is about time the government looked into this I have paid them enough tax all my working life, and it now appears that I have to pay a higher rate, just because I try not to sponge off the state !!