5 Tax-saving tips for your self-assessment tax return

With the self-assessment tax return deadline on 31st January, it's crucial to make the most of your allowable deductions and tax-saving opportunities. It's too late to implement many of these suggestions for 2023-24, but there is still time to act for next year. So if you are expecting an unexpected tax bill this week, here are five top tips to help you save money and ensure a smooth filing process.

1. Claim all allowable expenses

Make sure you're claiming all the allowable expenses related to your business. This includes costs such as office supplies, travel expenses, professional subscriptions, and even a portion of your home office expenses if you work from home. Properly documenting and claiming these expenses can significantly reduce your taxable income.

2. Utilise the trading allowance

The trading allowance allows sole traders and self-employed individuals to earn up to £1,000 tax-free from trading income. If your trading income is below this threshold, you can take advantage of the allowance without needing to report it on your tax return. If your income exceeds this amount, you can still deduct the £1,000 allowance from your taxable income rather than claiming business expenses.

3. Contribute to a pension scheme

Contributing to a pension scheme is a smart way to save for the future and reduce your tax liability. Contributions to approved pension schemes are tax-deductible, meaning you can lower your taxable income while building your retirement fund. Additionally, higher and additional rate taxpayers can claim further relief through their self-assessment tax return.

4. Take advantage of the marriage allowance

If you're married or in a civil partnership and one of you earns less than the personal allowance threshold (£12,570 for the 2024-25 tax year), you might be eligible for the marriage allowance. This allows the lower earner to transfer up to £1,260 of their personal allowance to the higher earner, potentially saving up to £252 in tax.

5. Consider charitable donations

Donating to charity not only supports good causes but can also provide tax benefits. Under the Gift Aid scheme, you can claim back the basic rate of tax on your donations. Higher and additional rate taxpayers can claim the difference between the basic rate and their tax rate on their self-assessment tax return. Keep records of your donations to ensure you claim the appropriate relief.

Conclusion

Filing your self-assessment tax return doesn't have to be a daunting task. By claiming all allowable expenses, utilising tax-free allowances, contributing to a pension scheme, taking advantage of the marriage allowance, and considering charitable donations, you can reduce your tax liability and make the process smoother. Remember, the deadline is 31st January, so if you haven't yet filed your 2023-25 return, you only have a few days lest, and for 2024-25, its never too early to start preparing!

If you have any questions or need further assistance, feel free to reach out to see how BlueFox Accounting could help!