Methods of tax savings:
- Individual Savings Accounts (ISAs): ISAs are tax-advantaged savings accounts that allow individuals to save up to a certain amount each year tax-free. There are several types of ISAs, including cash ISAs and stocks and shares ISAs.
- Pensions: Contributions to pensions are tax-deductible, meaning that individuals can reduce their taxable income by making contributions. Additionally, the earnings on pension investments grow tax-free, and individuals can typically withdraw a portion of their pension tax-free when they reach retirement age.
- Capital Gains Tax (CGT) allowances: Individuals can make use of the annual CGT allowance, which allows them to realize gains on investments up to a certain amount each year without paying tax.
- Business expenses: Business owners can deduct certain business expenses from their taxable income, reducing their overall tax liability. It’s important to keep detailed records of business expenses to ensure that they can be properly deducted.
- Research and Development (R&D) tax credits: Companies that engage in R&D activities may be eligible for tax credits that can help to reduce their tax liability.