Paying tax is an important part of being a valuable member of society – both as an individual and as a business. But it is also important that you don’t pay too much tax. After all, no one is going to thank you for paying something that you didn’t need to pay. But how can you save money on your tax bill? Here are some top tips to save money on tax.
You can deduct all of your pension contributions from your gross income. Although you won’t have access to the money in your pocket now, you will effectively save up to 40 percent compared to what you would pay if you didn’t put anything extra into your pension.
2. Your Spouse
Both you and your spouse have a 20 percent income tax limit. If your spouse is already earning up to that limit there is not much you can do. But if your spouse is not earning this much you can split your income to bring them up to the limit. This will effectively mean your overall tax bill as a couple will go down.
You can also do this with other members of your family, such as low earning or non-earning children. This will bring the overall family tax bill down.
3. Maximise Your Allowable Expenses
You can deduct certain expenses from your gross income, so make sure you are making the most of this. The things you can deduct include:
Travel for work, except where the travel is from your home to your normal place of work
Subsistence where you have to stay away from home because of work
Business related insurance expenses
Certain education and professional development courses
Equipment such as IT equipment or machinery
Administration expenses such as postage
Communication expenses such as phone and broadband
Lighting and heating expenses
Rent in relation to your business (this includes calculations to claim a part of your house rent if you work from home)
4. Rent A Room
If you have space in your home you can rent a room. You can earn up to €12,000 tax free from any tenants that you bring in for residential purposes.
5. Medical Expenses
You can claim tax relief on some medical expenses that you pay. In certain circumstances you can also get tax relief on health insurance payments, if they are paid through an employer.
6. Film Investments
You can deduct from your gross income any investments that you make to approved film companies. This means you can make a loan and claim tax relief on the amount.
7. Capital Gains Tax Timing
Make sure you time any sales where you will make capital gains so that you take full advantage of your annual exemption. Holding off a few weeks or months could represent a significant saving on tax.
Finally, make sure you pay your tax bills on time. This will not save you money directly but it will mean you will avoid paying interest and penalty charges which, in effect, put up your tax bill.
If you need help or advice on any issue relating to tax, you should give one of our experts a call.