4 Replies to “what are the different ways to save tax ?”

  1. you can savew tax by investing 100000 in mutual found,ppf,elss.NSc etc. you can get deduction under section 80D for medical insurance.


    Here are five simple tips for saving tax:

    1) Use your pension tax relief
    Setting up a personal or stakeholder pension means you receive tax relief at your standard rate.
    In other words, if you contribute £78 into a pension, the taxman chips in another £22. For higher-rate taxpayers, the Revenue’s contribution rises to £40 for every £60 you pay in.
    For the self-employed paying that £100 into a scheme, this relief means that you receive the £22 on your contributions you make and can then reclaim £18 off your tax bill.
    When the pension matures, you can claim up to 25% of that pension pot as a tax-free lump sum. For those in occupational schemes, the position is more complicated, but you can still claim a proportion of your pension as a tax-free lump sum in a similar way.
    2) Use your spouse’s tax allowance
    Tax on money held in a savings account is 20%. If you are a higher-rate taxpayer, you pay 40%.
    If you are married and one of you is a higher-rate taxpayer while the other is not, you can use a spouse’s lower tax band to save money.
    If he or she is on a 22% rate, their tax on savings is 20%. If they are not working, they pay no tax on their savings. All they need to do is fill in an R85 tax form.
    Click here for details (opens in new window)
    3) Sort out your inheritance tax
    The first thing you should do is make a will, ensuring that disposals after your death take place in the way you intend.
    Second, you can take advantage of various ways of reducing your inheritance tax bill.
    One of them is to use the “Seven-year rule”, whereby disposals of your assets made seven years prior to your death are not taxed as part of your estate after your death.
    You can also make a series of cash payments to various family members, use trusts to dispose of your assets, use “deeds of variation” to alter the will even after a person’s death, even set up a life insurance policy to pay out enough to meet the tax bill after your death.
    Click here for more details of these options
    4) Claim all your entitlements
    One of the striking features of the UK tax regime is its complexity. This often means people are unaware of the what they are entitled to claim for, or offset their earnings against.
    If you are self-employed, make sure you know everything that you can claim against to offset your tax bill.
    Click here for more information
    In terms of claiming, there are three main things to watch out for:
    Child Tax Credit (CTC)
    Working Tax Credit (WTC)
    Pension Credit (PC)
    All three will entitle you to more money, depending on your earnings. For more information on CTC and WTC, look at the other guides in this section.
    Click here for information on pension credit
    5) Reduce your capital gains tax liabilities
    Many people assume that capital gains tax is something that only applies to the better-off. After all, when was the last time that anyone made CGT gains of more than £8,500 (the limit for 2005-06), in any tax year.
    In fact, it is easy to find yourself facing large CGT bills, especially if you own a second property and sell one of them.
    Here are a few ways of cutting your CGT bill:
    Offset losses against gains: If you hold a range of assets, such as shares, there is a possibility that you may have recorded losses on some of them. In this case, consider disposing of assets that have shown a loss at the same time. You can set that loss against a taxable gain.
    Maximise tax-free gains. Everyone, including children, has the same CGT allowance. Spread ownership of your investments to maximise your tax-free gains.
    Transfer assets to your spouse. CGT allowances apply to individuals, therefore spouses receive a double allowance. You can effectively double your tax-free allowance, if you are married, by giving assets to your spouse to dispose.
    Use lower-rate tax bands. Since CGT is aggregated with income to determine the level at which it should be paid, gains should be realised by the spouse with the lower rate of tax.
    Make best use of exemptions. If you own two homes, decide which one you want to treat as your primary residence, for tax purposes, within two years.
    Defer the gain. If there are no losses or reliefs you can use to cut your tax bill, you can defer it by reinvesting the gain in venture capital trusts or in the shares of certain small companies.
    Bed-and-breakfast your gains. You can sell the assets and get your spouse to buy an identical holding. Buying and selling the same asset within the first 30 days is now subject to CGT, but you can either buy a similar asset or take out an “option” to protect against a price increase over that 30-day period.

  3. 1.Donate money to the good charitable trust
    2.Help to the poors
    3.Insured in the postal
    4.Spend money to the good activities
    5.Consult better ways to spend the money

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