5 Personal Tax Planning Ideas and Tips for UK Residents

There are two things in this life that is certain; death and taxes. We cannot really control our own deaths but we can surely influence how much tax we pay at the end of the year. A lot of people have been struggling throughout the global recession of late and in turn have started working from their homes to make a significant income. These new dynamics can help you lower the bottom line of your tax return by simply following a few golden rules. In the following segment we'll be covering the basics on how to lower your yearly tax return and maybe even get some government support in the process. 1) Personal Tax planning for Domiciled Residents For those of us who own property of any sort there are a few tricks and tips that you could apply in order to not pay your yearly property tax. The UK taxation system is under constant change and in turn can affect how much you pay at the end of the year. Thus it is always a good idea to dominate a basic knowledge of the tax system, at least to where it applies in your life. Simply by not knowing you could be spending a lot more than what is needed to. For instance; if you have an unused property you could get a 100% Renovation Allowance or a BPRA which basically means that money will be given to you in order to invest in the property and make it "business worthy". There are a few rules that apply to a BPRA but if you are sitting on a vacant land, then maybe this might be a course for you to consider. 2) Create Additional Tax-Free Income from a Spare Bedroom Another great personal tax planning strategy can be applied if you have a vacant room in your house. There are a lot of students that need lodging when studying away from their houses. For instance if you child is currently in University you could rent out their room while they are away and help to pay for their studies. The gross amount that you can receive before being taxed comes out to £4,250. You need to be clear that this amount is calculated before expenses are taken off the sum that the lodger is paying you, but also includes things such as; laundry services, meals and so forth. There are ways of exceeding this amount of income while not paying tax when you have multiple lodgers within the building. 3) Charities There are plenty of ways to reduce your bottom line tax return, charities being one of them. You can use a Gift Aid Declaration when donating to a charity that will give you 28p for every Pound you spend. Most Charities have these types of forms available for you, but if they don't then you can simply go to HM Revenue and Customs and they will supply you with one. A lot of people are using this method to significantly reduce their tax returns by setting up donation websites that directly give money to the charities and lowers their overall taxes. In other word through the donations of other people they have managed to lower their own tax statements. 4) Wear and Tear Allowance Another great tax trick one could apply is getting the Wear and Tear allowance. This basically means that apartments or houses that are furnished generally make more money than those that are not. The 10% wear and tear allowance is given as a deduction when computing the profit from the taxpayer in order to provide relief for items such as sofas, furniture, beds and so forth. You can only do this if you have some furniture in the house already. Unfu ished rental spaces are not allowed to get the 10% wear and tear allowance. 5) Using your Car for Business A lot of times people are forced to use their own vehicles for the sake of the business. If this is the case there is a way that you can lower your overall tax statements by jotting down the mileage of the car when being used for the business. Every 5th of April, you should write down your mileage and keep it in a book in your car in order to have your annual tax statement for your car. The way it works is as follows; if you have accumulated 10,000 miles in one year and your business miles constitute for 1000 miles, then you would be able to claim 1/10th of the total cost of the car. There are several ways to lower your yearly tax returns, all one really needs is to have a solid personal tax planning ideas in order to get the most for your money.