Ian Janes FCCA is a Director of Eye For Finance, Abergavenny based Financial Management Consultants and Accountants. Here he provides useful hints and tips regarding a variety of financial matters.
We are living through difficult economic times, and this is affecting most individuals and businesses. Mundane though it may seem, this makes it even more important that we all pay more attention to our financial affairs in order to make our money go further. This applies regardless of whether you are working or not, employed or self employed. Here are some hints and tips which you may find helpful.
Check your tax code
The tax year runs from April to April; therefore as it is still relatively early in the year, a check may be appropriate.
To many, a tax code can appear to be a mystery series of numbers and letters – it looks something like this 944L – but it is a really important figure used by your employer to calculate the amount of tax that should be deducted from you before you get paid.
Whilst there are a number of potential adjustments to your code, people born after 5th April 1948 have an allowance of tax free income of £9,440 in tax year 2013/14. Small errors can lead to mistakes of £100s. Use of an online tax code checker will help you to verify the accuracy of your code.
Claim what you’re entitled to
Many people take the opportunity to work from home, and save on petrol costs, but fewer realise that using the home for work purposes gives rise to work related expenses which can be deducted from income, thereby giving tax savings.
- For example, using a personal computer and desk, as well as heating and lighting can be claimed as tax deductible work expenses as long as you can justify that the proportion of the total domestic bills being claimed is a realistic reflection of the work usage.
- Make sure that the work or business use is only the partial use of a room, else you risk generating another tax problem.
Some employees are provided with a uniform or issued clothing in the workplace, which they then wash and iron at home. You are able to claim tax relief.
- The standard allowance for spending on uniform maintenance is £60 (for 2013/14) – so basic rate taxpayers would be able to claim £12 back (20% of £60)
- Most people can claim for the past four years – plus the current year – if you’ve been wearing the uniform all that time.
- You can do this yourself by writing to HMRC, you don’t have to pay someone for this.
- One important issue for self employed individuals is to maintain accurate and up to date records.
- As implied above, business related expenses help reduce profits chargeable to tax, and hence your tax bill. Receipts should be retained as evidence of such.
- Very importantly, if you have very recently started up a business, you must contact the HMRC to inform them that you’re trading, or else fines may be applicable.
For everyone, working or not, use the internet to your advantage for all of your expenditure:
- Use price comparison websites when you are due to renew car and/or home insurance or to check that you are not overpaying for your domestic electricity and gas;
- Use cashback ‘click through’ websites (such as Top CashBack) to earn extra money when buying products such as insurance, Sky TV, and other shopping online and;
- Before going to a chain restaurant or other outlet, search online for vouchers where typical examples have ‘kids go free’ offers or ‘free mains on birthdays’
In summary, a little time and effort, via letter, phone call or a few clicks of a mouse, can save you £££s, and I’m sure none of us would object to that!