Stop paying too much tax

Are you paying more in voluntary tax than you need to?

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Pay less tax

This year you'll pay £22,500 of your hard-earned money in taxes. It's a painfully large amount of cash and while some taxes are unavoidable there are things you can do to make sure you don't pay anymore.

The average household pays over £20,000 of tax a year through the obvious taxes on income and national insurance but also on the myriad hidden taxes like VAT, fuel duties, savings and airfare that we pay without a second thought.

All this tax will add £600 billion to the Treasury's coffers this year and I'm sure it would like you to pay more but you don't have to.

Protect your savings from the taxman: compare ISAs

While some taxes are unavoidable there are plenty of punitive charges that are levied that are termed 'voluntary tax'. The voluntary taxes that the average household are likely to pay are inheritance tax (levied at 40% on estates over £325,000) and capital gains tax (paid at 18% for basic rate taxpayers and 28% for higher rate taxpayers on capital gains over £11,000).

The government made £3.4 billion from inheritance tax (IHT) last year and collected £3.9 billion in capital gains tax (CGT) over the same period.

This shows there are plenty of people who are wealthy enough to pay these taxes but also there are not enough people organising their finances to avoid paying these taxes.

Protect your savings from the taxman: compare ISAs

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Tax tricks to improve your wealth

Tax tricks to improve your wealth


Tax traps
With soaring property prices and increased interest in buy-to-let properties the number of people falling into IHT and CGT traps is bound to rise.

But there are simple things you can do to avoid both, although it is always worth getting financial advice to ensure you are properly sidestepping the rules and not volunteering up too much tax.

If your house is pushing you over the IHT nil-rate-band threshold then you can start downsizing your estate and giving some money away without penalties. You can give away £3,000 in total each year and these gifts will be exempt from IHT, plus a few additional monetary gifts for special occasions like wedding. If you give away larger sums you have to survive for seven-years in order for them to fall outside of IHT.

Protect your savings from the taxman: compare ISAs

If you have a looming CGT bill then make sure you reduce it by splitting the asset between you and your spouse or civil partner as you both have an £11,000 allowance, meaning £22,000 of your gains can be kept out of the taxman's reach. Also make sure you claim back any expenses against the asset you are disposing of as this can reduce your bill – for instance renovation costs of a second property.

While you may baulk at paying thousands to the Treasury each year, you can make sure the tax take stops there and stop volunteering up more cash.

Read more about tax:
How to cut your inheritance tax bill
Are you at risk from property tax trap
Will you have to pay tax when you sell your home

How to Avoid Inheritance Taxes - TurboTax Tax Tips Video