MAIL ON SUNDAY: Tips to save yourself some tax

Aside from the more obvious tax-efficient options, there are several less well known options for the average person. For example, people can take the 'Gifts out of Normal Income' rule. This allows you to gift as much of your income as you can afford to, provided you don't deprive yourself, without the beneficiary having to pay IHT on the gift after your death. It is instantly relievable. There's also the Marriage Allowance, which allows married couples to pass up to £1,260 of the Personal Allowance of one, to the other. This allows a Higher Earner to earn more of their income tax-free before paying Income Tax upon it. This can potentially save £252 a year. There are Premium Bonds, too, which, as everyone should have an Emergency Fund, offer Tax-Free prizes. Or there's the £1,000 a Basic Rate Taxpayer can earn from savings accounts before they pay tax. Or simply ISAs, upon which there is no Income Tax or Capital Gains Tax. Once the ISA is used up, investing into a General Investment Account can allow you to use up your Capital Gains Tax allowance. This could potentially save up to 20% CGT on up to £12,300 of gain per year (£2,460). Other tricks of the trade include, if you've deferred your State Pension, take it as a lump sum in a tax year you are a non-taxpayer, and you'll pay no income tax upon it, no matter how large the lump sum is.

A common missed opportunity is the retention of child-benefit for families with an individual earning over £50,000. Once one household member earns over £60,000, the full benefit is lost. For a family with three children, this is worth £2,636.40 per year. This benefit can be retained by making pension contributions personally or via their workplace scheme. Adding up Income Tax and National Insurance savings, a mother or father earning £60,000 per year could save £6,836.40 in tax in this way.

Maximizing your pension contributions is a no brainer if you want to cut your tax bill, but always make sure you can afford to invest the money , that you can lock it up till the age of 57, and that if you have enough in your emergency funds. If you have a substantial amount to invest you can also maximise your unused allowances for three years prior to the current tax year. If you earn for example 70K a year, and you and your employer have contributed 15K to your pension this year you can invest up to 25K into your pension for this year. If it's into a personal pension effectively you put in only £20K , the government puts in another £5K on your behalf and you receive another £5K back in tax relief when you do your tax return. Even if you don't normally complete a tax return just contact HMRC with the details of the contribution and they will arrange to pay the relief. A 25K investment has effectively only cost you 15K - a 67% guaranteed return! The returns increase if you are an additional rate tax payer - and don't forget that above 100K salary you also start to lose your personal allowance, making the benefit even greater. If you are a director of a limited company, your firm can make a contribution on your behalf and this will decrease your business profits and hence your corporation tax bill, plus it's a great way to extract money from your business tax efficiently. You can take 25% of your pension tax free and only pay tax on the rest when you draw your pension later in life. Pensions are also outside your estate and not subject to inheritance tax , so if you have plenty of funds elsewhere that can be used for retirement purposes, they are a great way to leave a legacy for your children. If you die before the age of 75 also, your children can receive the pension free of income tax.

Money held in your pension can be passed to your children free of Inheritance Tax. The current pensions Lifetime Allowance is £1,073,100. So a husband and wife could save £858,480 of Inheritance Tax by maximising their pensions over the lifetime."