There is no better way to start 2018 than to lower your tax bill and have more money in your pocket. Here are 13 things to consider as a doctor or dentist.
This does not constitute advice and advice should be sought in all instances before acting on it. The Financial Conduct Authority does not regulate tax advice.
We’ve put together a list of ways that you can save tax in 2018:
- Check your tax code – check the numbers and letters that your tax code contains. If it contains the letters BR, X, WK1 and MTH1 – these are emergency tax codes, and this means you may be paying more tax then you should be.
- Use your ISA allowance – to save yourself tax make sure you use your full ISA allowance. The allowance for the tax year 2017/18 is £20,000. This will remain the same for 2018/19. You can choose to invest in a Cash ISA or a Stocks and Shares ISA, or a mixture of both.
- Invest in your pension – make contributions into your NHS pension scheme.
- Use your personal savings allowance – the first £1000 of interest you make from your savings is tax free for basic rate tax payers. For higher rate tax payers, it is £500. Unfortunately for additional rate tax payers there is no savings allowance.
- Make use of the Capital Gains Allowance – capital gains are the profit you make from selling assets. During the tax year 2017/18, capital gains under £11,300 are tax free. If you are married or in a civil partnership the allowance can be doubled to £22,600. If you do not use the full allowance it can not be carried over the next tax year.
- Consider using the Marriage Allowance – If you are married or are in a civil partnership you can transfer up to £1,150 of the personal allowance from the lower earner to the higher earner. This could save you £230 in tax. This is only possible if the higher earner is a 20% taxpayer.
- Submit your tax return on time – the deadline for submitting your tax return online and for paying any tax owed is 31st If you are late doing both, you will be fined and face paying surcharges and penalties as well.
- Check your expenses – make sure you are claiming for all the ‘allowance’ expenses you can. If you are not sure what HMRC deem an allowable expense, please seek guidance from your accountant.
- Off-set losses – if you made a loss the previous year it may be possible to carry it over and offset it against the next years profit.
- Think ahead about payments on account – if you think you may earn less this year then you did last year you can apply to HMRC to ask them to reduce the amount you need to pay towards payment on account.
- Transfer assets – if your spouse or civil partner is a lower rate tax payer, you can transfer savings and investments to them to save tax.
- Support a charity – making charitable donations is tax free. You or the charity can claim the tax back via the Gift Aid scheme.
- Use your dividend allowance – any dividends you receive from your limited company or from an investment outside of a pension or an ISA, will not incur tax, up to the level of £5,000 for tax year 2017/18.
Tax planning is important to save money
Dental & Medical Financial Services have been helping doctors and dentists with effective tax planning for over 25 years. Call Darren to discuss your tax position.
Tel: 01403 780 770