Tax breaks can provide you with a few hundred pounds every year which is adequate for catering to emergency cash needs. To avoid taking short-term loans such as payday loans, you can turn your attention to the tax incentives you could be missing out now. Besides avoiding short-term loans, tax incentives can help you build your savings account. Many tax incentives are being left on the table by Britons. Here are some of them.
1. Marriage allowance
The latest government statistics show that over 2 million married couples in Britain miss out on a £600 each (£1200) yearly marriage tax break. The total unclaimed marriage tax breaks amount to approximately £1.3 billion according to a recent freedom of information request submitted to the UK government requesting information on the tax break. Britain has approximately 4.2 million married couples and 15,000 civil unions eligible for the tax incentive. However, only 1.8 million married couples have claimed.
The incentive dates back to 2005 and couples are allowed to back-claim £632.To claim this incentive, you need to be in a civil union or marriage. Cohabiting partners aren’t eligible. You also need to be a taxpayer. However, spouses who aren’t taxpayers but are married to individuals who pay tax are still illegible to the incentive. To benefit, the lower earner must earn £11,500 or less. The tax is still applicable to individuals receiving a pension as well as those living abroad provided they are getting a personal allowance.
2. Childcare costs tax credit
You may also be missing out on working tax credit which is a tax incentive that helps with childcare costs. Working Tax Credit takes care of partial costs of childcare. You may be eligible for an additional £122.50 tax break every week for a single child or an extra £210 every week if you have two or more children. To qualify for childcare tax incentives, your kid must be minded by an approved childcare provider. Visit https://www.gov.uk/help-with-childcare-costs to get more information on tax incentives relating to childcare costs in the UK.
3. Travel incentives for employees
The UK government also gives travel tax incentives to employees whose work requires traveling which disrupts the normal daily routine. Please, note this tax is not given for normal daily commutes. The incentive considers travel expenses like toll charges, parking fees, business call costs, airfare, mileage, taxi, bus and/or railway transport costs. If your work requires you to travel and make overnight stays, you may also be eligible for this tax incentive on accommodation expenses like food and drinks. Claiming this tax incentive is easy. You need to file a self-assessment tax return online or via post (print and post form P87). You can also claim by phone if you have claimed successfully before. You can get more information about this tax incentive here: https://www.gov.uk/tax-relief-for-employees/travel-and-overnight-expenses.
4. Food-related tax incentives
You can also claim some tax relief for food costs incurred outside your routine/pattern. Please note this tax isn’t applicable to food costs incurred when taking clients out for lunch. A person who works from home can, however, claim food costs incurred when attending a work conference. This tax applies to reasonable expenses. For instance, you can’t claim tax breaks on food expenses related to expensive wine. Visit: https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim37670 for more information.
5. Research and development tax credits
You could also be eligible for R&D tax credits if you are a business owner. This tax incentive has been in place in the UK for years. The government put this tax incentive in place to encourage companies to spend on research and development which is considered crucial for economic growth. The incentive was also put in place to encourage investment in innovation. Currently, over 170,000 research and development claims have been submitted in the UK since 2001 according to HMRC’s Tax credit statistics. Over £16.5 billion has been claimed already as tax relief. Small business owners are claiming this tax more and more every year. In 2015-2016 for instance, SME claims increased by 22% compared to year 2014-2015 (from 17,875 to 21,856).
If you own an SME, you have an opportunity to get some tax breaks. R&D tax applies to SMEs with less than 500 employees and a turnover not exceeding 100 million. The relief is extended to research and development initiatives like software development, combining existing technologies, ownership patents as well as employment of software engineers, scientist or developers. SummaryYou probably leave a lot of money on the table in the form of unclaimed tax incentives. The information above can help you save hundreds and sometimes more than a thousand pounds every year in the form of tax breaks. You can then channel this money into your savings or emergency account to avoid over-reliance on emergency loans like payday loans.