PAYE

12 really quick and easy tax tips for PAYE workers

 

  1. Child care vouchers -  if you have children attending a nursery or looked after by a professional childminder, your employer can join a Childcare voucher scheme. This allows for £55 of the weekly cost to be deducted free of tax and NI if you are a basic tax rate payer, or £28 if you are a higher rate tax payer.
  2. Pensions – if you pay into a work pension scheme, 20% tax is automatically deducted. For high rate tax payers, you can claim additional relief either by declaring it on your Self-Assessment or calling the taxman.
  3.  Company cars – are a pain and the tax is huge BUT if you have a company van, the benefit in kind is capped at £3,000 so for a basic rate tax payer the cost of driving is only £600 or £1,200 for a higher rate payer.
  4.  Professional membership fees - your membership to a recognised trade or professional body it is a deductible expense, but not for your hobbies.
  5.  Share incentive schemes - there are loads of schemes that allow either NI or Capital Gains Tax to be saved, you don’t have work for a listed company either.
  6.  Giving your work colleagues a lift to work - if your employer encourages car pooling you can claim 5p a mile for the passenger without incurring any additional tax charge.
  7.  Cycle to work - get your employer to provides a bike both for travel to work and play, it’s not considered as a benefit in kind.
  8. Then after a time you can buy it off them at market value.
  9.  Season ticket loans - your company can advance the cost of an annual season ticket up to £5,000, much cheaper than buying a ticket weekly.
  10. From April 2014 this increases to £10,000 (not really sure if that’s a blessing?)
  11. Electric Cars – from April 2015 there’s no benefit in kind.
  12.  Working from home – it is becoming increasingly more common for staff to work from home. You can claim £4 a week allowance without having to produce receipts.

 

How long to keep your records

As a general rule, you should keep your records for a minimum of six years. However, if you are:

• an employer, you need to keep Pay As You Earn (PAYE) records for 3 years

(in addition to your current year)

• a contractor in the Construction Industry Scheme (CIS), you need to keep your CIS

records for 3 years (in addition to your current year)

• keeping records to complete a personal (non business) tax return, you only need to

keep them for 22 months from the end of the tax year to which they relate.

If you need to keep records for other reasons, for example the Companies’ Act

requires limited companies to keep specific records and you also use those records

for tax purposes, you need to be aware that there may be different time limits for

retaining them. Be careful not to destroy any records you also use for tax purposes

too soon.