How to Save Money on Taxes During the Cost of Living Crisis?

Advisor May 27, 2022

As the cost of living is reaching its all-time apex, people are looking for effective ways to save money. Thanks to financial literacy, a vast majority understand that it is the government taxes that drain money from their accounts. To combat that, they are looking to see creative ways to reduce taxes. If you think the same way, congratulations! You have already taken a step towards saving money on taxes. But there is a catch. Keep in mind that you do not deviate and disobey the government laws during the process.

/ Pexels / Regardless of your profession, there are certain legal steps that you can take to reduce taxes.

The good news is that you can lower your federal taxes while following the laws of the government. In other words, you can legally lower your taxes. Here are some best legal ways to legally save money on taxes:

Make Sure You are on the Correct Tax Codes

If you are a consumer who pays taxes via PAYE, you need to ensure that you are on the right tax code. More often than not, consumers do not look at their tax codes. As a result, they pay the wrong taxes which is more than they are supposed to pay. Generally speaking, tax codes change every year. On top of that, if you switch jobs or your employer does not have a P45 document, your tax code is likely to change.

Gustavo / Pexels / If you have overpaid due to the wrong tax code, you can receive a rebate for your overpayment.

That is why make sure to double-check your tax code every year or whenever you start a new job. Should the need be, reach out to the focal department for assistance. Paying wrong taxes is not only illegal, it is damaging. After all, you are paying your hard-earned money on something that you should not. And all this is caused by a slight inconvenience. So, ensure that you are on the correct tax code and you are paying what you are supposed to.

Check Your Qualification for Universal Credit

Pixabay / Pexels / Employees who earn £16,000 or less a year are qualified for universal credit.

Another important step that you can take to waive off your taxes is by checking if you qualify for universal credit. Universal credit is a worthwhile program that aims at helping low-income consumers. It waives off certain legal entitlements like taxes. Similarly, deserving consumers can also get financial assistance from the government.

However, financial assistance from the government varies depending on certain aspects. For example, if you qualify for the Universal Credit and have kids, you can get 85% of the childcare costs. Statistics suggest that a vast majority of Universal Credit goes unclaimed every year. So, it is a worthwhile idea to check if you qualify for Universal Credit and make the most out of it.