 3. Give money to charity Donating to a good cause can benefit those in need, while reducing your tax bill. Admittedly, this requires you to have the spare cash to give away in the first place, but once you factor in the income tax you'll save via Gift Aid, it will cost you less than you think. Ms Suter said: 'Say, for example, you donate £100, the charity will get £25 back through tax relief. Then a higher-rate taxpayer can get back 20pc of the £125, which equals £25.' This effectively works by increasing your basic-rate band by the amount you donate. Ms Suter added: 'So, if you donate £1,000, your basic-rate tax threshold will increase from £50,270 to £51,270 in the current tax year.' Through the Gift Aid scheme, higher and additional-rate taxpayers can claim tax back on any donation. They just need to give the details in their self-assessment tax return. Higher-rate taxpayers can claim back 20pc relief on the full amount given, while additional-rate taxpayers can claim back 25pc. This is on top o){kind=link}
Telegraph Money reveals nine ways to cut your income tax bill
Around 6.8 million taxpayers face being dragged into a higher tax bracket next year – but by following our tips, and doing a bit of extra planning, even those earning £110,000 won’t have to pay higher-rate tax.
Stubbornly high inflation and rising wages, combined with frozen tax-free allowances, mean 4.2 million people could become basic-rate taxpayers, who currently don’t pay tax, and 2.6 million could be dragged into the higher-rate tax band, according to calculations from the Centre for Economics and Business Research.
This means 4.2 million could become basic-rate taxpayers, who currently don’t pay tax, and 2.6 million could be dragged into the higher-rate tax band.
Laura Suter, head of personal finance at AJ Bell, said: “Thanks to the Government’s frozen tax allowances, we’re all paying more tax. The amount the Government is due to raise in income tax this year is expected to soar. It’s estimated 55pc more people will hit the additional-rate income tax band, thanks to rising wages and the lowering of that threshold.”