Maximising Income

There are many opportunities available to everyone when it comes to maximising income. Even if you are earning minimum wage, you work hard for your money so it is important to maximise your income wherever possible.

What is maximising income?

Maximising income means taking advantage of and regularly checking a number of factors that could benefit you financially like:

• Increase your earnings
• Reduce the amount of tax you pay
• Look into your entitlement to claim any benefits
• Take in lodgers

Increase earnings

Easier said than done right?

Of course, this might not be a possible for everyone but it is still an option worth thinking about if you are trying to clear your debts.

If the thought of asking for a pay rise sends shivers down your spine, you could always just try to make some changes the number of hours you work, take on an extra shift or work overtime on occasions.

Reduce the amount of tax you pay

This is very important:

One way that you may be able to reduce your outgoings is by making sure that your tax code is correct and that you are receiving any tax credits that you are entitled to.

What is a tax code?

A tax code is made up of several numbers and a letter – you can find it on:

• Your P45 (issued by your employer when you stop working for them).
• Your pay slip.
• Your PAYE Coding notice (usually sent to you by the Tax Office before the start of each tax year).

If you visit the Inland Revenue site you can find out everything you could possibly need to know about your tax code, including:

• How the codes are worked out
• How the different codes work
• If you are on an emergency tax code
• Changes that might affect your tax code

If you think you might be on the wrong tax code, you can contact Inland Revenue and find out for sure whether you have been paying too much tax. If you have, your code will be altered accordingly and you will be entitled to a rebate.

Look into your entitlement to claim any benefits

You can find everything you need to know about tax credits on the Inland Revenue site including:

• Rates and thresholds
• Forms and help-sheets
• Tools to help you handle your tax credits
• Advice
• Technical manuals
• Information on claiming, reporting changes, overpayment etc

Tax credits are a benefit; a payment from the government. There are two main categories and you can often get both types of tax credits:

1. Working Tax Credit
• If you work, but are on a low income, you may qualify for Working Tax Credit. This credit is based on the hours that you work and get paid for, or expect to be paid for (unpaid work does not count).
• Working tax credit is there to help people who are employed earn more than people on benefits and they are simply payments that can be made every month into your bank account like a benefit.
2. Child Tax Credit
• You do not have to be working to claim this credit.
• If you are responsible for at least one child or young person who lives with you, you may be entitled to Child Tax Credits.

These payments aren't taxable and we are talking serious cash here – sometimes thousands of pounds. So it is vital that you do a bit of research so that you can find out what you are entitled to.

Take in lodgers

Taking in a lodger is a good way to earn extra income. Some benefits of taking on a lodger are:

1. New friendships – if you live alone, lodgers can provide good company.
2. Lodgers can offer you extra security – if you’re away, someone will be there to look after the property.
3. Unlike tenancies, there are no statutory rules governing lodgers so you make your own rules in the form of a contract between you and your lodger.

However, there are some drawbacks to taking in a lodger:

1. You may need your landlord permission.
2. Your benefits may be reduced.
3. Insurance payments may increase.

It is important to consider your family’s situation before taking in a lodger as, although you can it can help to solve financial difficulties, another person sharing your home can be stressful.

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