With Britain’s finances deeply in the red, it’s a racing certainty that this autumn’s Pre-Budget Report, due in a few weeks’ time, will contain more misery for hard-pressed taxpayers. Faced with a huge £175 billion gap in his budget for the current fiscal year, the Chancellor Alistair Darling, will almost certainly have to drag some more revenue-raising measures from his battered Budget box.

Yet according to Unbiased.co.uk, the professional advice website, a staggering 81 per cent of people admit to doing nothing to reduce their tax payments, thus wasting an estimated £10 billion in the current financial year.

Times Money has decided to offer taxpayers a hand and, with the help of some experts, has come up with ten tips on how to save tax.

1 Check your PAYE code

Daniel Clayden, of Clayden Associates, says if you are one of the millions who are taxed on their income through the Pay As You Earn (PAYE) system you should check you are on the correct code.

“Most of us assume that if tax is being deducted at source it must be right, but the Revenue does get it wrong sometimes,” Mr Claydon says.

If you have been paying too much tax you can claim back the excess for up to six previous years. If you have been paying too little the Revenue can claim it back, but as Mr Clayden says: “It’s far better to sort the problem out sooner rather than later.” To check your tax code is correct ask the Revenue for a Notice of Coding and go through the details in full.

2 Make full use of your personal allowances

Danny Cox, of Hargreaves Lansdown, says every individual has a personal allowance, currently £6,475 a year, which is the amount you are allowed to earn before you start paying tax. Mr Cox says: “Couples should maximise their personal allowances by channelling savings and investments towards the person who pays the least amount of tax.”

3 Consider carrying out a salary sacrifice

Rob Simpson, of Simpson Financial Services, says salary sacrifice means giving up the right to part of your salary in exchange for a benefit, such as an employer pension contribution. Both you and your employer will save money on national insurance and the employer also saves on corporation tax.

4 Make the most of tax relief at your highest marginal rate on pension contributions

Jason Whitcombe, of Evolve Financial Planning, says this tax break is just too good to ignore. It is particularly valuable if you are a higher-rate taxpayer and so receive relief at 40 per cent on your pension contributions.

“Someone who is a basic-rate taxpayer now but expects to be a higher-rate taxpayer in the near future might, unusually, be advised to hold off investing until he or she is a higher-rate payer in order to benefit from the greater relief,” Mr Whitcombe says.

5 Form your own company if you are a high earner

Mike Warburton, of Grant Thornton, says individuals earning more than £150,000 a year are seeking to mitigate the effect of the planned new 50 per cent tax rate by forming their own companies. As companies they pay themselves dividends, rather than a salary, and avoid payment of national insurance. Instead they pay corporation tax at 21 per cent up to £300,000 and on a sliding scale after that. After deducting corporation tax, they would then pay an effective higher rate tax on their dividends of 36.1 per cent. This means that on every £100 they would first pay £21 in corporation tax and then £28.50 in top rate tax on the remaining £79 paid as a dividend. This total of £49.50 in tax would be less than the £50 tax and £1 national insurance they would pay if taxed in the normal way.

6 Save on VAT by buying goods now

Chas Roy-Chowdhury, of the Association of Chartered Certified Accountants, says if you’re thinking of buying some expensive goods in the next few months, do so before January 1. “If you buy in the next couple of months you will benefit from a VAT rate of 15 per cent, but this will rise to 17.5 per cent in January. So if you are contemplating a big-ticket purchase it would make sense to bring it forward,” he says.

7 Bring forward dividend payouts to this tax year

Stephen Herring, of BDO Stoy Hayward, says if you are a high earner and work for a family company or have your own company, you should consider bringing forward income distribution from future years to this tax year. “If you pay yourself a dividend this year, and assuming you are a higher-rate taxpayer, you would currently be paying an effective rate of 25 per cent on dividends. But from next year you would, as a top-rate taxpayer, be paying an effective rate of 36.1 per cent on your dividends. On a net dividend of £10,000 that is the difference between paying £2,500 in tax and £3,611,” he says.

8 Take advantage of your Isa allowance

Paul Aplin, of the Institute of Chartered Accountants in England and Wales, says: “It makes sense to put away as much money as possible into these tax-free savings accounts. The maximum annual contribution has been raised by £3,000 to £10,200. Those aged 50 or over can invest the extra money immediately, while those under 50 can do so from April 6.”

9 Make sure you receive your age allowance if you are over 65

Joss Harwood, of Eldon Financial Planning, says this allowance is worth £3,015 on top of the normal personal allowance for those aged 65 to 74 and £3,165 for those over 75, taking their total personal allowance to £9,490 and £9,640 respectively. Those entitled to it should make sure they claim it as it is sometimes not included automatically in an individual’s tax coding.

10 Don’t ignore simple tax-free savings

Gordon Bowden, of Quainton Hills Financial Planning, says National Savings Index-linked certificates have a lot going for them. He says: “Up to £15,000 can be invested in each issue and savers enjoy guaranteed inflation-proofed tax-free returns, which are 100 per cent secure as they are backed by the Government.”

Likely Pre-Budget Report measures

- Introduce a wealth tax of 0.5 per cent on personal fortunes of more than £1 million. Nigel May, of MacIntyre Hudson, the accountant, says it is highly likely the Chancellor Alistair Darling, right, will continue his assault against higher earners and a wealth tax would be one way of doing this.

- Increase the main rate of capital gains tax from 18 per cent to 25 per cent.

Mr May rates this an even-money bet. The current 18 per cent rate of CGT is lower than both the basic and higher rate of income tax, so there is currently a temptation for people to convert income into capital gains.

- Delay the next rise in fuel duty — scheduled for April 1 — until after the general election.

There’s a good chance that the Chancellor will be tempted to follow this course because a rise in petrol prices just before an election would hardly be a vote-winner.

- Extend the freeze on stamp duty for properties worth up to £175,000 for a further year.

It’s a reasonable bet that the Chancellor will seek to provide a few election sweeteners and a move such as this would not cost him very much. It would also help to support a still-fragile property market.