DESPITE the chancellor’s efforts to clamp down on tax planning it is still possible to knock thousands of pounds off your bill, writes David Budworth. Here are some legitimate ways to beat Gordon Brown at his own game.

Is there any way to cut tax on earned income?

One way, which helps to boost your pension, is salary sacrifice. You give up some of your wage, removing it from the national insurance net, saving money for you and your employer.

Your firm then pays the shortfall into your pension and you benefit from tax relief on the contributions. Your employer may also allow you to give up salary for another benefit, such as childcare vouchers. In effect, by reducing the amount of tax on your earnings it bumps up your take-home pay.

For example, if you earn £30,000 and contribute £1,000 to a pension scheme, you would pay national insurance contributions (Nics) of £2,745. You could take a cut in salary to £29,000 and the company would contribute £1,000 more to your pension. You would save £110 a year in Nics.

The benefits are greatest for basic-rate taxpayers unless a big cut in salary is agreed. You pay Nics of only 1% on earnings of £33,540 and above. But reducing your salary could hit salary-related benefits and entitlement to the state pension.

And my savings?

With only two weeks to go until the end of the fiscal year you must act quickly. You can invest up to £7,000 in an Isa this tax year — increasing to £7,200 in April 2008 — and some of your returns will be sheltered from tax. You can either invest up to £3,000 in a cash Isa and the rest in an equity Isa, or you can put the entire allowance in a shares Isa.

Barclays pays a best-buy rate of 6.5% on its cash Isa, including a bonus of 1 percentage point for 12 months. The minimum investment is £1.

A number of other savings schemes pay tax-free income, such as National Savings & Investments’ index-linked certificates. The three-year scheme pays the equivalent of 9.58% to higher-rate taxpayers. You can invest £15,000 in each issue.

Is it worth paying into a pension?

The tax breaks remain generous. The government offers tax relief on contributions of 22p for every 78p invested. A higher-rate taxpayer can claim a further 18p.

Are there other, simple ways to cut a tax bill?

If you have already used your capital-gains-tax allowance of £8,800 this tax year but want to sell some assets at a profit, you still have time to transfer them into your spouse’s name and use his or her annual exemption. It may also be worth selling investments that have produced losses because these can be set against gains made on other assets this year.

THE BUDGET AT A GLANCE

- Basic rate of income tax to be cut from 22% to 20% and 10% starting rate scrapped from April 2008

- Upper earnings limit for national insurance contributions, now £33,540, to be raised to about £39,000 in April 2008

- Higher-rate tax threshold — now £38,335 — to rise to £43,000 in 2009. Upper earnings limit raised to same level

- Higher personal allowance for pensioners, now £7,280, raised to £9,000 in April 2008

- Child benefit for first child raised to £20 a week in 2010 n Isa allowance raised from £7,000 to £7,200 in 2008, with cash limit going from £3,000 to £3,600

- Inheritance-tax allowance, now £285,000, to rise to £350,000 by 2010

- Road tax for the most polluting cars to double to £400

- Fuel duty to increase by 2p per litre from October with a further 2p per litre rise in 2008 and 1.8p by 2009

- Collapsed pension schemes get £6 billion more

- Stamp duty abolished on zero-carbon homes up to £500,000. More grants for solar panels and wind turbines

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