8 Legal Tax Relief Solutions That Can Help You Save Money

If you’re a UK taxpayer and need to file a self-assessment tax return, you may be able to claim various tax relief to reduce your tax liability. Here are some of the different tax reliefs that you can use to potentially reduce your tax bill:

Personal Allowance and Tax Brackets

Personal allowance is the amount of income you can earn each tax year without having to pay any income tax. It is the first line of many tax relief available to an individual. For the tax year 2022/23, the personal allowance is set at £12,570. This means that you can earn up to £12,570 in the tax year before you are required to pay any income tax on your earnings.

Everyone in the UK is entitled to a certain amount of tax-free income each year, known as the Personal Allowance. The amount of Personal Allowance you get depends on your income and personal circumstances. Once you’ve used up your Personal Allowance, you’ll be taxed at different rates depending on your income level, which are called tax brackets. By knowing your Personal Allowance and tax bracket, you can better estimate how much tax you’ll need to pay.

For the tax year 2022/23, there are three income tax bands in the UK:

  • Basic rate: 20% tax on income between £12,571 and £50,270
  • Higher rate: 40% tax on income between £50,271 and £150,000
  • Additional rate: 45% tax on income over £150,000

Pension Contributions tax relief

If you make contributions to a personal pension scheme or a workplace pension scheme, you may be able to claim tax relief on these contributions. The maximum amount you can claim depends on your income and the type of pension scheme you’re paying into.

Charitable Donations tax reliefs

Charitable donations are a great way to support your favourite causes and make a positive impact on society. But did you know that charitable donations can also provide tax benefits?

In the UK, eligible charitable donations made to registered charities can be tax deductible. This means that you can claim back a portion of the donation as a reduction on your income tax bill. The amount you can claim back depends on your income tax rate.

For example, if you’re a basic rate taxpayer, you can claim back 20% of your charitable donations as tax relief. This means that for every £1 you donate, you can claim back 25p in tax reliefs. Higher rate and additional rate taxpayers can claim back even more, up to 45% of the value of the donation.

To be eligible for tax relief, your donation must be made to a registered charity or community amateur sports club (CASC). You must also have paid enough income tax or capital gains tax to cover the amount of tax that the charity will reclaim on your behalf.

If you make donations to registered charities, you may be able to claim tax relief on these donations. The amount of tax relief you can claim depends on your income and the amount of your donation.

Working From Home tax reliefs

If you work from home, you may be able to claim tax relief on some of the costs associated with working from home. This could include costs like electricity, gas, or broadband. The amount of tax relief you can claim will depend on your circumstances and the specific costs you’ve incurred. Read more about it on our article.

Business Expenses

As a self-employed individual or a business owner, you may incur various expenses related to your work. You can often claim tax relief on allowable expenses, which can help to reduce your tax bill. Here are some examples of common business expenses that may be eligible for tax relief:

Tax relief on Travel Expenses

You can claim tax relief on travel expenses that are incurred for business purposes. This can include expenses such as fuel costs, public transport, and vehicle insurance. However, you cannot claim tax relief on any private mileage or personal travel.

Tax relief for Office Expenses

If you have a dedicated office space, you may be able to claim tax relief on expenses such as rent, utility bills, and insurance. You may also be able to claim for any repairs and maintenance to your office space or equipment.

Tax relief for Equipment and Supplies

You may be able to claim tax relief on the cost of purchasing or leasing equipment and supplies that are essential to your business. This could include things like computers, software, stationery, and other tools and equipment.

Training and Development

If you attend training or development courses that are related to your business, you may be able to claim tax relief on the cost of these courses. This could also include courses that help you improve your skills or knowledge in your industry.

Marketing and Advertising

If you incur costs related to marketing and advertising your business, you may be able to claim tax relief on these expenses. This could include expenses such as website design and hosting, social media advertising, and printing and distribution of promotional materials.

Insurance

You may be able to claim tax relief on the cost of insurance that is necessary for your business. This could include things like professional indemnity insurance, public liability insurance, and employer’s liability insurance.

To claim tax relief on allowable business expenses, you will need to keep accurate records of your expenses, including receipts and invoices. You can then include these expenses on your self-assessment tax return under the ‘Business expenses’ section.

It’s important to note that not all business expenses are eligible for tax relief, and the amount of relief available can vary depending on the specific expense and your individual circumstances. It’s a good idea to consult with a tax specialist or accountant to ensure that you are claiming all eligible expenses and maximizing your tax relief.

Tax relief for Married Couples Allowance

If you’re married or in a civil partnership and one of you was born before April 6, 1935, you may be eligible for the Married Couples Allowance. This allows you to transfer a portion of your Personal Allowance to your spouse or civil partner, potentially reducing the amount of tax you both need to pay. Read our article on married couple allowance for a better picture.

Childcare tax reliefs

If you’re a working parent, you may be able to claim tax relief for some of the costs associated with childcare. This could include claiming through the Tax-Free Childcare scheme or the childcare element of Universal Credit. Also, the amount of tax relief you can claim will depend on your circumstances and the specific costs you’ve incurred. To be eligible for Tax-Free Childcare, parents must meet the following criteria:

  • Have a child who is under the age of 12 (or under 17 if the child has a disability)
  • Be in work (or self-employed) and earning at least the equivalent of the National Minimum Wage for 16 hours a week (on average)
  • Not be receiving any other support for childcare, such as vouchers or salary sacrifice schemes

Parents can open a Tax-Free Childcare account online and pay money into it from their bank account. For every £8 paid into the account, the government will add an extra £2, up to a maximum of £500 per quarter (or £1,000 if the child has a disability).

Parents can then use the money in the account to pay for registered childcare providers, such as childminders, nurseries, and after-school clubs. The providers must be registered with Ofsted or a childminder agency in England, or with the relevant authorities in Scotland, Wales, or Northern Ireland.

By understanding the tax reliefs available and taking advantage of them. You can potentially reduce your tax liability and keep more of your hard-earned money.

These are some of the tax relief to keep in mind while filing your self-assessment. However, claiming these reliefs depend on your situation. If you have more questions feel free to contact us.

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