Xela Finance

Here are some ways you can reduce your tax bill with HMRC:

1. Claim your personal allowance: Everyone is entitled to a personal allowance each tax year, which is the amount of income you can earn tax-free. For the tax year 2022/23, the personal allowance is £12,570. Make sure you claim this allowance when you fill out your tax return.
2. Contribute to a pension: If you’re a higher-rate taxpayer, you can reduce your tax bill by making contributions to a pension. The contributions are tax-deductible, which means you’ll pay less tax on your income. You can contribute up to 100% of your annual salary or £40,000 (whichever is lower) into your pension each tax year.
3. Invest in an ISA: An Individual Savings Account (ISA) allows you to save or invest money tax-free. You can invest up to £20,000 each tax year into an ISA. This means any returns on your investment will be tax-free.
4. Claim tax relief on charitable donations: If you make donations to charity, you may be eligible for tax relief. You can claim back the tax you’ve already paid on the donation, which will reduce your tax bill. Make sure the charity is registered with HMRC to qualify for tax relief.
5. Claim expenses: If you’re self-employed, you can claim certain expenses against your income, which will reduce your tax bill. These may include travel expenses, office costs, and equipment expenses. Make sure you keep accurate records of your expenses and claim only what you’re entitled to.

Reducing your tax bill can be a complex process, and it’s important to get it right to avoid penalties or fines. If you’re not sure about any of the above methods, or you need further advice on reducing your tax bill, it’s worth seeking the help of a qualified accountant or financial advisor.