Ilyas Patel Accountants in Preston
Tax season often feels overwhelming, with taxpayers scrambling to complete their returns and dreading hefty bills.
Beyond the usual strategies like pensions and ISAs, there are creative and lesser-known ways to reduce your tax liability.
These strategies could save you money while ensuring compliance with HMRC regulations.
(Read Time: Approx. 4 minutes)
Most people are familiar with mileage claims: you can claim 45p per mile for the first 10,000 miles and 25p for additional mileage when using your personal car for business.
However, the allowance applies per company, not per individual.
This means if you work for multiple companies that are not associated, you can claim mileage for each one.
Additionally, businesses can reclaim VAT on fuel costs.
By keeping receipts, you could reclaim between 7p and 24p per mile on the VAT element of the fuel.
Electric car users can also benefit by claiming VAT on electricity used for business journeys.
You must ensure that this is claimed by the company, and not the individual.
These small steps can make a big difference when you calculate your annual travel expenses.
This can also be claimed per car as well as per company.
Gift Aid offers more than just the satisfaction of helping others—it’s a great tax-saving tool for higher-rate taxpayers.
For example – as a higher rate tax payer – if you donate £800 to a registered charity, the government adds £200, making it a £1,000 donation.
You can then reclaim £200 in your tax return, effectively reducing your out-of-pocket cost to £600.
Setting up a personal charitable trust or making regular contributions can also provide long-term benefits.
The combination of supporting a cause and reducing your tax liability makes this an ideal strategy to explore.
If you own rental property with a partner or spouse, shifting the beneficial interest could lower your tax bill significantly.
By transferring income to the partner in a lower tax bracket, you can ensure rental income is taxed at a lower rate.
This does not require solicitors and can be done by filing the appropriate documentation with HMRC, as well as a trust deed.
For example, you can allocate 90% of the rental income to a non-working spouse while keeping property ownership at a 50/50 split for capital gains purposes.
Once the split is set, it remains fixed, so careful planning is essential.
If your self-employment income exceeds £50,000, setting up a limited company might reduce your tax liability.
This is especially beneficial for consultants, medics, or professionals with additional income streams from private or legal work.
By shifting income through a limited company, you can take advantage of lower corporate tax rates while keeping personal income within a lower bracket.
This strategy requires professional advice to ensure its implemented correctly, but the savings can be substantial.
If your spouse or children contribute to your business—such as managing your website, answering calls, or handling administrative tasks—put them on the payroll.
This reduces your taxable profits and provides income to family members.
For non-earning spouses, this strategy can also create eligibility for state benefits and National Insurance contributions.
Paying a salary to family members is a straightforward way to optimise your tax position while compensating them for their work.
Salary sacrifice is a well-known scheme in the public sector but can benefit private sector employees too.
By redirecting part of your salary into pensions or benefits like car schemes, you reduce your taxable income.
This can also help those in the child benefit tax trap or higher tax bands by keeping their income under critical thresholds.
This approach is particularly useful for anyone close to the £100,000 income level, where the personal allowance begins to taper.
By reducing your taxable salary, you effectively lower your tax liability while enhancing your benefits.
Many professionals overlook reimbursable expenses.
Medics, for example, may fail to claim on GMC subscriptions, scrubs, or training fees.
These expenses often qualify for tax relief and can generate refunds for up to four years retrospectively.
Higher-rate taxpayers could recover thousands of pounds by carefully reviewing work-related expenses.
Even full-time employees should consider filing a self-assessment return if they incur such costs, as the potential refunds far outweigh the effort involved.
Expert advice becomes invaluable when planning your tax savings.
Tax specialists, such as Tax Expert, can identify savings opportunities you may not be aware of and ensure full compliance with HMRC regulations.
Consulting a professional is often a cost-effective move.
The savings uncovered typically exceed the fees paid, making this a worthwhile investment for anyone serious about reducing their tax bill.
Reducing your self-assessment tax bill doesn’t have to be stressful.
By exploring these eight strategies—mileage claims, charitable contributions, joint property ownership, and more—you can save money and make smarter financial decisions.
However, proper implementation and advice are key to maximising these benefits.
Watch our tie-in Tik Tok about how to reduce your tax bill.
Contact us at Ilyas Patel Accountants for professional guidance.
Fill out our form here for any questions, give us a call at 01772 920579, or message us on our WhatsApp for out of office hours.
Kind regards,
Ilyas Patel