How can I reduce my personal tax burden in the UK?

There are lots of ways to reduce your tax bill legally, whether you're an employee or self-employed, a landlord, investor or pensioner.

As taxes are a complex topic, it is important to seek advice from a qualified tax professional before making any decisions. But there are some general steps that you can take to potentially reduce your personal tax burden in the UK.

1. Make use of tax reliefs: The UK government offers various tax reliefs on things like pensions, charitable donations, and business expenses. By taking advantage of these reliefs, you can reduce the amount of tax you owe.
2. Use your personal allowance: Every UK taxpayer has a personal allowance, which is the amount of income they can earn tax-free. For the tax year 2022-2023, the personal allowance is £12,570 (unless you earn over £100,000) . By earning less than this amount, you can reduce the amount of tax you owe.
3. Maximise your ISA allowance: ISAs (Individual Savings Accounts) are tax-free savings accounts that are available to UK residents. The amount you can save in an ISA each year is limited, but any interest you earn is tax-free. Using your ISA allowance can help reduce the tax you owe on your savings.
4. Consider your business structure: If you are self-employed or run your own business, consider incorporating. Limited companies generally have a lower rate of corporation tax than individuals.
5. Keep detailed records: It’s important to keep detailed records of any expenses you incur in the course of earning your income. This will help you claim back any expenses you are entitled to claim, which will reduce your taxable income.
6. Plan your finances: Planning your finances and anticipating potential tax payments can help you avoid any penalties or interest charges. Review your finances regularly and try to anticipate any potential tax liabilities.

In summary, there are several steps you can take to potentially reduce your personal tax burden in the UK, such as making use of tax reliefs, using your personal allowance, maximising your ISA allowance, considering your business structure, keeping detailed records, and planning your finances. However, it is important to remember that tax laws are complex and it is best to consult with a qualified tax professional before making any decisions. Our great team here at Amanah Accountants would be more than happy to walk you through the process.