How do I pay less tax?

If you’re working paying taxes is a fact of life, but paying too much is common. If you don’t find out and claim it back, you will never get the money you are owed.

It’s reported nearly a third of employed UK tax payers are paying too much income tax and they don’t even know it.

To make sure you are only paying the tax you need to you should find out more about how to pass less tax legally.

Top Tip – One of the main ways to pay less tax is to claim back tax relief on expenses you have because of your job.

How to pay less income tax

One of the main ways to pay less tax is to claim back tax relief on expenses you have because of your job. You can get a tax rebate for the last four years and get a tax code change resulting in you paying less tax in the future.

You can claim a tax rebate for:

• Travel  Normal commuting to one place isn’t allowed but you can claim for traveling to different places of employment.
• Uniform Washing a uniform or protective clothing means you should be able to get a uniform tax rebate.
• Tools and protective clothing If you buy tools and protective clothing for your job, and you’re not paid back the cost by your employer you can make a tax rebate claim.
• Professional fees Most professional bodies and some unions have agreements in place permitting tax relief on some or all of the annual cost.
• Pension tax relief For higher rate taxpayers; if you pay into a private pension, then you qualify for an extra 20% tax relief.
• Use of home If you are contractually obliged to work from home, there is the opportunity to claim tax relief on the applicable proportion of household costs.

Remember…

You don’t have to be self employed to claim a tax rebate for expenses incurred due to your job.

How to pay less tax and your tax code

Checking your tax code is important because an incorrect code means an incorrect tax bill.

Having gaps in employment and company benefits can often mean you have an incorrect tax code.

There are many factors that can effect your tax code and you can find out more in our tax code guide which let’s you know how to check your tax code and what to do if you feel something is not correct.

Is paying less tax legal?

Rightly or wrongly, in many cases you will only pay less tax if you claim what you are owed. It’s perfectly legal and actually expected of you to claim a tax rebate. The onus is on you to find out what you are entitled to, and then claim back what you are due.

Don’t leave it too late to make a tax claim

Paying less income tax is your choice; don’t expect it to happen automatically in most cases. You have four years to claim any income tax you are due so if you think you have overpaid, making a tax rebate claim sooner rather than later is advisable.

How to make a tax rebate claim

The way in which you claim a tax rebate does depend on the type of tax rebate you are reclaiming from HMRC.

Automatic tax rebates

Sometimes you can overpay income tax and HMRC repay it to you automatically. When this happens HMRC will usually send you a P800 tax calculation through the post to let you know.

If you have received a P800 tax calculation from HMRC detailing a tax refund you should be able to reclaim this through your personal tax account or by using the HMRC app.

Employment expenses tax rebate claim

For any expenses claim worth under £2500 a P87 form is normally needed by HMRC either through an online submission or by post.

A claim for expenses worth £2500 or more is generally has to be processed on a self assessment tax return.