UK tax relief: Everything you need to know

Tax relief can help UK taxpayers by allowing them to lower the amount of tax they pay or recover back tax. UK tax relief is when you may be entitled to receive deductions or claim tax credits on your Corporation Tax.

Certain payments, such as repaying a loan, or paying into a pension, are exempt from taxation. Income tax, for example, is deducted immediately from your paycheck by your employer.

Alternatively, if you are self-employed or have another source of income, you can claim tax back from HMRC. To do so, you must file a self-assessment tax return with HMRC so that they can establish your level of tax relief.

UK Tax Relief

UK Corporation Tax relief

When you start a limited company, you must register for corporation tax (within three months of starting to trade). It is important to note that ‘trading’ can refer to any business activity, from purchasing stock to posting an advert – it does not have to involve generating money. To avoid any penalties, you should register for company tax as soon as possible.

You are responsible for paying the correct amount of tax, therefore you must keep accurate company accounts and complete a Company Tax Return by your deadline.

Am I eligible to claim tax relief?

You may be able to claim tax relief if you spend your own money to purchase items for business reasons. If you are self-employed, you can claim tax relief on business expenditures. However, you cannot claim tax relief if your employer pays for your expenses.

If your business has asked you to work from home, you can also claim tax relief. However, you will not be able to claim this if you voluntarily choose to work from home.

If your taxable profits exceed £250,000, you will be liable to a 25% tax rate beginning in April 2023. If your profits are less than £50,000, you will be subject to a lower limit rate of 19%. If your profits fall between the lower and upper limits, you will pay a marginal rate of 26.5% but will benefit from marginal relief.

What type of tax relief can I claim?

You may be able to claim tax relief on the following:

  • Uniforms: Cleaning, repairing, and replacing uniforms. 
  • Transport: If you use a car for work. The amount you claim will be determined by the type of car and whether you own it, lease it, or it is a corporate vehicle.
  • Tools: Purchasing tools and equipment for your profession and fixing or replacing tools required for the work. This might range from a pair of scissors to heavy machinery.
  • Travel and overnight expenses: This involves work-related travel and overnight fees. It also covers transportation, hotel stays food and drinks.

Leave a Comment

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.