Let’s face it: no one enjoys paying taxes. In fact, most of us would rather see our hard-earned money go towards things that benefit us directly, like a holiday, a new gadget, or investing in something that will help us grow. But when it comes to tax time, it can often feel like you’re losing out.

The truth is, you don’t have to pay more than you need to. One of the best ways to reduce your tax burden is to take advantage of tax deductions, allowances, and reliefs. However, many people – whether they’re employees or business owners – miss out on significant savings simply because they don’t know about all the available tax deductions.

In this blog, we’ll walk you through the most commonly overlooked tax deductions in the UK. We’ll show you how you can claim back more of your hard-earned cash and keep more of it in your pocket. These aren’t just for self-employed individuals or business owners – there are deductions for almost everyone. So, let’s dive in and uncover the deductions you could be missing!

1. Work-Related Expenses: Claiming Back What You Deserve

When most people think about work-related expenses, they usually think of self-employed individuals, freelancers, or business owners. But in fact, employees can claim deductions too. Many people forget that the taxman might be willing to help if they’re spending money for work-related reasons. From uniforms to professional subscriptions, here are some expenses you could claim.

• Uniform and Work Clothing: If your job requires you to wear a uniform, protective clothing, or anything with a logo, the costs related to buying or cleaning these items might be deductible. For example, if you’re a nurse who needs scrubs, or a builder who wears safety equipment, you could be eligible to claim the cost of buying and cleaning these items. This deduction can add up if you regularly purchase and clean uniforms.
• Professional Subscriptions: Some jobs require membership to professional bodies or associations. If your job requires you to pay for professional memberships to keep your qualifications up-to-date (e.g., accountants, lawyers, engineers), you may be able to claim these membership fees as tax-deductible. Not all employees think of this, but it’s an easy win to make sure you’re reducing your taxable income.
• Work-Related Travel and Parking: If your job requires travel beyond your regular commute, those expenses could be deductible. This includes things like train fares, car mileage, taxi fares, and even parking fees. If you’re using your own car for work-related travel, you could claim mileage expenses. Keep records of your journeys, as HMRC requires this proof for claiming deductions.

2. Home Office Expenses: Working From Home? There’s Relief for You

Working from home is becoming increasingly common, and with it comes the potential to claim home office expenses. While many people don’t realise it, the costs associated with working from home could be eligible for tax relief. Let’s break it down.

• Utility Bills: If you work from home, you can claim a proportion of your electricity, heating, water, and even your phone and broadband bills. How much you can claim depends on the size of your home office compared to the rest of your home. For instance, if your home office occupies 15% of your total living space, you can claim 15% of these bills.
• Office Equipment: From furniture to technology, anything you buy for your home office may be deductible. If you’ve had to buy a desk, chair, computer, or printer specifically for your business use, these are costs that could reduce your taxable income. These deductions are especially valuable if you’ve made significant investments in creating a productive workspace.
• Rent or Mortgage Interest: If you’ve dedicated a part of your home to business use, you can claim a proportion of your rent or mortgage interest. Just like utilities, the proportion you can claim depends on the size of your home office. For example, if your office takes up 20% of your home’s floor space, you could claim 20% of your rent or mortgage interest.

3. Capital Allowances: Claiming for Business Investment

If you’re a business owner, the tax deductions available to you go beyond day-to-day expenses. You can also claim tax relief on larger investments, such as equipment, machinery, and even business vehicles, through Capital Allowances.

• Annual Investment Allowance (AIA): The AIA is a generous tax relief scheme that lets businesses claim back the full cost of certain assets, such as machinery or office equipment, in the year they were purchased. If your business has invested in large assets like computer servers, printing equipment, or even company vehicles, you could deduct the full purchase cost from your taxable income. The AIA applies to most capital investments, so don’t forget to make use of this deduction.
• Energy-Efficient Equipment: In line with helping the environment, businesses can also claim deductions for energy-efficient investments. If you’ve installed solar panels, energy-saving lighting, or other eco-friendly office improvements, these could qualify for tax relief. The government offers incentives for green investments, so don’t miss out.

4. R&D Tax Credits: Investing in Innovation Pays Off

Research and development (R&D) is not just for the big tech companies or scientists in lab coats. Many smaller businesses are eligible for R&D tax credits, especially if they’re investing in innovation to improve their products or services. If your business is developing new processes or products, you could qualify for a significant tax reduction.

• What Counts as R&D?: R&D tax credits aren’t just for lab-based work. If your business is involved in creating new software, developing new products, or even improving existing services, you could be entitled to a tax credit. This is one of the most underused tax reliefs available, especially for small and medium-sized enterprises (SMEs).
• How to Claim?: Keep detailed records of your R&D activities, including time spent on research, resources used, and any associated costs. You’ll need to submit a detailed report when applying for R&D tax credits. If you’re unsure, our team at Legacy Accounting can help guide you through the process and maximise your claim.

5. Vehicle and Mileage Deductions: Take the Wheel on Tax Savings

If you use your car for business purposes, you could claim tax deductions for the costs related to your vehicle. The amount you can claim depends on the proportion of your vehicle’s use for business, so it’s essential to keep accurate records of your mileage and other vehicle-related expenses.

• Mileage Allowance: If you use your own car for business, you can claim a mileage allowance of 45p per mile for the first 10,000 miles in the year, and 25p per mile for any additional miles. This allowance covers the costs of running and maintaining your vehicle, including fuel, insurance, and wear-and-tear.
• Other Vehicle Costs: In addition to mileage, you can also claim for other vehicle-related expenses, such as maintenance, repairs, insurance, and parking. However, you’ll need to separate the business use from personal use. Keeping a mileage log or using a mileage tracking app will help ensure that your claims are accurate.

6. Pension Contributions: Lower Your Taxable Income and Save for the Future

Making contributions to your pension is one of the most powerful ways to reduce your taxable income while planning for your future. Whether you’re self-employed or employed, pension contributions can lead to significant tax savings.

• Self-Employed Contributions: If you’re self-employed, you can contribute to a personal pension scheme and receive tax relief on those contributions. The more you contribute, the less you’ll pay in taxes. This is a great way to reduce your tax burden while building your retirement savings at the same time.
• Employer Contributions: As an employee, contributions made by your employer to your pension scheme can also reduce your taxable income. So if your employer offers a pension plan, take full advantage of this opportunity. You can reduce your taxes while securing your future.

7. Charity Donations: Giving Back and Saving on Taxes

Charitable donations aren’t just good for the soul—they can also help reduce your tax liability. The Gift Aid scheme allows individuals to claim back a portion of their charitable donations, which is a fantastic incentive to give back.

• Gift Aid: If you’re a taxpayer, your donations to registered charities are eligible for tax relief through Gift Aid. The charity itself can reclaim 25% of your donation, and you can reduce your taxable income by the same amount. Whether you donate to a local charity, an international cause, or a specific fundraiser, you can benefit from this relief.

Maximise Your Tax Savings with Legacy Accounting

At Legacy Accounting, we specialise in helping businesses and individuals like you navigate the often-complex world of tax reliefs and deductions. We know exactly what can and cannot be claimed, ensuring that you’re making the most of the tax system. With our help, you won’t miss out on any deductions, no matter how small.

We understand that taxes can be confusing and overwhelming. That’s why our team is dedicated to simplifying the process for you. Whether you need help claiming back home office expenses, understanding capital allowances, or exploring R&D tax credits, we’ve got you covered. Get in touch today, and let’s maximise your savings together.

Contact Legacy Accounting:

Visit: www.legacyaccounting.co.uk
Call: 01235 820000
Email: info@legacyaccounting.co.uk