How Can I Reduce my Tax in the UK?

  • 2 years ago

You are not alone if you think you pay high tax and you do not have ways to cut down your bills. We know that fee is guaranteed, but paying it less is another certainty while not paying it is consider as unsociable. Last year, the prime minister opened her mouth on people who do not pay their errands and dodge their liabilities.  She emphasized on the playing of tax. She claimed that we are living in a healthy society, so tax paying is a must.

Many departments have changed their way for those who avoid tax and demand new legislation and now requires that they must pay their taxes at all cost. Financial advisers give many schemes, but sooner or later, they all go with a lawsuit and bankruptcies in the trail. Many companies do not come into the tax net by their definition, but they do bend the tax system to avoid it. There are many options given by the government for wealthy people to pay their taxes. It has seen in many newspapers that governments are allowing the rich to have different options at their disposal, so they do no avoid tax.

There are specific ways that one cay pays tax, which is as follows:

By Allowance of Tax

It is essential to try the allowance and reliefs from the government as they are increasing every year. One can use allowance for tax-free on dividend, saving, and capital gains even on basic income allowance of tax and can quickly get £27,000 per year tax-free. This generous scheme has an offer of a rent a room which is up since May 2016. Before that, £4,000 was the threshold. It has the only option that you must have rooms on rent, not the home converted into apartments.

Digital Tax

Since May 2016, £2,400 or above earning has sheltered on income or property. The new £15, 00 x 2 allowance was introduced, so people who are using AirBNB like sites can get benefits as they rent out their property. Digital Tax is to help new entrepreneurs who rent out their properties and homes.


Since the rise of Individual Savings Account (ISA) from May 2015, the scope of tax-free savings has also increased, which is helping young people a lot. It is also offering a retirement plan, or one can buy a home if they like. This scheme is mostly for those who are under 40 and can easily save up to £45,000 per year. This scheme also offers a government bonus of up to 35 percent. This scheme is suitable for tax-friendly savings, and it shields the peer-to-peer loans with interest paid on the charge from borrowers.


The tax break from a pension is still up, and the amount that can be saved from this reduced. However, annuities are the most tax-saving options, and it's most tax-efficient. There is a scope for saving of pension on behalf of children, and maximum contribution can go up to £2,000 per year to £4,000.

Tax Code Check

Your tax deducted from the calculations made by your employers, but few checks it how much correct that deduction is? Your tax code is a mixture of letters and numbers, and if you multiply those numbers with 10, this brings out how much money you earn before deduction of tax. The important number is 747, which is why most people make more than £7,475 and start to pay tax.

Take advantage of the Pension

If you use your pension, which is saving for your retirement, you can easily avoid tax because the pension is tax relief qualification. It means if you are a primary taxpayer, you can easily qualify for relief of tax with a rate of up to 21%. Higher taxpayers can be eligible up to 45% with an additional percentage of up to 55%.

We can say that pensions are a lovely way to have a tax-free option after your retirement. You have to pay your income tax once your pension starts to come. Also, note that the pension amount is now £51,000 per year.

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