Tax Reliefs Explained – How They Can Reduce Your Tax
Tax Reliefs Explained – How They Can Reduce Your Tax
Amanda Souza
Tax reliefs are a valuable way to reduce your tax liability. They either lower your taxable income or provide a direct credit against the tax you owe. Reliefs are available across personal, business, and investment activities, helping individuals and companies manage finances more effectively while encouraging growth and strategic planning.
Common Tax Reliefs:
Income Tax Reliefs:
- Pension Contributions: Contributions to approved pension schemes reduce taxable income while saving for retirement.
- Medical Expenses: Uninsured medical costs, including hospital fees, prescriptions, and treatments, can qualify for relief.
- Home Renovation Incentives: Relief for qualifying work on your principal private residence encourages property maintenance and improvements.
- Education Expenses: Tuition fees and certain education-related costs may qualify for relief.
Tax Credits:
- PAYE Tax Credit: Automatically applied to employees under the PAYE system, reducing annual tax.
- Rent Tax Credit: Relief for eligible tenants paying rent on their primary residence.
- Single Person or Married Couple Credit: Standard reduction in tax liability based on personal circumstances.
- Home Carer Credit: Additional relief for families supporting dependents.
- Charitable Donations: Donations via PAYE or self-assessment qualify for relief, supporting philanthropy.
Business & Investment Reliefs:
- Start-Up Relief for Entrepreneurs (SURE): Refund of past income tax when investing in a qualifying new company.
- Employment and Investment Incentive (EII): Tax relief for investors supporting start-ups, encouraging innovation.
- Capital Gains Tax Reliefs (e.g., Entrepreneur Relief): Reduces tax payable when selling certain business assets, promoting long-term investment and retention of ownership.
Claiming Tax Reliefs:
To claim reliefs, it is important to:
- Keep accurate records of expenses, contributions, or investments.
- Submit the correct forms through your tax return, such as:
- Form 11 for self-assessed taxpayers
- Form 12 for PAYE employees
- Specific forms for capital gains or business-related reliefs
Contact us:
By understanding which reliefs you qualify for and applying them correctly, you can optimise your tax position while staying fully compliant. At Gallagher Keane, we guide clients through all available tax reliefs, helping them make informed decisions and take advantage of opportunities to reduce their tax liability.
