How to Pay Less Taxes | Tax-Saving Tips UK
- Adil Akhtar
- Jun 19, 2021
- 20 min read
Updated: Sep 16
Paying Less Tax in the UK | Understanding the Basics for 2025/26
Why Paying Less Tax Isn’t About Dodging the Rules
Picture this: you’re staring at your payslip and wondering why so much of your hard-earned salary vanishes each month. Most people assume there’s nothing they can do — HMRC takes what it takes, end of story. But that’s not quite right.
Paying less tax in the UK isn’t about avoidance schemes or fancy offshore tricks. It’s about using the rules properly. Over my 18 years as a tax adviser, I’ve seen clients from all walks of life — from nurses to self-employed designers to company directors — miss out on legitimate reliefs simply because they didn’t know they existed.
The goal here is simple: understand how tax is calculated in 2025/26, spot the common pitfalls, and apply practical steps to reduce your liability.
2025/26 UK Income Tax Rates at a Glance
The tax year 2025/26 runs from 6 April 2025 to 5 April 2026. Here are the income tax bands for England, Wales and Northern Ireland:
Band | Income Range | Rate |
Personal Allowance | Up to £12,570 | 0% |
Basic Rate | £12,571 – £50,270 | 20% |
Higher Rate | £50,271 – £125,140 | 40% |
Additional Rate | Over £125,140 | 45% |
Key point to note: If your income exceeds £100,000, your personal allowance reduces by £1 for every £2 above this threshold. By the time your income hits £125,140, you lose it completely. That creates an effective 60% tax rate in this narrow band — a trap many high-earning professionals stumble into.
How Scotland Differs
If you live in Scotland, your tax bill may look very different. Scotland sets its own income tax bands:
Band | Income Range | Rate |
Starter | £12,571 – £14,732 | 19% |
Basic | £14,733 – £25,688 | 20% |
Intermediate | £25,689 – £43,662 | 21% |
Higher | £43,663 – £125,140 | 42% |
Top | Over £125,140 | 48% |
Source: Scottish Income Tax 2025/26 – GOV.UK
This means a Scottish employee earning £50,000 pays more tax than someone in England on the same income. I’ve had clients moving between Edinburgh and Manchester completely baffled by the difference — one even thought HMRC had made an error until we explained the devolved system.
Don’t Forget National Insurance
None of us loves tax surprises, and one of the biggest culprits is National Insurance (NI). While technically not income tax, it affects your take-home pay just as much.
For employees in 2025/26:
● 0% on earnings up to £242 per week (£12,570 per year)
● 8% on £242–£967 per week
● 2% on earnings above £967 per week
Source: National Insurance rates and thresholds
A common mistake I see is people checking their tax code but forgetting to review NI. For example, someone taking on a second job often finds their NI contributions higher than expected because each employment calculates NI separately.
What If Your Tax Code Looks Off?
Think of your tax code as a postcode for your income — if HMRC puts you in the wrong “address”, your payslip won’t match reality.
You can check your tax code and allowances in your HMRC personal tax account. Over the years, I’ve seen countless clients placed on an emergency code (often “1257 W1/M1”) after switching jobs. One client, Sarah from Manchester, was overpaying £250 per month until she spotted the error and corrected it via her account.
If your code looks unusual — say, it has a “K” prefix or suddenly drops your allowance — it’s worth digging deeper. Don’t assume your employer or HMRC has it right; mistakes are more common than you’d think.
Example: The £100k Salary Trap
Now, let’s think about your situation if you earn close to £100,000.
Take James, a senior engineer I advised in London. His salary was £102,000. On paper, he thought he was only just over the £100k mark. In reality, because his personal allowance tapered away, his effective tax rate between £100,000–£102,000 was eye-watering.
Here’s why:
● At £100,000, he had the full £12,570 personal allowance.
● For every £2 above £100k, he lost £1 allowance.
● By £102,000, he lost £1,000 of allowance, meaning more of his income was taxed at 40%.
The result? He paid much more than expected. The fix was simple — making a gross pension contribution of £2,000 pulled him back under £100k, restoring his allowance and saving thousands.
Why Frozen Thresholds Matter
Since 2021, the personal allowance and basic rate band have been frozen, and they’ll stay that way until at least 2028. This “fiscal drag” means as wages rise with inflation, more people drift into higher tax brackets.
Back in 2020, I’d rarely see teachers or mid-level civil servants in higher rate tax territory. By 2025, many are. HMRC isn’t changing the bands, but your pay rises are quietly pushing you up the ladder.
This is why it’s crucial to review your tax position annually. Don’t assume last year’s numbers still apply.
Self-Employed? Different Rules, Same Pitfalls
If you’re self-employed, tax works differently — you pay via Self Assessment, not PAYE. But the bands and rates above still apply.
The biggest pitfall? Forgetting to account for Payments on Account. I once had a client, Tom the freelance graphic designer, who earned £40,000 in his first year. He budgeted for the £5,486 tax due, but when HMRC asked for another 50% upfront towards next year (about £2,743), he was floored.
Tip: Always plan for this by setting aside at least 25–30% of your income in a separate savings pot. HMRC’s own guidance is here: Payments on Account.
Step-by-Step: How to Check If You’re Overpaying
Here’s a practical checklist I use with new clients:
Log into your personal tax account – check your tax code, income, and benefits recorded.
Compare payslips with HMRC records – mismatches are common if you’ve had multiple jobs.
Check your P60 or P45 – these show total pay and tax deducted.
Look for emergency codes or K codes – they often signal errors.
If self-employed, reconcile income and expenses – small unclaimed costs (like home office use) add up.
Check savings and dividends allowances – HMRC doesn’t always automatically apply them.
Review pension and gift aid contributions – these extend your basic rate band.
If you find an error, you can contact HMRC directly via check income tax. Many corrections can be made online, saving weeks of waiting.
Why Little Mistakes Cost Big Money
Be careful here, because I’ve seen clients trip up when ignoring “small” things. One client, a part-time lecturer, didn’t realise her second job had no personal allowance applied — she overpaid nearly £1,200 before catching it. HMRC refunded it, but only because she checked.
The lesson? HMRC won’t always tell you if you’re overpaying. The system assumes your details are right. If they aren’t, it’s on you to spot it.
Smarter Tax-Saving Moves for Employees, Self-Employed and Business Owners
Why Tax Planning Isn’t Just for the Wealthy
Now, here’s the truth: most of the tax savings I’ve helped clients achieve didn’t involve millionaires or corporate giants. They were everyday people — teachers, small shop owners, IT freelancers — who simply didn’t know what was available to them. Tax planning isn’t some luxury service; it’s about making the rules work for you.
Let’s break down 30 tips into practical, actionable moves. In this part, we’ll focus on employees, the self-employed, and business owners separately, because each group faces different traps and opportunities.
Maximising Reliefs as an Employee
Employees often think they have the fewest options, but that’s not true. Over the years, I’ve seen payslips transformed just by tweaking a few things.
1. Claiming Job Expenses
Picture this: you’ve bought your own tools for work or paid for travel your employer doesn’t reimburse. These can often be claimed back. HMRC has an online service for claiming work-related expenses here: Claim tax relief for your job expenses.
I once worked with a nurse who washed her uniform at home. She was entitled to a flat-rate allowance of £125 per year. Over four years, that added up to £500 — money she’d otherwise have lost.
2. Marriage Allowance
If you’re married or in a civil partnership, and one of you earns below the personal allowance (£12,570), you can transfer £1,260 of allowance to your partner. That saves up to £252 a year. HMRC has a simple tool here: Apply for Marriage Allowance.
I had a couple in Birmingham who hadn’t claimed it for three years — they received a backdated refund of nearly £750.
3. Salary Sacrifice for Pensions
Contributing to a pension directly from your salary before tax is one of the most efficient ways to save. Many employers offer salary sacrifice schemes, where you give up part of your salary in exchange for pension contributions. This reduces both income tax and National Insurance.
Details: Tax on your private pension contributions.
I’ve seen mid-level professionals cut their effective tax bill by thousands just by maximising this.
4. Cycle to Work and Other Benefits
Employers can offer schemes like Cycle to Work, which let you buy a bike tax-free via salary sacrifice. It’s a small perk, but over a few years, it adds up. More info here: Cycle to Work scheme.
Self-Employed: Avoiding Costly Pitfalls
Now, let’s think about your situation if you’re self-employed. You have more flexibility, but also more responsibility.
5. Claim Every Allowable Expense
From office supplies to part of your home running costs, every legitimate expense reduces taxable profit. HMRC’s guide is here: Expenses if you’re self-employed.
I once reviewed the books of a freelance photographer who wasn’t claiming mileage to shoots. Over three years, she missed out on £4,000 of tax relief.
6. Simplified Expenses for Home Working
If you work from home, you can either claim actual costs or use HMRC’s flat-rate simplified expenses method. Many sole traders don’t realise this shortcut exists. Details: Simplified expenses.
7. Making Tax Digital (MTD) – Get Ahead
From April 2026, most self-employed taxpayers will need to follow Making Tax Digital for Income Tax rules. Staying compliant early helps avoid penalties and keeps your books accurate. Read here: Making Tax Digital for Income Tax.
8. Using Payments on Account to Your Advantage
As covered in Part 1, HMRC often asks for advance payments towards next year’s bill. But if your income falls, you can apply to reduce them: Reduce payments on account.
This saved one of my clients, a web developer whose earnings dipped after a big contract ended, nearly £3,000 in unnecessary upfront payments.
Tax-Saving for Business Owners
Running a limited company or partnership? You’ve got different levers to pull. But be careful: I’ve seen directors get stung by mixing business and personal funds, or forgetting dividend rules.
9. Choosing Salary vs. Dividends
Many directors pay themselves a small salary (within NI thresholds) and the rest as dividends. This can be more tax-efficient, but the balance must be right. HMRC guidance: Tax on dividends.
For 2025/26, the dividend allowance is just £500. Anything above that is taxed at 8.75% (basic rate), 33.75% (higher), or 39.35% (additional).
10. Corporation Tax Planning
From April 2023, Corporation Tax increased to 25% for profits over £250,000, with a tapered rate between £50,000–£250,000. Keeping profits just under thresholds (e.g., via pension contributions) can reduce liability. See: Corporation Tax rates.
11. Claiming Capital Allowances
If your business buys equipment, you can usually deduct the cost using capital allowances. The Annual Investment Allowance allows up to £1 million of qualifying spend to be written off each year. Guidance: Claim capital allowances.
I had a client in construction who bought vans in his personal name. By shifting the purchase to the company, he gained thousands in tax relief.
12. Using R&D Tax Relief
If your company develops new products or processes, you might qualify for R&D tax relief. This is often overlooked by smaller firms who don’t see themselves as “tech companies”. HMRC details: Research and Development (R&D) tax relief.
One of my clients, a small food manufacturer in Yorkshire, claimed R&D relief for developing eco-friendly packaging — saving over £20,000 in tax.
Case Study: The Small Business Owner’s Dilemma
Take Emma, who runs a graphic design company in Bristol. She paid herself a £40,000 salary and £20,000 dividends. She didn’t realise her company could contribute £10,000 to her pension, reducing Corporation Tax and her personal income tax at the same time. After restructuring, she saved over £5,000 annually.
This is where good planning pays off — not complicated schemes, just sensible use of the rules.
Don’t Forget VAT Thresholds
If your turnover exceeds £90,000 (as of April 2025), you must register for VAT. But some businesses benefit from voluntary registration earlier — for example, if most of their customers are VAT-registered and can reclaim it. More info: Register for VAT.
How Side Hustles Can Trip You Up
None of us loves paperwork, but HMRC is tightening checks on undeclared side income. If you sell on Etsy, tutor online, or drive for Uber, you must declare it if earnings exceed £1,000 per year (the “trading allowance”). Guidance: Tax on selling services or goods.
I’ve seen penalties hit people who thought “it’s just a hobby”. Better to declare and use expenses to reduce profit.
Checklist: Key Tax Moves for 2025/26
Here’s a practical worksheet to review before the year ends:
● Check your tax code in your personal tax account.
● If married/civil partner, apply for Marriage Allowance.
● Review work-related expenses: Tax relief for job expenses.
● For self-employed, claim all allowable expenses.
● If income falls, apply to reduce payments on account.
● Company directors: review dividends vs. salary balance.
● Businesses: check eligibility for R&D relief.
● Track turnover against the VAT threshold.
Advanced Tax-Saving Strategies and Complex Scenarios Explained
Why Advanced Planning Matters
By now, you’ve seen how basic checks and reliefs can save you hundreds, sometimes thousands, in tax. But some situations are more complicated — multiple jobs, rental income, or crossing tricky thresholds like the High Income Child Benefit Charge. These are the areas where, over my 18 years in practice, I’ve seen people lose the most money simply because they didn’t understand the rules.
The High Income Child Benefit Charge
If you or your partner claim child benefit and one of you earns over £50,000, you may face the High Income Child Benefit Charge (HICBC).
● At £50,000, you start losing 1% of child benefit for every £100 earned above that.
● At £60,000, the charge wipes out the benefit entirely.
HMRC guidance: Child Benefit tax charge.
I once worked with a client, Mark, who earned £58,000 and didn’t realise this charge applied. He had to repay £1,500 to HMRC. The fix? He made a gross pension contribution, reducing his taxable income to £49,500, avoiding the charge and saving both the benefit and tax.
Handling Multiple Income Sources
Imagine you’ve got a salary, a rental property, and some dividends on the side. Each income type is taxed differently, and that’s where many people go wrong.
● Employment income: taxed through PAYE.
● Rental income: reported via Self Assessment. Guidance: Tax on property income.
● Dividends: taxed separately with a £500 allowance.
Case in point: A client of mine in Leeds had two part-time jobs and a small rental. HMRC gave both employers the full personal allowance, which led to underpayment. When HMRC caught it, he faced a bill of £2,800. The lesson? Always check your personal tax account to ensure your allowances are split correctly: Check your Income Tax.
Emergency Tax Codes and Overpayments
None of us loves surprises on payday, and emergency tax codes can be one of the nastiest. This usually happens when you change jobs and HMRC doesn’t have your details. You’ll see codes like “1257 W1” or “1257 M1”.
Good news: this often means you’re overpaying, and you can reclaim it once HMRC updates your record. The fix is straightforward: Tax codes explained.
One of my clients, Alice, changed jobs mid-year and overpaid £1,200 because of an emergency code. A quick update through her personal tax account sorted the refund in weeks.
Rare but Costly: The 60% Trap
I mentioned this earlier, but it’s worth repeating. If you earn between £100,000 and £125,140, the tapering of the personal allowance creates an effective 60% marginal tax rate.
The practical fix?
● Make pension contributions.
● Use salary sacrifice.
● Consider charitable donations through Gift Aid.
Details: Gift Aid.
A barrister client of mine reduced his taxable income to £99,500 with a pension top-up, regaining the full personal allowance and cutting his effective tax bill by £8,000.
Devolved Tax Differences: Scotland and Wales
We’ve covered Scotland’s different income bands already, but here’s a subtle point many miss: if you move across the border mid-year, HMRC decides your tax residency for the whole year based on where you lived longest.
So, someone moving from Newcastle to Edinburgh in October 2025 could end up paying Scottish rates for the entire year. Guidance: Scottish Income Tax.
Wales, meanwhile, has the power to set income tax rates but currently mirrors England and Northern Ireland. Still, always check: Welsh Income Tax.
Advanced Reliefs for Businesses
For business owners, there are extra reliefs often overlooked:
● Business Asset Disposal Relief (BADR): When selling your business, you may pay just 10% Capital Gains Tax on qualifying gains. Guidance: Business Asset Disposal Relief.
● Inheritance Tax planning: Shares in trading companies may qualify for reliefs that reduce liability. Guidance: Inheritance Tax reliefs.
I helped a retiring shop owner in Kent structure his exit using BADR. Instead of paying 20% CGT, he qualified for the 10% rate, saving £40,000.
Why Small Allowances Matter
You might think things like the £1,000 trading allowance or the £1,000 savings allowance aren’t worth much. But stack them up, and they can make a real difference.
For example, a couple with modest side income and savings could save £400–£600 annually just by claiming both allowances. Details:
● Trading allowance
● Tax-free savings interest
How a Tax Accountant Can Help You Pay Less Tax
So, the big question on your mind might be: do you really need a tax accountant?
Here’s where professional advice pays for itself:
● Spotting errors HMRC won’t flag: I’ve recovered thousands for clients whose codes were wrong for years.
● Structuring income smartly: choosing the right balance of salary, dividends, and pension contributions.
● Planning around thresholds: avoiding the £50,000, £100,000, and £125,140 traps.
● Handling complex cases: multiple incomes, property portfolios, business exits, or cross-border work.
Think of it like servicing your car. Sure, you could ignore it, but when the warning light flashes, you’ll wish you had expert hands on the wheel.
Summary of Key Points
Know the 2025/26 tax bands – £12,570 allowance, 20% basic rate to £50,270, 40% up to £125,140, 45% above.
Check your tax code regularly via HMRC’s personal tax account. Errors are common and costly.
Use reliefs wisely – Marriage Allowance, job expenses, and simplified self-employed expenses.
Plan around thresholds – £50,000 (child benefit charge), £100,000 (allowance taper), £125,140 (no allowance).
Self-employed? Always budget for Payments on Account, and claim all allowable expenses.
Business owners can save with pension contributions, dividends planning, R&D relief, and capital allowances.
Emergency tax codes often lead to overpayments – reclaim them quickly.
Devolved systems differ – Scotland has higher rates, Wales currently mirrors England.
Use small allowances – trading allowance, savings allowance, and dividend allowance can all stack up.
Professional advice pays off – an experienced accountant can help you avoid traps and claim every relief you’re entitled to.
How Can a Tax Accountant Help You Reduce Tax Burden in the UK?
In the complex world of taxation, understanding and navigating the myriad of rules, regulations, and opportunities for savings can be a daunting task. This is where the expertise of a tax accountant comes into play. A tax accountant can be an invaluable asset in reducing your tax burden in the UK. Here's how:
1. Comprehensive Understanding of Tax Laws
Tax laws in the UK are intricate and ever-changing. A tax accountant is well-versed in these laws and stays up-to-date with the latest changes. Whether it's understanding the nuances of Income Tax, Capital Gains Tax, or Inheritance Tax, a tax accountant can guide you through the complexities, ensuring compliance and identifying opportunities for savings.
2. Personalised Tax Planning
Every individual or business has unique financial circumstances. A tax accountant can provide personalised tax planning tailored to your specific situation. By understanding your income, expenses, investments, and financial goals, they can develop a strategic tax plan that aligns with your needs.
3. Maximising Allowances and Reliefs
The UK tax system offers various allowances and reliefs that can reduce your tax liability. From personal allowances to pension contributions, gift aid donations to Venture Capital Trusts (VCTs), a tax accountant knows how to maximise these benefits. They can identify the most suitable options for you, ensuring that you take full advantage of what's available.
4. Assistance with Property Taxes
If you own property, either as a homeowner or a landlord, the tax implications can be significant. A tax accountant can help you navigate property taxes, including Stamp Duty Land Tax, Capital Gains Tax on property sales, and deductions for landlords. They can advise on the most tax-efficient way to buy, sell, or rent property, potentially saving you thousands of pounds.
5. Support for Business Owners
For business owners, the tax landscape is even more complex. Corporate Tax, VAT, PAYE, and other business-related taxes require careful management. A tax accountant can assist with business structure, tax-efficient profit extraction, R&D tax credits, and more. They can help you align your business strategy with tax efficiency, supporting growth and sustainability.
6. Handling Tax Investigations
Should you ever face a tax investigation by HMRC, having a tax accountant by your side can be crucial. They can liaise with HMRC on your behalf, provide the necessary documentation, and negotiate if needed. Their expertise can make the process less stressful and more favourable.
7. Retirement Planning
Planning for retirement involves careful consideration of pensions, investments, and other financial factors. A tax accountant can help you develop a retirement plan that maximises tax efficiency, ensuring that you have a comfortable and financially secure retirement.
8. Inheritance Tax Planning
Inheritance Tax can take a significant portion of the wealth you wish to pass on to your loved ones. A tax accountant can assist with estate planning, utilising gifts, trusts, and other legal means to minimise Inheritance Tax. This planning can preserve your legacy and provide peace of mind.
9. International Tax Considerations
If you have financial interests outside the UK, international tax rules come into play. A tax accountant with expertise in international taxation can guide you through the complexities, ensuring compliance with both UK and foreign tax laws, and identifying opportunities for savings.
10. Ongoing Support and Advice
Taxation is not a once-a-year concern. A tax accountant can provide ongoing support and advice, helping you make informed financial decisions throughout the year. Whether it's a change in income, a significant purchase, or a new investment opportunity, having a tax accountant to consult with can make a difference.
FAQs
Q1: Can someone change their tax code if they suspect it’s incorrect?
A1: Well, it's worth noting that yes—you can correct an incorrect tax code via your personal tax account or by calling HMRC. I’ve seen folks with “1257W1” codes losing hundreds in overpaid tax until they flagged it. Always check your payslip early in the new tax year for unexpected changes.
Q2: How can someone minimise the High-Income Child Benefit Charge without losing benefit?
A2: In my experience with clients, the key is pension contributions—if one partner tops themselves down to under £50,000 adjusted net income through gross pension contributions, they’ll retain full Child Benefit without triggering the taper. It’s a simple move that’s often overlooked.
Q3: What’s the quickest way to check if someone is due a tax refund under PAYE?
A3: Many ask this. The fastest route is to check your personal tax account—if you see an unexpected tax overpayment, HMRC will issue a P800 letter or sometimes refund automatically. One client waited weeks before checking and found £1,200 due back from a code error.
Q4: Can someone be both employed and self-employed without double-paying tax?
A4: Absolutely—you can be a salaried employee and run a side business. They’re taxed separately—PAYE for your job, Self Assessment for your business—and overlapping allowances can trip people up. I once helped a teacher running tutoring lessons avoid a nasty surprise on her return by planning her allowances across both incomes.
Q5: How does remote working affect tax relief for self-employed individuals?
A5: If you work from home, you might use simplified expenses or claim a proportion of utility bills. I’ve advised freelancers in Cornwall claiming £6/week flat relief—I’ve even broken it down for clients to ensure they're not under-claiming electricity or broadband costs tied to work.
Q6: Can someone reduce their tax bill by splitting income between spouses?
A6: Yes—but only in certain cases like transferring assets or income-bearing investments. I helped a couple spread £5,000 rental income between them, saving a few hundred in tax because one spouse stayed in the basic rate band and the other used their full personal allowance.
Q7: What should someone do if they’ve underpaid tax due to multiple jobs?
A7: If that happens, HMRC may send an underpayment notice. Correcting it often involves splitting personal allowance across your jobs via your personal tax account. One railway driver I advised avoided a £3,000 bill by just reallocating his allowance properly mid-year.
Q8: Is it possible to claim back overpaid Self Assessment taxes?
A8: It is, provided you file late or overpaid on payments on account. You can request relief via the return within four years. I’ve reclaimed overpayments for a freelancer who mistakenly paid full advance tax after a dip in income—worth tens of pounds and saved a nasty cashflow squeeze.
Q9: What’s the simplest way to check if someone must register for Self Assessment?
A9: Quickest is to check HMRC’s Self Assessment eligibility guidance—look for untaxed side income over £1,000, rental profit, capital gains, or high earned income. I often ask clients: “Do you have earnings HMRC doesn’t know about yet?” That catch-all helps avoid missing registration.
Q10: How can a business owner minimise Corporation Tax around threshold bands?
A10: In practice, shifting expenses or pension contributions within your company before year-end can keep profits just below the upper threshold. I guided a client who invested in equipment worth £20,000 in the last quarter—it knocked him under the profit level and saved thousands in tax.
Q11: What should someone in Scotland check differently for personal tax?
A11: Scottish rates differ, so it’s important to ensure HMRC has your correct address and residence. I once had a client living on the border whose mail showed one postcode, but their council tax was in Scotland—paying a 21% band instead of 20%. Small clerical error, big annual cost difference.
Q12: Does adding gift aid change someone’s tax bracket or allowance?
A12: It can. Grossing up donations via Gift Aid can reduce your taxable income—one accountant I helped donated £1,000, which extended his basic rate band and saved more than the charity gain for him. It's a win-win for donor and good cause.
Q13: Is VAT voluntary registration ever useful for small businesses?
A13: Quite often. If most clients can reclaim VAT, voluntary registration can improve cashflow and not increase costs for them. I advised a design studio this last year—a small saving of 20% on costs became competitive edge.
Q14: What happens tax-wise if someone sells a personal asset occasionally online?
A14: If it’s truly personal items, it’s generally outside of tax. But if you start regularly flipping items, and exceed the £1,000 trading allowance, that counts as business income and must be declared. I once helped someone selling antique finds on Etsy safely under the limit to stay hobby, not business.
Q15: Can high-earners avoid the £100k allowance taper by charitable giving?
A15: Yes—making large charitable donations before year-end can pull taxable income under the £100k mark, restoring full personal allowance. I’ve seen this tactic work well for doctors and lawyers with year-end bonuses.
Q16: What should someone do if HMRC notifies side-hustle income from Vinted or eBay?
A16: Keep clear records of costs versus income. If HMRC flags you, you might have to register for Self Assessment, but demonstrating it was hobby with expenses can keep it tidy. One maker of craft jewellery won back £600 after showing net profit stayed under the threshold.
Q17: How can someone check if they’re impacted by frozen thresholds leading to stealth tax?
A17: Simple way is to compare your tax bands year-on-year via your personal account. I advise clients to track if their basic rate threshold has effectively dropped as inflation pushes earnings up, and to consider pension or ISA planning to soften the creep.
Q18: What should someone with mixed income (rental + salary) watch out for?
A18: Be careful—personal allowance is applied across all incomes, but rental income may push you into higher bands. I gave a scenario to a client in Guildford: his small-auctioned antique income pushed his salary taxed at 40%, costing him more than the antique sale netted. It helped him time sales more tax-efficiently.
Q19: Can someone in a limited company reclaim personal expenses?
A19: Only if they’re clearly for business and reported via P11D or reimbursed via expenses policy. I’ve seen directors trying to cover school runs or personal phone charges—HMRC flags these. Always keep mileage or itemised business receipts to stay clean.
Q20: How might someone prepare for MTD (Making Tax Digital) ahead of the deadline?
A20: Start digitising records early—even using spreadsheets tied to compliant software helps. I’ve helped sole traders and landlords set up quarterly logging before MTD mandates, so when April comes, they aren’t scrambling—and they've spotted errors earlier too.
About The Author:
Adil Akhtar, ACMA, CGMA, CEO and Chief Accountant of Pro Tax Accountant, is an esteemed tax blog writer with over 10 years of expertise in navigating complex tax matters. For more than three years, his insightful blogs have empowered UK taxpayers with clear, actionable advice. Leading Advantax Accountants as well, Adil blends technical prowess with a passion for demystifying finance, cementing his reputation as a trusted authority in tax education.
Email: adilacma@icloud.com
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