Tax relief explained
Tax relief can benefit UK taxpayers as it allows you to reduce the amount of tax you pay or claim back tax you’ve already paid to the government, potentially providing you with a lump sum. On this page, you’ll learn everything you need to know about tax relief, how it works, what you can claim tax relief on and how you claim it.
Table of Contents
What is the meaning of tax relief?
How does tax relief work?
Certain payments, such as gifting money to someone, paying a loan, or paying into a pension can be made without having to pay tax. For example, income tax is deducted directly and automatically from your salary by your employer.
Alternatively, if you’re self-employed or receive income from another source, you can claim tax back from HMRC. To do this, you’ll need to complete a self-assessment tax return so that HMRC can determine your level of tax relief.
Am I eligible to claim tax relief?
One way that you’re eligible to claim tax relief is if you use your own money to purchase things needed solely for business purposes. If you’re self-employed, you can make claims on expenses you’ve incurred to run your business, but you cannot claim tax relief if your employer pays for your expenses.
You can also claim tax relief if your employer has asked you to work from home. You won’t be able to claim this if your decision to work from home was voluntary.
You also receive tax relief on your pension contributions, based on the income tax bracket you’re in. It’s worth looking into your pension documents to check whether you need to do this yourself or whether your pension provider does it for you.
You’re also entitled to tax relief on charitable donations you make through Gift Aid. The Gift Aid scheme means that the charity you donated to can claim back the tax you paid on your donation.
What can I claim tax relief on?
You might be eligible to claim tax relief on the following things:
- Uniforms and tools: Cleaning, repairing, and replacements of uniforms, and repairing or replacing tools you need for your job. This can be anything from a pair of scissors to electric machinery.
- Vehicles: If you use a vehicle for work, you may be able to claim tax relief. However, how much you can claim will depend on the vehicle and whether you own or lease it, or whether it’s a company vehicle.
- Travel and overnight expenses: You can claim tax relief on travel and overnight expenses for your work. This includes transport costs, accommodation, food and drink.
- Professional fees and subscriptions: If you’re required by your company to subscribe to approved organisations, you may be eligible for tax relief.
- Working from home: You can claim tax relief if your company has asked you to work from home. Tax relief can be applied to extra bills you may need to pay, such as telephone, electricity and internet.
- Buying other equipment: Some equipment you need for work, such as a computer, is eligible for tax relief.
- Pension contributions: You can either let your employer take pension contributions out of your pay before deducting income tax, or via your pension provider who can claim 20% of your tax back and add it to your pension pot.
- Charity donations
How do I claim tax relief?
If you file a self-assessment tax return with HMRC, you can make tax relief claims for expenses during this process. You can also check your eligibility and claim tax relief through the UK government website**.
For claiming tax relief on charitable donations, complete the charitable giving section on your self-assessment form. Alternatively, you can ask HMRC to amend your tax code which is used to calculate what tax-free income you’re entitled to.
How far back can I claim tax relief?
You can claim tax relief for expenses made up to four years previously. To make the claim, you must have records of what you’ve spent. If you’re claiming for a current tax year, HMRC will make the adjustments based on your tax code. For claims on previous years, HMRC will either make adjustments or give you a tax refund.
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