Tax relief explained

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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.

What does tax relief mean?

‘Tax relief’ means you reduce the amount of tax you pay to the government. You can get tax relief in a few ways, including tax on your income, tax rebates on business expenses, pension relief or working from home tax relief. Some tax relief is automatic, while others you’ll need to apply for.

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.

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 you were legally required to work from home in the 2020/21 and 2021/22 tax years due to the pandemic. However, following a tightening of the rules on 6th April 2022, it’s now more difficult to claim working from tax relief (more on that below).

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.

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 may be able to retrospectively claim working from home tax relief if you were required to work from home during the pandemic in 2020/21 and 2021/22. However, you can only claim working from home tax relief for the current 2023/24 tax year if your job requires you to live far away from your office or your employer does not have an office. 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: Donations to charity by individuals are tax-free. Donating through Gift Aid or Payroll Giving (which when you donate directly from your wages or pension) means you can get 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.

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.