'Reward for saving': 'Lesser known' form of tax relief could boost value of your pension

Ms Thorne said: “Self-employed workers do not automatically pay into pensions, but contributions to a private pension are free from tax and NI deductions.”

In addition, she continued: “Travel costs to see clients, such as fuel, mileage, hotel accommodation, or business rent and rates, should all be allowable costs, and so also can obtain tax relief.

“In fact, most expenditure that is incurred and necessary for the purpose of business is likely claimable.”

According to Ms Thorne, while both PAYE and self-employed Britons can claim travel expenses for costs incurred while travelling on the job, they can’t claim for their day-to-day, ordinary home-to-registered office commute.

Another form of tax relief can be claimed through the marriage allowance. The scheme allows for tax relief to be shared between couples who are married or are in a civil partnership.

To be eligible, one partner must earn below the personal allowance threshold of £12,570.

The Marriage Allowance tax relief lets one partner transfer £1,260 of their Personal Allowance to the higher-earning wife, husband, or civil partner.

This reduces their tax by up to £252 in the tax year (April 6 to April 5 of the next year).

But, that’s not all. There’s also additional tax relief to earn from things such as savings accounts.

David Baggaley, tax partner at Clive Owen LLP said: “Moving money from a regular savings account to an ISA, in effect, constitutes tax relief, as any interest income received is now tax-exempt rather than taxable.”

A more complete list of expenditures that qualify for tax relief, can be found on the Government’s website.

What is tax relief?

For those working in the UK, tax relief is used as a means to reduce the amount of tax paid to the Government from a person’s income.

The core taxes that individuals typically face are income tax, capital gains tax, inheritance tax and stamp duty land tax.

Mr Baggaley said: “Within each of these, there are various reliefs an individual can claim. To take income tax as an example, an individual could consider tax relief on pension contributions, charitable donations, and job-related and business expenses.”

Leave a Reply