As the ongoing cost-of-living crisis continues to make life in the UK pretty darn expensive, the tax credit connoisseurs over at EmpowerRD have taken it upon themselves to point us Brits in the direction of five overlooked tax breaks that could be leaving us better off.
These five little-know ways of (legally) cutting your tax bill could save workers and parents across the country hundreds – if not thousands – of pounds. And so it’s certainly worth heading to GOV.UK to see if you can benefit from any of them.
Claim tax relief on your work uniform
Employees that have to clean, repair, or replace their uniform for work can claim a fixed amount of tax relief each year. This is considered a ‘flat rate expense’ and doesn’t require sending any receipts. The standard amount is £60 per year, slicing £12 off the tax bill of a basic-rate taxpayer in the UK – but there are certain workers who are eligible for more. Nurses, midwives, healthcare assistants, and domiciliary care workers can claim on £125 per year. Police officers up to chief inspector level can claim on £140 per year. These claims can cover costs of the current tax year and those of the previous four years – but not the costs that are already covered by your employer.
Claim the difference on your mileage
Employees who use their own car or van for work journeys (not including their commute) could cut their tax bill if their employer pays less than HMRC’s approved mileage rate. The rate for the current tax year is 55p per mile for the first 10,000 business miles and 25p for every mile after that. You can claim tax relief on the difference between the approved amount and the amount your employer pays.
Open a Tax-Free Childcare account
For every £8 eligible parents pay into a Tax-Free Childcare account, the government will add £2, up to £2,000 a year for each child aged 11 or under, or up to £4,000 a year for a disabled child aged 16 or under. This money can then be spent on nurseries, childminders and nannies, and after-school and holiday clubs – as long as the provider is signed up to the scheme.
Claim extra pension tax relief
Higher-rate taxpayers could be missing out on extra tax relief on their pension contributions. Personal pension providers usually add basic-rate tax relief (20%) on their pension contributions but taxpayers in England, Wales, and Northern Ireland paying 40% Income Tax can claim a further 20% relief on qualifying contributions, whilst those paying 45% can claim a further 25%. The extra relief if limited by how much income you paid the higher tax rates on.
Use your ISA allowance before tax on savings interest goes up
Savers can put away up to £20,000 per tax year into ISAs without paying tax on the interest or investment returns earned inside them. This tax-free savings protection could become even more valuable now that the Budget recently confirmed that from April 6, 2027, interest above the Personal Savings Allowance will be taxed at 24% for basic-rate taxpayers, 44% for higher-rate taxpayers, and 49% for additional-rate taxpayers.
Ross Taylor from EmpowerRD said: “A lot of people simply don’t realise these tax breaks are there for them. They are a normal part of the tax system, and HMRC has made most of them quick to check and claim online. Ten minutes looking at your uniform, your mileage and your pension could be worth hundreds of pounds, so it is well worth doing before the end of the tax year.”
