How to Reduce Your Self Assessment Tax Bill Legally

Nobody enjoys paying more tax than necessary. The good news? There are plenty of legitimate, HMRC-approved ways to reduce your Self Assessment tax bill — without crossing any lines. With the right mix of expenses, reliefs, and planning, you can keep more of your hard-earned money in your pocket.

✅ 1. Claim All Allowable Expenses

Many people miss out on tax savings simply by not claiming everything they’re entitled to. Common allowable expenses include:

• Business travel (excluding commuting)

• Office costs (rent, utilities, stationery)

• Software and subscriptions

• Professional fees (e.g., accountants, memberships)

Tip: Only claim expenses that are wholly and exclusively for business purposes. Keeping receipts and records is essential.

💡 2. Use Tax-Efficient Investments

Some investments are designed to save tax as well as grow your money:

• ISAs: Any growth and income inside an ISA is tax-free.

• SEIS/EIS investments: Government-approved schemes offering generous income tax and capital gains tax relief.

Tip: These can be higher-risk, so seek advice before investing.

🏦 3. Boost Pension Contributions

Pension contributions not only build your retirement fund but also:

• Reduce your taxable income

• Qualify for tax relief at your highest marginal rate

Example: A £1,000 pension contribution can cost as little as £600 after tax relief for higher-rate taxpayers.

📉 4. Offset Capital Losses

If you’ve sold shares, crypto, or other assets at a loss, don’t waste it:

• Report the loss to HMRC

• Use it to offset future gains, reducing your CGT liability

🗓️ 5. File Early

Filing your Self Assessment early gives you:

• More time to plan for your tax bill

• Early visibility of any payments due

• Peace of mind by avoiding penalties and interest

🎯 Conclusion

Reducing your tax bill isn’t about bending the rules — it’s about understanding and using them to your advantage. By claiming allowable expenses, making smart investments, and planning ahead, you can stay compliant with HMRC while keeping more money in your business or pocket.