8 Ways to Reduce Income Tax in the UK: Guidance from a Financial Adviser

Reducing income tax legally and efficiently is a goal shared by many individuals and business owners across the UK. With the right planning and expert guidance, it’s possible to make the most of available allowances, reliefs, and strategies. Working with a financial adviser can help ensure you’re taking full advantage of the options that apply to your circumstances.

In this article, we explore practical ways to lower your tax bill while highlighting how a certified financial adviser can provide tailored service and support throughout the process.

1. Maximise Pension Contributions

One of the best and most tax-efficient ways to reduce your income tax is to make pension contributions. Contributions to a pension scheme can reduce your taxable income, and in many cases, you’ll benefit from tax relief at your highest marginal rate. A financial advisor with expertise in pensions can help you determine how much to contribute and ensure you stay within annual allowance limits.

If you’re seeking personalised guidance, you can book a meeting with an adviser to explore your pension planning strategy in depth.

2. Use ISA Allowances

Although ISA contributions don’t reduce taxable income directly, any interest, dividends, or capital gains earned within an ISA are free from UK tax. A top financial adviser can assist you in building a diversified investment strategy within your ISA portfolio, ensuring you’re making the most of your annual allowance.

An independent adviser can also help balance your ISA and pension savings in line with your long-term goals and tax position.

3. Claim Available Tax Reliefs

Various tax reliefs are available in the UK that can lower your overall tax liability. These include:

-Marriage allowance

-Gift Aid donations

-Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS)

-Venture Capital Trusts (VCTs)

Navigating these reliefs can be complex, but the best financial advisers offer a comprehensive service that ensures nothing is missed. An independent financial adviser can help identify which reliefs are appropriate for your financial situation and risk appetite.

4. Make Use of Allowances

Everyone has access to personal allowances and tax-free thresholds. An experienced financial advisor can help you optimise income and asset allocation between spouses or civil partners, ensuring both parties make full use of their allowances.

By working with a certified adviser, you can also plan for tax-free gains on investments and avoid breaching thresholds that may trigger additional tax liabilities.

5. Consider Income Timing and Structuring

Timing your income—particularly for business owners or those with flexible earnings—can have a big impact on your tax liability. For example, delaying a dividend or bonus to the next tax year may allow you to stay within a lower tax bracket. A financial adviser can help you structure income efficiently, keeping long-term goals in view.

If you’re unsure where to begin, book a meeting with an adviser today to review your income strategy.

6. Review Protection Products

Some types of protection, such as Relevant Life Plans, offer tax-efficient life cover for company directors. The premiums are usually paid by the business and may be considered an allowable business expense. A financial advisor can help assess whether such protection options are suitable for you or your company.

Speak to an independent adviser to understand how insurance and protection products can form part of a tax-aware financial plan.

7. Professional Fees May Be Deductible

In certain circumstances, you may be able to claim tax relief on professional fees, including those paid to a certified financial adviser, especially if they relate to investment or pension advice through your business. A top financial advisor can help structure these engagements to deliver value and potential tax benefits.

8. Find the Right Financial Adviser

The key to effective tax planning is personalised advice. If you’re looking to find a financial adviser who understands your goals, tax position, and long-term financial health, seek a certified and independent adviser who offers a transparent and regulated service.

Look for firms that are FCA-authorised and that offer clear information about their fees and expertise in tax planning, pensions, and protection.

Book a meeting with an adviser today to take control of your income tax planning and start building a more efficient financial future.

Founded in 2017, Fintuity has fast become one of the only digital Independent Financial Advisers (IFA) in the United Kingdom.  Fintuity offers a wide range of financial advisory services including pensions, protection, investments and mortgage advice. The key difference is that as an exclusively digital service, we can offer significant savings and a service that is direct to you and on demand.