Home > Self Assessment > How Can I Reduce My Self Assessment Bill?

How Can I Reduce My Self Assessment Bill?

By: J.A.J Aaronson - Updated: 24 Apr 2014 | comments*Discuss
Self Assessment Allowable Expenses Self

A Self Assessment bill can come as something of a shock. The idea of having to pay your entire year’s tax bill in one or two instalments is a daunting one, particularly if you are earning less than you did in the previous year.

But, while self assessment taxpayers are at something of a disadvantage in one sense, they benefit from the ability to take extra steps to minimise their tax bill. There are a number of important ways that you can reduce the amount you have to pay each January. Some you must bear in mind throughout the year, and others only apply when you come to actually paying your bill.

Allowable expenses

Allowable Expenses are perhaps the most important tool in the arsenal of a self-employed taxpayer. These expenses cover the day-to-day running of your business, and might include things like phone line and other utility bills, professional fees like those charged by accountants and lawyers, stationery and postage.

When you are Completing Your Self Assessment, your total allowable expenses are deducted from your income – but, of course, you can only claim for expenditure of which you have kept accurate records. Efficient accounting is therefore the most effective way for most self assessment taxpayers to keep their bills down.

You should pay particular attention to expenditure that is not exclusively for business purposes. For example, if you work from home and use the same phone line for personal and business calls, you will need to work out what proportion of the expense is allowable. HM Revenue and Customs (HMRC) is particularly attentive to claims of this sort, and you must therefore ensure that you only make accurate and easily verifiable claims.

Offset losses

You can also reduce your self assessment tax bill by offsetting business losses. Many small business owners do not break even for their first couple of years, but you can use these losses to offset your tax bill when you are in profit. (See our article Minimising My Tax As A Small Business Owner for more information.)

There is often confusion about what you can and cannot offset. Many people believe that capital losses can be offset against your annual capital allowance; this is not the case. Instead, you should offset your losses against other forms of income. You should do this in the Capital Gains Summary section of your Self Assessment.

Pay promptly

When it comes to actually paying your tax bill, you should remember that further charges will accrue if you do not settle your bill promptly. The deadline for making a balancing payment against the previous year’s tax bill is October 31st for all paper returns and January 31st to file your self assessment online.

You will also not be able to make use of HMRC’s direct debit service unless you are up to date with your tax bill – and this can result in you missing the deadline again next year. You should therefore ensure that you pay your tax on time.

Finally, it is worth remembering that some help is available to those who are having genuine difficulty paying their tax bill. If you cannot meet the January 31st deadline, make sure that you read our article on advice for those who cannot pay their tax.

You might also like...
Share Your Story, Join the Discussion or Seek Advice..
Why not be the first to leave a comment for discussion, ask for advice or share your story...

If you'd like to ask a question one of our experts (workload permitting) or a helpful reader hopefully can help you... We also love comments and interesting stories

(never shown)
(never shown)
(never shown)
(never shown)
Enter word:
Latest Comments
  • Kenthen
    Re: What Does Road Tax Pay For?
    I often wondered if it's legal for the council to close public roads for pedestrian usage unless it's for repair or some other road…
    11 August 2019
  • Oky
    Re: How Will My Second Job Be Taxed?
    Hi if I work for 2 agency. One job is 40 hour per week and other is 12 or 20 hours per week, only for one week it will be.…
    7 August 2019
  • Jo-jo
    Re: How Will My Second Job Be Taxed?
    I have main job at 24 hours a week and earn £198 a week if I take on a 2nd job at 10 hours a week at £9.04 an hour how much…
    3 August 2019
  • Jules
    Re: Should I be Paid Mileage Allowance?
    Im a carework i dont get paid any mileage i only get 25p per visit but my calls are 5 & 6 miles apart how do i claim some…
    24 July 2019
  • San
    Re: What is My Tax Code?
    Hello I have a first job and I am earning 290 a week and have been charged 60 for that first wage and I have started a second job for weekend…
    18 July 2019
  • MH829567
    Re: What Does Road Tax Pay For?
    Road Tax doesn't pay for anything cos it don't exist. Vehicle Excise Duty or CAR tax pays for the environmental effects of the…
    9 July 2019
  • Sandra
    Re: Payment of Pensions
    I want my pension to be paid weekly not monthly can this be changed ?
    5 July 2019
  • Sandra
    Re: Payment of Pensions
    I want my pension to change from monthly to weekly can thus happen?
    5 July 2019
  • vic
    Re: How Will My Second Job Be Taxed?
    my son is at uni and works on a sat for 8 hrs, he has just started a full time summer job until uni goes back and has been…
    4 July 2019
  • Jane
    Re: How Will My Second Job Be Taxed?
    Hi, I've recently been offered 2 part time positions (very similar roles) and am wondering if I could accept both offers? In…
    4 July 2019