There are a huge number of ways that an employee can pay less tax. Unfortunately, many of them are unattractive to the employee or they involve the employee spending money to save tax - which normally means spending more than you recoup from the Revenue.

However, if you take into account other factors such as NI and Tax Credits you may find that your marginal rate of "tax" is very much higher than you imagine. See Your True Rate of Tax. But even if your marginal rate of tax is approaching 100%, spending simply to reduce your tax liability makes no (financial) sense - although if driven by a political or moral motive you might want to ensure that the Revenue get none of your money!

Expenditure must be wholly, exclusively, and necesssarily incurred by the employee.

This can frequently include Using Your Own Car for your work (but not for the daily 'commute'). Many people who approach us are surprised to find that they are due a refund of tax after taking into account a claim for using their car for work. This number increases as less people are given a company car. The receipt of an allowance, included in salary and taxed at source, in lieu of a car makes no difference.

It is frequently a mistake to receive Free Fuel for private use of your car. Calculate the cost to you in tax (don't forget Your True Rate of Tax.) and compare that with the private fuel that you would normally buy.

If you already give to a charity, doing so via Gift Aid will greatly enhance the value of the gift to the charity if you are a basic rate or a higher rate taxpayer. For the higher rate taxpayer who is already giving to a charity, "gift-aiding" a gift and completing your tax return form correctly will result in a reduction of tax of over 23% of the amount given (actually 18/78ths). For more on Gift Aid, please see Tax Efficient Giving. It is also possible to "gift-aid" items other than money. In the right circumstances, this will reduce the tax bill for both the basic rate and the higher rate donor.

Making contributions to a Personal Pension Plan has a similar effect on your tax to gift aid payments. A basic rate taxpayer will notice no difference to their tax - although the government will normally contribute 22/78ths of the payment you make to the pension fund - but the higher rate taxpayer will benefit from an actual reduction (18/78ths of the amount paid) in their tax liability. Again, please don't forget Your True Rate of Tax.

Child Care At the time of writing, this legislation has not been finalised. In the right circumstances it seems that a couple will be able to reduce their tax bill by £2000 a year. But take care. Please see our posting dated 10 November 2006 in current tax issues labelled "Childcare Vouchers".

The list is endless. You might be using your home for work. Share schemes seem to be growing again in popluarity. Flat rate allowances apply to many occupations. Certain occupations seem to attract more allowable expenses than others. Doctors, for example, need to spend a lot of money to practise their art (when in employment), but sales directors (as another example) are normally well catered for by their employer and there is frequently little more than a motoring claim to be made.

However, there are a number of benefits with which an employer can provide an employee without a taxable benefit arising. This isn't the same as paying less tax, but it can be if you were to make a salary sacrifice to receive a tax free benefit that you would otherwise have paid for from taxed income.

For more, please contact us, or perhaps have a look at current tax issues to see if there are any updates.

Read this: Bad news for tax cheats ... very bad news

Important Note The information on this page is offered as a taster and is not complete and may actually be incorrect at the time of reading. Please do not forget to read our craftily worded disclaimer.