How to Legally Reduce Tax in the UK – Smart Strategies Used by Accountants

How to Legally Reduce Tax in the UK – Smart Strategies Used by Accountants

Reducing tax legally is not about loopholes or risky schemes. In the UK, effective tax planning is about understanding the system, using the available allowances correctly, and structuring your income in a way that is both compliant and efficient.

Many business owners and self-employed individuals pay more tax than necessary simply because they are unaware of the options available to them.

Salary vs Dividends – Choosing the Right Balance

For Limited Company directors, how you take money out of your company matters. A well-planned combination of salary and dividends can significantly reduce Income Tax and National Insurance contributions. However, the optimal balance changes regularly due to tax thresholds and legislation updates, which is why this should never be left to guesswork.

Pension Contributions as a Tax Tool

Pension contributions are one of the most powerful and underused tax-saving strategies in the UK. Contributions made by a company are usually tax-deductible and do not attract National Insurance. At the same time, they help secure your long-term financial future.

Making Full Use of Allowances and Reliefs

From the Personal Allowance and Dividend Allowance to Capital Allowances and R&D tax relief, the UK tax system offers numerous opportunities to reduce liabilities — but only if they are claimed correctly and on time.

Timing Income and Expenses

The timing of invoicing, purchases, and investments can have a real impact on your tax bill. Strategic planning around accounting periods can legally defer tax and improve cash flow.

Avoiding Aggressive Tax Planning

HMRC actively investigates aggressive tax avoidance schemes. A professional accountant ensures your tax strategy is effective, compliant, and sustainable — protecting both your finances and your reputation.

At Lucas Prestige Accountants, we focus on tailored, transparent tax planning that works within the law and aligns with your long-term business goals. Our clients benefit from proactive advice, not last-minute calculations.