Nanoparticles of Bi₄TaO₈Cl, a Bi-based layered oxychloride where the halide ions are in the interlayer space, have been synthesized by a solution combustion technique for the first time. The formation of homogenous particles in the 30–70 nm range is confirmed by an SEM measurement. The nanoparticles showed enhanced UV and visible light driven photocatalysis compared to bulk Bi₄TaO₈Cl. The photocatalytic efficiency for the degradation of the anionic dye Congo red was evaluated for nano Bi₄TaO₈Cl, bulk Bi₄TaO₈Cl and anatase TiO₂. It is observed that the photocatalytic activity of both nano and bulk Bi₄TaO₈Cl was higher than anatase TiO₂. The optical band gap of the nanoparticles, determined to be 2.8 eV, was larger than the band gap (2.5 eV) of the bulk material. The degradation of Congo red was followed by UV-Vis spectroscopy and the structural destruction of the dye was further established by FTIR spectra. Nano and bulk Bi₄TaO₈Cl degrades 95% and 85% of the dye, respectively. A possible degradation mechanism of Congo red is proposed. The results emphasize the combined role of the particle size and band gap for the generation of efficient photocatalysts functioning in visible light.