Nobody should pay more tax than they legally owe. Here are 12 strategies — all completely legal — that could save you hundreds or thousands per year.
1. Max Out Your Pension Contributions
Pension contributions get tax relief at your marginal rate. A £1,000 contribution costs a basic rate taxpayer just £800, and a higher rate taxpayer just £600. If you're near the £100k threshold, pension contributions can save you from the 60% tax trap. You can contribute up to £60,000/year.
2. Use Your ISA Allowance
You can put £20,000 per year into ISAs (Cash, Stocks & Shares, Lifetime, or Innovative Finance). All growth, interest, and dividends within an ISA are completely tax-free. Over a lifetime, this can save tens of thousands in tax.
3. Salary Sacrifice
If your employer offers salary sacrifice, you save both income tax AND National Insurance on the sacrificed amount. On a £45,000 salary, sacrificing £300/month into a pension saves roughly £1,500/year more than a normal pension contribution. Use our salary sacrifice calculator.
4. Claim Marriage Allowance
If one partner earns under £12,570 and the other is a basic rate taxpayer, you can transfer £1,260 of personal allowance — saving £252/year. You can backdate for 4 years (worth up to £1,260 total). Check your eligibility.
5. Claim Working from Home Allowance
If your employer requires you to work from home (even occasionally), you can claim tax relief on £6/week (£312/year) without receipts. For a basic rate taxpayer, that's £62 saved. Higher rate taxpayers save £125.
6. Claim Professional Subscriptions
If you pay for professional body memberships required for your job (like ACCA, RICS, BMA, Law Society), you can claim tax relief on the full cost. HMRC has an approved list of qualifying bodies.
7. Use the Trading Allowance
The first £1,000 of self-employment income is tax-free. If you have a small side hustle earning under £1,000, you don't even need to tell HMRC.
8. Charitable Giving via Gift Aid
If you donate to charity via Gift Aid and you're a higher rate taxpayer, you can claim back an additional 20% through your tax return. A £100 donation costs you just £60.
9. Capital Gains Tax Planning
Use your £3,000 annual CGT exemption every year — don't let it go to waste. If selling investments, spread sales across tax years. Transfer assets to your spouse before selling to use both exemptions (£6,000 total). See our CGT calculator.
10. Childcare Schemes
Tax-Free Childcare gives you up to £2,000/year per child (government tops up 20% on childcare payments up to £10,000). For higher earners, salary sacrifice childcare vouchers (if still available from a legacy scheme) can also save tax.
11. Cycle to Work Scheme
Buy a bike through salary sacrifice and save 32-42% on the cost (income tax + NI savings). On a £1,000 bike, you'd save £320-£420.
12. Electric Vehicle Salary Sacrifice
EV salary sacrifice is one of the most tax-efficient benefits available. The Benefit in Kind rate for electric cars is just 2%, meaning you can drive a new EV for 30-50% less than buying or leasing privately.
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