While your income tax is basically calculated on how much you earn, there are several smart and legal ways you can save money on your taxes. Most of these are achieved by reducing your taxable income through tax relief. There are several ways to do this, and one of the most basic is to reduce the amount of your income that is counted towards your income tax by subtracting expenses and charitable donations. Let's see how it all works.
| Relief Type | Description | Max Benefit (2025/26) | How to Claim |
|---|---|---|---|
| Personal Allowance | First £12,570 tax-free | £12,570 | Applied via PAYE code |
| Marriage Allowance | Transfer £1,260 allowance | Save up to £252 | Online claim |
| Pension Contributions | Tax relief on savings | 20–45% | Through provider/Self Assessment |
| ISAs | Tax-free savings/investments | £20,000 allowance | Bank/investment provider |
| Gift Aid | Charitable donation top-up | +25% value | Registered charity declaration |
| Trading Allowance | Tax-free side income | £1,000 | Self Assessment |
| Working-from-Home Relief | Flat-rate expense | £312/year | Online claim (PAYE/Self Assessment) |
What Is Tax Relief in the UK?
Tax relief is a way to reduce how much Income Tax you pay. You can subtract certain expenses, contributions, or allowances from your taxable income. You can use the reliefs built into the system to lower your tax bill fairly and legally without evading taxes. Common expenses include pension contributions, charitable donations, and business expenses. Many people save hundreds or thousands of pounds each year.
Who Can Claim Tax Relief?
Anybody who pays Income Tax in the UK can claim some form of tax relief. This will depend on your income type and employment status. Even those who don't fill out a Self Assessment can claim smaller reliefs through their Personal Tax Account on GOV.UK.
Top 5 Tax Reliefs Most People Miss
- Marriage Allowance transfer (worth up to £252 per year)
- Pension contribution top-ups for higher-rate taxpayers
- Flat-rate work-from-home deduction (£6/week)
- Gift Aid on charitable donations
- Trading Allowance (£1,000 tax-free income for side jobs)
Using Your Full Personal Allowance
Everyone living and working in the UK is subject to a Personal Allowance. This is the amount of money you can earn before paying any Income Tax. For the 2025/26 tax year, this allowance is £12,570, the same level as previous years. Any amount earned under this is subject to no Income Tax. However, higher earners lose £1 for every £2 earned over £100,000. By the time you reach £125,140, you'll end up with no Personal Allowance.
for the 2025/26 tax year.
Many people lose part of their personal allowance because their main job or pension isn't coded correctly. Always check that your 1257L code applies to your primary income source. You can fix this easily via your Personal Tax Account.
Claiming Pension Contributions and Retirement Savings
Pension tax relief is one of the most effective ways to save on your tax contributions. By contributing to a pension, the government adds back the tax you've already paid on that money. For example, if you contribute £100 to your pension, the government would add £25 (for a basic-rate taxpayer).
Before Claiming Tax Relief, Make Sure You Have...
Opening and Using ISAs for Tax-Free Savings
An Individual Savings Account (ISA) can be used to earn interest, dividends, or investment growth tax-free. The annual ISA allowance is £20,000 per person for the 2025/26 tax year. Since ISA earnings aren't included in your taxable income, they're a simple, tax-efficient saving method.
for the 2025/26 tax year.
Tax Relief for the Self-Employed and Business Expenses
Anyone self-employed can claim their business expenses against their taxable profit to reduce the amount of tax they pay. You can claim capital allowances on larger items like machinery, computers, and vehicles. For those with a smaller turnover (under £1,000), you can claim the Trading Allowance, which is a £1,000 deduction from income without tracking individual expenses. Any expenses must be "wholly and exclusively" for business purposes. Common deductible expenses include:
Working From Home and Job-Related Expense Claims
For those who work from home, travel for work, or purchase tools and uniforms, etc., there may be specific tax reliefs that apply. Even if you don't complete a full Self Assessement, you can claim these through your Personal Tax Account online.
Marriage Allowance and Family Tax Relief
Marriage Allowance means that one partner can transfer up to £1,260 of their unused Personal Allowance to their spouse or civil partner, potentially adding up to £252 a year. This claim can also be backdated for up to four tax years, which means if you're finding out about it, you can still recover some past savings. Make sure you're eligible:
Charitable Donations and Gift Aid
When you donate to a registered charity under Gift Aid, the charity can claim back 25p on every £1 you give. Higher-rate taxpayers can also claim extra tax relief on donations through Self Assessment. Gift Aid applies to one-off or regular donations and even charity shops, provided you sign a Gift Aid declaration.
Capital Gains, Inheritance, and Investment Reliefs
Capital gains, inheritance, and investment reliefs are all subject to specific criteria. Ensure you're aware of them to pay the right amount of tax. Here's how they all work.
Capital Gains Tax (CGT)
For 2025/26, the CGT annual exemption remains at £3,000. You only pay tax on gains above this threshold:
- 10% (basic rate) or 20% (higher rate) for most assets.
- 18% or 24% for residential property (not your main home).
Inheritance Tax (IHT)
Each person has a £325,000 nil-rate band and a potential £175,000 main-residence allowance if passing their home to direct descendants.
Small gifts under £250 per person or up to £3,000 per year are exempt.
Investment Reliefs
Schemes like the Enterprise Investment Scheme (EIS) or Seed Enterprise Investment Scheme (SEIS) allow you to claim up to 30–50% Income Tax relief on investments in small UK businesses, plus capital-gains deferrals.
How To Claim a Tax Rebate or Refund
If you've overpaid on your tax, you can claim a tax rebate. Overpayment often occurs when you change jobs, reduce your income, or are put on emergency tax codes. HMRC typically takes between 2 and 6 weeks to rectify overpayments, but more complex cases can take longer. Ways to claim:
Key Tax Rebate and Filing Dates (2025–2026)
6 April 2025
Start of the tax year
31 October 2025
Deadline for paper Self Assessment returns
31 January 2026
Online return and payment due
31 July 2026
Second Payment on Account (if applicable)
When To Get Professional Tax Advice
We hope you've found this helpful information, but we always recommend speaking to a professional for tax advice. If you have multiple income sources, run a business, or invest heavily, it's worthwhile to seek help from a qualified accountant or tax adviser. Look for a Chartered Tax Adviser (CTA) or Chartered Accountant (ACA/ACCA) for guidance. A qualified tax adviser can:
Final Tips: Paying Less Tax the Legal Way
Claiming tax relief isn't illegal. This is thoughtful financial planning that ensures you pay the right amount of tax and aren't overcharged. Being aware of what does and doesn't count is essential.
References
- GOV.UK – Income Tax relief on maintenance payments https://www.gov.uk/income-tax-reliefs
- GOV.UK – Claim tax relief for your job expenses https://www.gov.uk/tax-relief-for-employees
- GOV.UK – Marriage Allowance https://www.gov.uk/marriage-allowance
- GOV.UK – Tax on your private pension contributions https://www.gov.uk/tax-on-your-private-pension
- GOV.UK – Individual Savings Accounts (ISAs) https://www.gov.uk/individual-savings-accounts
- GOV.UK – Self Assessment tax returns https://www.gov.uk/self-assessment-tax-returns
- GOV.UK – Tax relief when you donate to a charity https://www.gov.uk/donating-to-charity
- GOV.UK – Capital Gains Tax: what you pay it on, rates and allowances https://www.gov.uk/capital-gains-tax
- GOV.UK – How Inheritance Tax works: thresholds, rules and allowances https://www.gov.uk/inheritance-tax
- GOV.UK – Check how to claim a tax refund https://www.gov.uk/claim-tax-refund
- GOV.UK – Contact HMRC https://www.gov.uk/contact-hmrc
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