The UK tax code is dense, but the ways to legally reduce what you pay are surprisingly few — and most of them are hiding in plain sight. Every allowance, band and threshold below is either being underused by 70%+ of the people eligible for it, or is genuinely little-known. None of this is aggressive tax avoidance. It’s just using the reliefs Parliament put in the tax code specifically so you would use them.

Here’s the 2024/25 map.

1. Use your full Personal Allowance — including your spouse’s

You get £12,570 of tax-free income a year. Most PAYE workers don’t think about it because it’s applied automatically via their tax code. But two situations are commonly missed.

If you’re married or in a civil partnership and one of you earns under £12,570 (part-time, on maternity leave, self-employed with a slow year, retired early, etc.), the lower earner can transfer £1,260 of their Personal Allowance to the higher earner via Marriage Allowance. That’s worth up to £252 a year — and you can backdate the claim up to four tax years, meaning a first-time claimant can pick up more than £1,000 in one hit.

Check whether you qualify with our Marriage Allowance calculator.

If you earn between £100,000 and £125,140, your Personal Allowance tapers away at £1 for every £2 over £100k — creating an effective 60% marginal tax rate on that slice. Anything that gets your adjusted income back under £100k (pension contributions, charitable Gift Aid) restores your allowance pound-for-pound. This is the single highest-return tax play in the UK code. We wrote a full deep dive on the £100k trap and the four ways to escape it if you’re anywhere near this income band.

2. Salary sacrifice for pension — the National Insurance saver

A normal personal pension contribution gets 20%/40%/45% Income Tax relief. That’s already good. Salary sacrifice does something extra: because your gross salary is reduced before NI is calculated, you also save National Insurance (8% for most earners, 2% above the upper earnings limit).

For a basic-rate taxpayer sacrificing £3,000/year:

  • Personal pension: net cost £2,400 (20% tax relief)
  • Salary sacrifice: net cost about £2,160 (20% tax + 8% NI saved)

That’s roughly £240 more into your pension for the same take-home hit. Over a working career, it compounds heavily.

Model your own numbers on the Salary Sacrifice calculator. Not all employers offer it — but if yours does and you don’t use it, you’re leaving money on the table.

3. ISA the full £20,000 (or as close as you can get)

Every UK adult gets a £20,000 ISA allowance each tax year. Anything inside an ISA grows tax-free forever — no Income Tax on interest or dividends, no Capital Gains Tax on growth, and it doesn’t count towards your dividend or capital gains allowances outside the wrapper.

The critical bit for 2024/25: with the CGT annual exempt amount slashed to £3,000 (from £12,300 two years earlier) and the dividend allowance dropped to £500 (from £2,000), keeping investments inside an ISA has gone from “nice to have” to “structurally important”. If you have shares or funds sitting in a regular brokerage account, run a Bed & ISA — sell and immediately rebuy inside the ISA — before your gains grow into a tax bill.

See our Capital Gains Tax calculator for what that unrealised gain would cost you today.

4. Split assets with your spouse

Assets can be transferred between spouses/civil partners with no CGT and no Income Tax, at any time. This unlocks three things simultaneously:

  • Two Personal Allowances instead of one
  • Two Capital Gains annual exempt amounts (£3,000 × 2 = £6,000)
  • Two dividend allowances (£500 × 2 = £1,000)
  • Two Personal Savings Allowances (£1,000 for basic-rate, £500 for higher-rate)

If one of you is a higher-rate taxpayer and the other basic-rate, moving income-producing assets to the basic-rate partner can cut the effective tax rate on that income roughly in half. It’s the single most effective piece of household tax planning for couples.

5. Salary vs dividends for company directors

If you run a limited company, the split between salary and dividends is your biggest lever. In 2024/25:

  • Take a salary up to the NI Secondary Threshold (£9,100) — no employee or employer NI, still gets you NI credits for state pension
  • Or up to the Personal Allowance (£12,570) — pays a little employer NI but usually still worth it
  • Then top up with dividends — 8.75% tax up to the basic-rate threshold, 33.75% higher, 39.35% additional

The maths shifts every time HMRC changes the dividend rates. Run your specific numbers through the Dividend Tax calculator with your intended salary as the “other income” input.

6. Pension contributions past 40% — the 42%-effective play

If you’re a higher-rate taxpayer (earning £50,270–£125,140), every £1 you put into a pension via personal contribution costs you 60p after tax relief. But the effective marginal saving on the £100k–£125k slice is 60% (thanks to the tapered Personal Allowance) — so pension contributions in that band are effectively 60% subsidised by HMRC.

If you’re near the £100,000 line, prioritising pension over ISA for that year is almost always the right call. You can always ISA next year.

7. Time your Capital Gains across tax years

CGT is charged per tax year. If you have a large gain to realise, splitting the sale across 5 April can use two years of the £3,000 annual exempt amount — a £6,000 tax-free chunk instead of £3,000.

If you’re selling residential property that isn’t your main home, timing matters even more — the higher rate dropped from 28% to 24% on 6 April 2024, so completing on or after that date instead of before saves 4 percentage points.

8. Charitable giving via Gift Aid

Gift Aid does two things: the charity gets 25% more (25p per £1 you give), and if you’re a higher- or additional-rate taxpayer, you get to claim the difference between your rate and the basic rate back on your Self Assessment. A £1,000 gift as a higher-rate taxpayer means:

  • Charity receives £1,250
  • You reclaim £250 via your tax return
  • Net cost to you: £750

Gift Aid contributions also reduce your adjusted income for the £100k–£125k Personal Allowance taper, which stacks with tip 6.

9. Register self-employment properly and use the trading allowance

If you do any freelance work on the side — even £500 of it — the first £1,000 is covered by the trading allowance and you don’t need to report it. Above £1,000, register with HMRC, but use the trading allowance as a lump-sum deduction instead of tracking actual expenses if your real expenses are lower.

For sole traders with meaningful profit, run your numbers through the Self-Employed Tax calculator to see the Class 2 and Class 4 NI position — often a surprise to first-time filers.

What order should you actually do all this in?

Rough priority list for most UK households:

  1. Marriage Allowance if eligible (2 minutes online, £252/yr, backdatable)
  2. Salary sacrifice pension at work up to the employer match, minimum
  3. ISA as much as you can afford
  4. Salary sacrifice more if income is near £50k, £100k, or £125k thresholds — you get outsized value
  5. Bed & ISA existing taxable investments
  6. Split assets with spouse if applicable
  7. Charitable giving via Gift Aid
  8. CGT timing across tax years for larger disposals

The calculators you’ll want open

While planning, keep these tabs open:

Or start at the UK Tax hub which lists everything with a “which calculator do I need?” decision helper.

The disclaimer that actually matters

Every figure above is for the 2024/25 UK tax year (6 April 2024 – 5 April 2025). The rules change most Novembers (Autumn Statement) and Marches (Spring Budget). None of this is financial or tax advice — it’s a starting point for a conversation with an accountant, or a nudge to check your own Personal Tax Account. But if you take away just Marriage Allowance and one round of salary sacrifice, this article will already have paid for itself many times over.