9 Tips to Pay Less Tax in the UK

Thousands of UK residents overpay tax every year—and you might be one of them. These nine tips can help you legally reduce your tax bill and keep more of what you earn.

Before diving in, use our UK salary calculator to see your current tax position. Then apply these strategies.

1. Claim Tax Credits

Working Tax Credit and Child Tax Credit can put hundreds or thousands back in your pocket if you’re eligible. Check gov.uk/child-tax-credit for details. Even if you’ve never claimed before, it’s worth checking.

2. Use Your Personal Allowance Fully

Everyone gets a tax-free personal allowance. If you have investments or rental income in joint names, consider whether transferring to the lower-earning partner (if they’re under the threshold) could save tax.

3. Claim Refunds for Overpayments

If your income dropped during the year, you may have overpaid. HMRC should notify you, but it pays to check your payslips and tax code. Use form R40 to reclaim overpaid tax.

4. Take Advantage of Employee Benefits

The Cycle to Work scheme lets you buy a bike through salary sacrifice—before tax and National Insurance. Tax-free childcare can give parents 25% off childcare costs (up to £500 every three months) if you earn under £100,000.

5. Use Marriage Allowance

If one partner earns under the personal allowance and the other pays basic rate tax, you can transfer up to £1,260 of allowance. Married Couple’s Allowance can save £427–£1,108 per year. Check which suits you.

6. Save for Retirement

Pension contributions are taken from gross pay, so you get tax relief straight away. You can receive relief on contributions up to 100% of your earnings. Basic rate taxpayers can also earn up to £1,000 tax-free on savings interest.

7. Claim Tax-Deductible Expenses

If you’re self-employed, keep receipts for business costs. Office, travel, and professional expenses can reduce taxable profit. There’s also a £1,000 trading allowance if you don’t claim other deductions.

8. Plan Your Accounting Period

Self-employed? You can choose your accounting year-end. Aligning it with the tax year or spreading profits can help with cash flow and tax timing.

9. Reduce Payments on Account

If you pay tax in advance (January and July) and expect this year’s income to be lower, you can apply to reduce payments using form SA303.

All of these strategies are above board. Start with our UK salary calculator to understand your numbers, then work through the list.