£ Understand Your Tax
Tax planning · UK · 2025/26

How to legally reduce your Income Tax

Income tax is the biggest bill most people pay — but UK law is full of legitimate ways to lower it. Here are the main ones in plain English, with a tool that shows how pension contributions, Gift Aid and the Marriage Allowance cut your bill.

The legal ways to cut income tax — at a glance

See how much you could save

Enter your salary, then add a pension contribution, a Gift Aid donation, or the Marriage Allowance. The tool compares your income tax with no planning to your tax with these steps.

Your situation

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You could save up to
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Income tax with no planning
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Income tax with these steps
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Illustration of income tax only, using 2025/26 rates (England, Wales & NI). Salary sacrifice also saves National Insurance, so real savings can be larger. Doesn't replace advice. Open the full income tax calculator →

The reliefs, explained simply

Each card tells you what it is, who can use it, and what to watch out for — with a link to the official HMRC guidance.

🪙 Pension contributions

Everyone

Money you pay into a pension gets tax relief at your highest rate — 20%, 40% or 45%. It's the single most powerful way most people cut income tax, and it builds your retirement pot at the same time.

Who: anyone with earnings, up to a £60,000 annual allowance for 2025/26.
Watch out: higher-rate relief above 20% usually has to be claimed via your tax return — it isn't always automatic.
Official guidance →

🔄 Salary sacrifice

Employees

You give up part of your salary in exchange for a benefit — pension, an electric car, or a cycle. Because your gross pay falls, you save income tax and National Insurance, making it more efficient than paying from take-home pay.

Who: employees whose employer offers a scheme.
Watch out: a lower salary can affect mortgage borrowing, statutory pay and some benefits. Don't sacrifice below minimum wage.
Official guidance →

❤️ Gift Aid donations

Everyone

When you donate with Gift Aid, the charity reclaims 25%, and if you're a higher or additional-rate taxpayer you reclaim the difference yourself. It also pushes down your "adjusted net income", which can help with the 60% trap and child benefit.

Who: UK taxpayers donating to registered charities.
Watch out: you must have paid at least as much tax as the charity reclaims, or HMRC can ask for it back.
Official guidance →

💍 Marriage Allowance

Married / civil partners

If one partner earns under the £12,570 personal allowance, they can transfer £1,260 of it to a basic-rate partner — cutting that partner's tax by up to £252 a year. You can usually backdate up to four years.

Who: married/civil partners where one is a non-taxpayer and the other pays basic-rate (20%) tax.
Watch out: it's not available if the higher earner is a higher-rate taxpayer.
Official guidance →

🛡️ ISAs & tax-free allowances

Everyone

Interest and dividends inside an ISA are tax-free (up to £20,000 a year in). On top, the Personal Savings Allowance and the £500 dividend allowance shelter income held outside an ISA.

Who: UK residents; the savings allowance is larger for basic-rate taxpayers.
Watch out: allowances shrink as your income rises — additional-rate taxpayers get no personal savings allowance.
Official guidance →

🧾 Claim what you're owed

Employees

Many people overpay simply by not claiming. You can claim tax relief on job expenses — working-from-home costs, professional subscriptions, tools and uniforms — and you should check your tax code is right.

Who: employees who pay for allowable work costs themselves.
Watch out: only claim genuine costs your employer didn't reimburse, and keep records.
Official guidance →

Legal planning vs. illegal evasion

You're entitled to use the reliefs Parliament created — that's planning. Misrepresenting the facts is evasion.

✓ Legal planning
Paying into a pension; using salary sacrifice through your employer; claiming Gift Aid you're entitled to; claiming real work expenses you actually paid for.
✗ Illegal evasion
Claiming expenses you never incurred; not declaring side income, tips or rental income; claiming the Marriage Allowance when you don't qualify.

Frequently asked questions

How can I legally pay less income tax?
Pay into a pension, use salary sacrifice, donate via Gift Aid, claim the Marriage Allowance if eligible, shelter savings and investments in ISAs, and claim any work expenses and allowances you're owed.
What is the 60% tax trap?
Between £100,000 and £125,140, your personal allowance is withdrawn, creating an effective ~60% rate on that band. Pension contributions or Gift Aid that bring income under £100,000 restore the allowance — see our pension relief calculator.
Does salary sacrifice really save more than a normal pension payment?
Often yes, because it cuts National Insurance as well as income tax. The exact benefit depends on your employer's scheme.
Do I need to do a tax return to claim these?
Some are automatic (basic-rate pension relief); others — higher-rate relief, larger expense claims — are claimed through Self Assessment or directly from HMRC.

Related

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Income Tax Calculator
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Pension relief
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The legal ways
Educational guide — not tax or financial advice. UK income tax for 2025/26 (England, Wales & Northern Ireland; Scotland has its own rates). Reliefs have conditions and change over time. Whether they apply depends on your circumstances. Always confirm with HMRC and a qualified adviser before acting.