Navigating the UK’s tax system can be complex, and many individuals may overlook valuable allowances and reliefs that could reduce their tax liabilities. As we progress through the 2025/26 tax year, it’s essential to be aware of these opportunities to optimise your finances. Here are ten personal tax allowances and reliefs you might be missing:
1. Marriage Allowance
If you’re married or in a civil partnership, and one partner earns less than the personal allowance threshold of £12,570, you could benefit from the Marriage Allowance. This allows the lower-earning partner to transfer up to £1,260 of their unused personal allowance to the higher-earning partner, potentially saving up to £252 in tax annually. Eligibility requires that the higher earner pays the basic rate of income tax.
2. Blind Person’s Allowance
Individuals registered as blind or severely sight-impaired are entitled to an additional tax-free allowance. For the 2025/26 tax year, this allowance is set at £3,130, which can be added to your personal allowance, increasing the amount of income you can earn before paying tax.
3. Rent-a-Room Relie
Homeowners can earn up to £7,500 per year tax-free by renting out a furnished room in their primary residence under the Rent-a-Room scheme. This is particularly beneficial for those with spare rooms looking to generate additional income without incurring extra tax liabilities.
4. Personal Savings Allowance
Depending on your income tax band, you can earn interest on savings without paying tax:
- Basic-rate taxpayers: Up to £1,000 tax-free.
- Higher-rate taxpayers: Up to £500 tax-free.
- Additional-rate taxpayers: No allowance.
This allowance applies to interest earned from bank accounts, building societies, and other savings vehicles.
5. Dividend Allowance
For the 2025/26 tax year, you can receive up to £500 in dividends tax-free. Dividends above this threshold are taxed at different rates depending on your income tax band:
- Basic rate: 8.75%
- Higher rate: 33.75%
- Additional rate: 39.35%
This is particularly relevant for shareholders and investors.
6. Capital Gains Tax (CGT) Allowance
Each individual has an annual CGT allowance, allowing you to realise gains on assets up to a certain amount before paying tax. For 2025/26, this allowance is £3,000. Strategically planning the sale of assets and utilising this allowance can minimise your CGT liability.
7. Pension Contributions
Contributing to a pension scheme not only helps secure your retirement but also offers immediate tax benefits. You can contribute up to £60,000 annually (or 100% of your earnings, whichever is lower) and receive tax relief at your highest marginal rate. This means that for every £100 contributed, a basic-rate taxpayer effectively pays £80, and a higher-rate taxpayer pays £60.
8. Gift Aid Donations
Donating to charity through Gift Aid allows charities to reclaim 25p for every £1 donated. If you’re a higher or additional-rate taxpayer, you can claim the difference between your tax rate and the basic rate on your donation, reducing your tax bill. For example, a £100 donation could result in a £25 tax rebate for a higher-rate taxpayer.
9. Annual Inheritance Tax (IHT) Exemptions
You can give away up to £3,000 each tax year without it being added to the value of your estate for IHT purposes. If you didn’t use this exemption in the previous tax year, you can carry it forward, allowing for a potential £6,000 tax-free gift. Additionally, small gifts of up to £250 per person can be made to any number of individuals annually.
10. Junior ISA Contributions
You can save up to £9,000 per year into a Junior ISA for your child, with all interest and gains being tax-free. This not only provides a tax-efficient way to save for your child’s future but also keeps the funds outside your estate for IHT purposes.
How Centralyze Accounting Can Help
Understanding and utilising these allowances and reliefs can significantly reduce your tax liabilities. However, navigating the complexities of the UK tax system can be challenging. That’s where Centralyze Accounting Ltd comes in.
Based in Greater London, Centralyze Accounting specialises in providing tailored accounting solutions for individuals and businesses. Their services include:
- Personal tax planning and compliance
- Bookkeeping and VAT services
- Payroll management
- Corporation tax services
With a dedicated team of professionals, Centralyze Accounting ensures that you only pay what’s necessary while claiming every penny you’re entitled to. They understand the challenges of running a small business and offer simple, affordable, and hassle-free accounting services designed to fit your budget.
Contact Centralyze Accounting Today
Don’t miss out on valuable tax allowances and reliefs. Get in touch with Centralyze Accounting to ensure your finances are in order and you’re making the most of the 2025/26 tax year.
- Phone: 0203 813 9087
- Email: connect@centralyzeaccounting.co.uk
- Website: www.centralyzeaccounting.co.uk
Let Centralyze Accounting simplify your finances so you can focus on what truly matters.