12 ways to make you more tax-efficient this tax year

Friday, April 10, 2015

In 2015, UK taxpayers are set to overpay some £4.9 billion by failing to take some simple tax-planning measures, according to research from financial adviser website Unbiased.co.uk1. That's equivalent to £165 for every taxpayer. Here's how to make sure that doesn't happen to you…

Tax efficient blogA bit of careful planning may reduce the amount of tax you pay and help you save more over the next year.

1. Your tax code. Always check your payslip to make sure you're on the right tax code - use the gov.uk tax code guide to check what the numbers and letters on your tax code mean.

2. Tax credits. Are you receiving all the tax credits you're due? Checking this might sound daunting, but you can use the HMRC's tax credits calculator to help you.

3. Council Tax. If you live in England or Scotland, check you're in the right band for your council tax payments - there's a useful guide to how to do this on moneysavingexpert.com

4. Savings interest. As a result of the March 2014 Budget, from April this year anyone with an income of less than £15,600 will not have to pay tax on their savings interest.2

5. Use your ISA allowances. Along with a slightly higher allowance this tax year - £15,240 for 2015/16 - another ISA Budget announcement has also taken affect, allowing you to replace any money you take out of your ISA without losing its tax benefits. The only condition is that you replace it within the same tax year.

6. Other tax-free savings options. The unique status of friendly societies such as Foresters means we can offer another tax-exempt option. A saving allowance of £25 per month will provide you with a cash sum paid-out free of capital gains and income tax and which can be held alongside a NISA.

7. Pay more into your pension. As a result of the March 2015 Budget there have been major changes to pensions this month with new flexibility, as you can now choose how to use the money.  One thing remains the same: they're a tax efficient way to save. If you're a basic rate taxpayer, the taxman pays £25 for every £100 you pay in. If you are a 40% or 45% tax payer you can claim extra tax relief in your self assessment tax return.

8. Plan with your partner. The Marriage (and civil partners) Tax Allowance applies to couples where one partner doesn't pay any tax and the other is a basic rate taxpayer. It means that the non-taxpaying partner can transfer up to £1,060 of their unused annual income tax allowance to their spouse or civil partner, reducing their tax bill by up to £212. (For couples where one or both were born before 6 April 1935, the Married Couple's allowance applies instead).

9. A Capital idea. Husbands, wives and civil partners all have their own Capital Gains Tax allowance. If you transfer an asset into both your names, you can both make use of your tax-free allowance to reduce the amount of tax you pay on any gain.

10. Buy to let. While you must pay tax on the rent you receive, you can reduce the amount by claiming for allowable expenses.

11. Swap salary for childcare vouchers. If you're a parent with a child aged 15 or below, you can reduce your taxable income by exchanging up to £243 of your salary every month for the same amount in tax-free childcare vouchers (£124 for higher rate taxpayers joining the scheme now). This can reduce your tax and National Insurance bill by up to £930 for a basic rate tax payer.

12. Self employed allowances. Make sure you claim for all your allowable expenses to reduce your tax bill if you work for yourself. These vary according to factors such as whether or not you work from home.

This blog is intended to provide information, not financial advice, to help you make an informed decision about savings and investments. We do not offer financial advice.  Everyone's circumstances are different and  you should contact a financial adviser if you want personal financial advice.  You may have to pay a fee for this advice.

Tax rules may change in the future and depend on individual circumstances.


  1. Unbiased.co.uk UK Tax Payers set to overpay £4.9 billion in tax
  2. Gov.uk 0% 'starting rate' tax for savings interest