Beyond business and property expenses, the UK tax system offers several valuable reliefs and allowances related to personal and family circumstances. For those completing a Self Assessment return, actively claiming these can lead to significant tax reductions. Key opportunities include the Marriage Allowance, the tax-efficient employment of a spouse, and maximising the benefits of charitable donations through Gift Aid.
The Marriage Allowance: A Simple Tax Cut for Couples
The Marriage Allowance is a tax relief designed to benefit couples where one partner has an income below the tax-free Personal Allowance. It allows the lower-earning individual to transfer a fixed portion of their unused Personal Allowance to their spouse or civil partner.
For the current tax year, the amount that can be transferred is £1,260. This transfer reduces the higher-earning partner’s tax bill by up to £252 (£1,260 \times 20\%). To be eligible, HMRC sets out clear criteria :
- The couple must be married or in a civil partnership.
- The lower earner’s income must be below their Personal Allowance (usually £12,570).
- The higher earner must be a basic-rate taxpayer, meaning their income is typically between £12,571 and £50,270.
A significant feature of this allowance is the ability to backdate a claim for up to four previous tax years, provided the eligibility criteria were met in those years. This can result in a one-off tax refund of over £1,000. This is particularly relevant for couples whose circumstances have recently changed, for instance, if one partner has stopped working to care for children or has started a new business with low initial earnings.
The application is made by the lower-earning partner, either through HMRC’s online service or via their Self Assessment tax return. Once a claim is made, the transfer happens automatically each year until HMRC is notified of a change in circumstances, such as divorce or the lower earner’s income increasing above the Personal Allowance.
Employing Your Spouse: A Tax-Efficient Business Strategy
For self-employed individuals, legitimately employing a spouse or civil partner can be a highly effective tax planning strategy. The salary paid to the spouse is treated as an allowable business expense, which directly reduces the taxable profits of the business owner.
The primary tax advantage comes from income splitting. It allows profits to be shifted from the business owner, who may be a higher-rate taxpayer, to their spouse, who may have unused Personal Allowance or be a basic-rate taxpayer. This utilises the spouse’s lower tax bands, reducing the overall tax burden on the household. For example, a sole trader with profits of £60,000 would pay tax at the 40% higher rate. By paying their spouse a legitimate salary of £12,570 for genuine administrative work, the sole trader’s profit falls to £47,430 (within the basic rate band), and the spouse receives their salary completely tax-free, as it is covered by their Personal Allowance.
HMRC scrutinises such arrangements closely to ensure they are not a sham for tax avoidance. Therefore, strict compliance is essential. The key conditions are :
- The spouse must be performing real work that is “wholly and exclusively” for the business.
- The salary paid must be at a commercial rate, meaning it should not be more than what would be paid to an unrelated person for the same work.
- The salary must be physically paid from the business bank account to the spouse’s personal account and properly processed through the PAYE system, with tax and National Insurance contributions deducted and reported as required.
To make the arrangement defensible in the event of an HMRC enquiry, robust documentation is vital. This should include a simple employment contract, a job description, evidence of the work performed (such as timesheets), and clear bank records showing the salary payments.
Gift Aid: Boosting Your Donations and Your Tax Return
Gift Aid is a scheme that allows charities to increase the value of donations from UK taxpayers. When a taxpayer makes a donation and completes a Gift Aid declaration, the charity can reclaim the basic rate tax (20%) that the donor has already paid on that money. This means for every £1 donated, the charity receives an extra 25p from HMRC, at no additional cost to the donor.
For higher-rate (40%) and additional-rate (45%) taxpayers, there is a significant personal tax benefit. They can claim back the difference between their marginal rate of tax and the 20% basic rate that the charity reclaims. This relief is claimed on the Self Assessment tax return. For example, on a £100 cash donation, the charity claims £25 from HMRC. A higher-rate taxpayer can then personally claim back a further £25 (£125 \times (40\% – 20\%)), reducing the net cost of their £100 donation to just £75.
To claim this on the tax return, the taxpayer must enter the gross amount of their donations in the relevant section—that is, the cash amount they paid plus the 25% claimed by the charity.
A particularly powerful, but often overlooked, benefit exists for individuals with an adjusted net income between £100,000 and £125,140. In this income bracket, the tax-free Personal Allowance is gradually reduced by £1 for every £2 of income over £100,000. A Gift Aid donation has the effect of increasing the income threshold at which this tapering begins. This means the donation not only receives higher-rate tax relief but can also restore the taxpayer’s lost Personal Allowance, leading to an effective rate of tax relief that can be as high as 60%. For individuals in this income bracket, charitable giving via Gift Aid is one of the most tax-efficient actions available.
FAQs
What is the maximum income to qualify for Child Benefit?
There is no maximum income that disqualifies you from claiming Child Benefit. However, there is an income threshold at which the benefit is effectively paid back through a tax charge known as the High Income Child Benefit Charge (HICBC). As of the 2025/2026 tax year, if either you or your partner has an individual ‘adjusted net income’ of over £60,000, the HICBC will apply. The charge claws back 1% of the Child Benefit for every £200 of income over £60,000.
What is the two child cap in the UK?
The “two-child limit” is a policy that affects parents claiming Universal Credit or Child Tax Credit. It means that families will generally not receive an additional amount (the ‘child element’) for any third or subsequent child born on or after 6 April 2017. There are some exceptions to this rule, such as for multiple births or in cases of adoption. This policy does not affect the amount of Child Benefit you can receive.
Does Child Benefit stop when child goes to university in the UK?
Yes, Child Benefit payments typically stop when a child goes to university. The benefit is for children under 16, or under 20 if they are in approved full-time, non-advanced education (such as A-Levels or a BTEC) or approved training. As a university degree is considered ‘advanced’ education, it does not qualify. Payments will usually stop on the 31st of August after the child’s 16th birthday unless you can prove they are staying in approved education or training.
Does every child in the UK get Child Benefit?
No, not every child in the UK receives Child Benefit. While the benefit is available to most families, eligibility is not automatic and depends on your circumstances. It must be claimed by a parent or guardian. Furthermore, as mentioned, families where one partner earns over the HICBC threshold may choose not to receive the payments to avoid the tax charge, even though they are technically eligible to claim it.
What is the maximum you can earn to receive child benefit?
You will effectively receive no net Child Benefit if your individual adjusted net income exceeds £80,000 in the 2025/2026 tax year. At this income level, the High Income Child Benefit Charge amounts to 100% of the Child Benefit you receive, meaning the full amount is paid back in tax. However, many families with incomes in this range still claim the benefit and pay the charge to protect their State Pension credits, particularly if one parent is not working.
How much money do you get from the government for having a baby in the UK?
The primary ongoing payment is Child Benefit. However, for those on low incomes and certain benefits, there is a one-off payment called the Sure Start Maternity Grant, which is a tax-free payment of £500 to help with the costs of a new baby. You may also be eligible for Statutory Maternity Pay from your employer or Maternity Allowance from the government if you are not eligible for the former.
How much is child benefit in the UK in 2025?
For the tax year 2025-2026, the weekly rates for Child Benefit are:
- Eldest or only child: £25.60 per week
- Additional children: £16.95 per week for each additional child
How to stop paying child support when child turns 18 in the UK?
Child maintenance payments, often called child support, typically stop when the child turns 16, or 20 if they remain in full-time, non-advanced education (up to A-level or equivalent). If your arrangement is through the Child Maintenance Service (CMS), they will automatically close the case around the child’s 20th birthday. If you have a private arrangement, you should communicate with the other parent to agree on a final payment date based on when the child finishes their course. If the child is 18 and has finished their A-levels (or equivalent), payments are no longer legally required.
How much is the child element of universal credit?
For the 2025-2026 benefit year, the child element of Universal Credit includes a standard monthly amount for each of your first two eligible children. The rates are:
- For a first child (born before 6 April 2017): £333.33 per month
- For any child born on or after 6 April 2017, or for second and subsequent children: £287.92 per month You may also receive extra amounts if your child is disabled.
Do I pay maintenance if my child is studying for an apprenticeship in the UK?
It depends on the specific apprenticeship. Child maintenance is generally payable if a child is in full-time, non-advanced education. Many apprenticeships do not meet this definition because they are considered a form of work for which the young person is paid. If the apprenticeship involves more than 24 hours a week of work-based training, it is unlikely to be considered approved education, and therefore child maintenance payments would typically cease. You should check the specific details with the Child Maintenance Service (CMS).