UK tax relief is often overlooked, causing millions of UK taxpayers each year to pay more than necessary by missing out on legitimate reliefs they could legally claim.. From self-employed workers missing out on business-related deductions to PAYE employees unaware of allowances like Marriage Allowance or tax-free pension contributions, these unclaimed benefits can quietly add up to hundreds or even thousands of pounds in lost savings.
Tax reliefs are designed to support individuals and businesses in areas such as pensions, charitable giving, investments, work expenses, and more. When used correctly, tax reliefs can significantly lower your overall tax liability, leaving more money in your pocket.
In this article, we’ll walk you through some of the most valuable but commonly missed tax reliefs available in 2025, whether you’re an employee, a landlord, a self-employed professional, or a small business owner. Knowing what to claim and how to claim it can make all the difference when it comes to maximising your tax efficiency and staying HMRC-compliant.
What Are Tax Reliefs?
Tax reliefs are legal ways to reduce the amount of tax you have to pay. They work by either lowering your taxable income or allowing you to reclaim some of the tax you’ve already paid. In simple terms, tax reliefs help you pay less tax by recognising certain expenses or financial decisions that the government wants to support, such as saving for retirement, running a business, or donating to charity.
A wide range of people can claim tax reliefs. These include individuals earning through PAYE, self-employed workers, landlords, company directors, and businesses of all sizes. The type of relief you can claim often depends on your income source, job type, expenses, and financial activities.
It’s important to understand the difference between tax reliefs, allowances, and deductions. Tax allowances, such as the Personal Allowance, let you earn a certain amount of income tax-free before tax applies. Deductions reduce your total taxable income, usually based on specific expenses. Tax reliefs, on the other hand, often allow you to either reduce your tax bill directly or reclaim part of the tax paid on certain activities.
Together, these mechanisms help you manage your tax more efficiently and ensure you don’t pay more than necessary.
Personal UK Tax Relief You Might Be Missing
There are several tax reliefs available to individuals in the UK that often go unclaimed, either due to lack of awareness or misunderstanding of eligibility. Here are some of the most overlooked personal tax reliefs for the 2025 tax year:
Marriage Allowance
Marriage Allowance lets a lower-earning spouse or civil partner transfer up to 10% of their unused Personal Allowance to their partner. In 2025, the Personal Allowance remains at £12,570, so up to £1,260 can be transferred. This could reduce the couple’s overall tax bill by up to £252 per year. To qualify, one partner must be a non-taxpayer (earning less than the Personal Allowance), and the other must be a basic rate taxpayer (earning between £12,571 and £50,270).
Blind Person’s Allowance
This is an additional tax-free allowance given to individuals registered as blind or severely sight-impaired. For 2025, the Blind Person’s Allowance is £2,870, which is added to the standard Personal Allowance. If the individual doesn’t earn enough to use the full allowance, it can be transferred to a spouse or civil partner.
Gift Aid on Charitable Donations
If you donate to UK-registered charities and you’re a taxpayer, Gift Aid allows the charity to claim an extra 25p for every £1 donated. Higher-rate and additional-rate taxpayers can also claim additional tax relief on those donations via their Self Assessment return. For example, if you’re a 40% taxpayer and you donate £100, you can claim back £25 through your tax return.
Pension Contributions Relief
Contributing to a registered pension scheme qualifies for tax relief. Basic rate tax relief is added automatically by pension providers for most contributions. Higher and additional-rate taxpayers can claim further relief through Self Assessment. For example, a £100 pension contribution effectively only costs £80 for basic rate taxpayers, and even less for those in higher tax bands. The annual pension contribution limit remains £60,000 for most people in 2025, although this may be tapered for high earners.
Maintenance Payments Relief (less common, but still applies to some)
If you or your ex-spouse were born before 6 April 1935, you may qualify for Maintenance Payments Relief for spousal support, but only under specific conditions. While this applies to a small group, it’s often missed by those eligible.
By knowing and applying these reliefs, many individuals can significantly lower their tax liability for the year, particularly those on lower or moderate incomes, or those with charitable or retirement savings activity.
Business and Self-Employed UK Tax Relief
If you’re self-employed, run a small business, or operate as a sole trader or limited company, there are several valuable tax reliefs that can help reduce your overall tax bill. These reliefs are designed to encourage investment, innovation, and economic activity, but many go unclaimed due to a lack of awareness or guidance.
Working from Home Relief
If you work from home, even part-time, you may be eligible to claim tax relief for additional household costs such as electricity, heating, broadband, and a portion of rent or mortgage interest. HMRC offers a simplified flat rate of £6 per week (£312 per year), or you can claim a proportion of actual costs if you have detailed records. This relief applies whether you’re self-employed or an employee required to work from home.
Annual Investment Allowance (AIA)
The AIA allows businesses to deduct the full value of qualifying plant and machinery from their profits before tax. In 2025, the limit remains at £1 million per year. Qualifying items include equipment, tools, commercial vehicles (not cars), and other tangible business assets. This is a powerful tool for reducing taxable profits quickly after major purchases.
Research and Development (R&D) Tax Relief
If your company is engaged in developing new products, processes, or services—or improving existing ones—you may qualify for R&D tax relief. For small and medium-sized enterprises (SMEs), eligible businesses can either deduct an extra 86% of qualifying costs from profits or, if loss-making, claim a cash credit. The new combined R&D scheme introduced in 2024 is expected to continue through 2025, simplifying the process but requiring stricter compliance. Common qualifying costs include staff wages, software, and utilities directly related to R&D.
Capital Allowances
Capital allowances let businesses deduct the cost of certain capital assets, such as business vehicles, machinery, or office equipment, from their taxable profits over time. The two main types are the Annual Investment Allowance (described above) and Writing Down Allowances (WDAs), which apply to longer-term depreciation of assets not fully covered by AIA.
Business Mileage Allowance
If you’re self-employed and use your personal vehicle for business, you can claim simplified mileage expenses instead of tracking individual costs like fuel, insurance, and repairs. In 2025, the approved mileage rates remain at 45p per mile for the first 10,000 miles and 25p per mile thereafter. These rates apply to cars and vans.
Trading Loss Relief
If your business makes a loss, you may be able to offset that loss against other income from the same year, previous years, or future profits. This can lead to a tax refund or reduce future tax bills. The rules vary slightly depending on whether you’re self-employed, in a partnership, or running a limited company.
Business Rates Relief (Small Business Rate Relief)
If your business property has a rateable value below £15,000 and you use only one property, you may qualify for Small Business Rate Relief. In some cases, you may pay no business rates at all. This relief is administered by local councils and often underutilised by new or microbusinesses.
By actively reviewing your expenses, purchases, and development activities, you can take advantage of these reliefs to reduce your tax liability and reinvest more into growing your business.
Landlords and Property Owners
Landlords often overlook specific tax reliefs available to them, especially as property taxation rules have changed significantly over recent years. While some previously generous allowances have been restricted, there are still legitimate ways to reduce your tax bill as a rental property owner in 2025.
Replacement of Domestic Items Relief
This relief allows landlords of residential properties to deduct the cost of replacing household items such as furniture, appliances, and kitchenware. The key condition is that the new item must replace something provided for the tenant’s use, and it must be like-for-like or similar in value. For example, if you replace a worn-out sofa with a similar model, the cost of the new sofa (minus any sale proceeds or disposal income from the old one) is deductible. Initial purchases for new rental properties are not eligible, they are only replacements.
Mortgage Interest Tax Relief (Post-Section 24 Changes)
Since the full implementation of Section 24 in April 2020, landlords can no longer deduct mortgage interest from rental income. Instead, they receive a basic rate tax credit equal to 20% of the interest paid. This remains unchanged in 2025. While it’s not as generous as the old system, it’s still a relief that helps offset some finance costs, especially for landlords in higher tax brackets. This applies to individual landlords, not limited companies.
Allowable Expenses
Landlords can deduct a wide range of expenses from rental income before calculating their tax liability. Common allowable costs include:
- Letting agent fees
- Property repairs and maintenance (not improvements)
- Council tax and utility bills (if paid by the landlord)
- Landlord insurance
- Legal and accounting fees
- Ground rent and service charges
It’s important to note that capital improvements, such as adding an extension or upgrading a kitchen beyond its original standard, are not deductible as revenue expenses, though they may qualify for capital gains tax relief when the property is sold.
Capital Gains Tax Reliefs for Property Sales
When you sell a rental property that has increased in value, you may be liable for Capital Gains Tax (CGT). However, you can still claim reliefs to reduce the bill:
- The annual CGT exemption remains £3,000 in 2025 (subject to updates by HMRC).
- If the property was ever your main home, you may be eligible for Partial Private Residence Relief and Letting Relief.
- Costs associated with buying, selling, and improving the property (like legal fees, estate agent fees, and renovations) can also be deducted from the gain.
Wear and Tear Allowance (no longer available)
Note that the old 10% Wear and Tear Allowance was abolished in 2016. Some landlords still mistakenly claim it, but it is no longer permitted. Only actual replacement costs are allowed under the Replacement of Domestic Items Relief.
Landlords should keep detailed records of all property-related expenses and consult a tax advisor if unsure about specific claims. With proper planning, many of these reliefs can help maintain profitability in an increasingly regulated rental market.
Investment and Savings-Related Reliefs
The UK tax system offers several reliefs to encourage long-term saving and investment. These reliefs are especially useful for individuals looking to grow wealth tax-efficiently, support innovation, or prepare for retirement. However, many of these benefits are underutilised due to lack of awareness or confusion around eligibility.
Individual Savings Accounts (ISAs)
ISAs remain one of the most accessible and tax-efficient ways to save and invest. For the 2025/26 tax year, the annual ISA allowance remains at £20,000 per person. Money held in an ISA, whether it’s a Cash ISA, Stocks and Shares ISA, Lifetime ISA, or Innovative Finance ISA, grows tax-free. You pay no income tax on interest or dividends and no capital gains tax on profits.
For younger savers, the Lifetime ISA (for those aged 18–39) allows you to save up to £4,000 per year toward a first home or retirement, with a 25% government bonus added to your contributions.
Enterprise Investment Scheme (EIS)
The EIS encourages investment in early-stage UK companies. If you invest in a qualifying EIS company, you can claim up to 30% income tax relief on investments up to £1 million per tax year (or £2 million if at least £1 million is invested in knowledge-intensive companies). Other tax advantages include:
- No capital gains tax on profits if shares are held for at least three years.
- Loss relief if the investment fails.
- Deferral of capital gains tax when reinvesting proceeds in EIS shares.
EIS investments are higher risk but come with strong incentives for high earners or experienced investors.
Seed Enterprise Investment Scheme (SEIS)
SEIS is similar to EIS but targets even earlier-stage startups. In 2025, you can invest up to £250,000 per year under SEIS and claim 50% income tax relief. Capital gains on SEIS shares are tax-free after three years. It’s a powerful tool for angel investors and those supporting innovation in tech, biotech, and green sectors.
Venture Capital Trusts (VCTs)
VCTs are publicly listed funds that invest in small UK companies. When you invest in a VCT, you can claim 30% income tax relief on investments up to £200,000 per year, provided shares are held for five years. Dividends and capital gains from VCTs are also tax-free. These are suitable for higher-rate taxpayers seeking regular tax-efficient income.
Capital Gains Tax (CGT) Annual Exemption
Every individual in the UK is entitled to a tax-free allowance on capital gains. In 2025, the CGT annual exemption remains at £3,000 per person. This means you can make up to £3,000 in gains from selling assets like shares, property (that’s not your main home), or crypto without paying CGT. Married couples and civil partners can effectively double this by using both allowances.
Savings Interest and the Personal Savings Allowance
Depending on your income level, you may not have to pay tax on savings interest:
- Basic rate taxpayers can earn up to £1,000 of interest tax-free.
- Higher rate taxpayers get a £500 allowance.
- Additional rate taxpayers receive no allowance.
Banks and building societies no longer deduct tax at source, so it’s your responsibility to declare any interest that exceeds your allowance.
Dividend Allowance
In 2025, the tax-free dividend allowance is £500 (down from £1,000 in 2023 and £2,000 in earlier years). This means the first £500 of dividends you receive from shares is tax-free, after which dividend tax applies:
- 8.75% for basic rate
- 33.75% for higher rate
- 39.35% for additional rate taxpayers
Investors receiving dividends outside an ISA or pension should plan around this to avoid unnecessary tax.
These reliefs provide excellent opportunities to grow your wealth while staying within the tax rules. Whether you’re investing in the markets or supporting UK innovation, understanding and using these reliefs can help you achieve better returns after tax.
How to Ensure You Don’t Miss Out
Even the most generous tax reliefs are useless if they’re not claimed. Many taxpayers miss out simply because they don’t know they’re eligible, they don’t keep proper records, or they assume HMRC will automatically apply reliefs—which is often not the case. Here are key steps to make sure you’re claiming everything you’re entitled to in 2025:
1. Keep Accurate and Organised Records
Always maintain detailed documentation of income, expenses, donations, pension contributions, investment activity, and business-related purchases. HMRC may ask for evidence if you’re audited or if your claim appears inconsistent. Digital tools and accounting software like QuickBooks, Xero, or FreeAgent can simplify this process for both individuals and businesses.
2. Use a Self Assessment Tax Return if Necessary
If you’re self-employed, earn income from property, or have additional income not taxed through PAYE, you’ll need to file a Self Assessment tax return. This is often the only way to claim reliefs such as higher-rate pension contribution relief, business expenses, trading losses, or Gift Aid top-ups.
3. Take Advantage of HMRC Tools and Guidance
HMRC offers online eligibility checkers, calculators, and downloadable forms to help you determine which reliefs apply. While not always user-friendly, these tools are worth reviewing, especially the Self Assessment help pages and tax relief explainer guides.
4. Don’t Rely on Automatic Reliefs Alone
Some reliefs, like basic-rate pension relief, are applied automatically. However, many others, especially higher-rate reliefs, marriage allowance transfers, R&D claims, or SEIS/EIS relief, require active claims. Failing to do so means losing out on legitimate savings.
5. Consider Using a Professional Accountant or Tax Advisor
A qualified accountant or tax advisor can help ensure you’re not only claiming the correct reliefs but also structuring your finances to take full advantage of them. This is particularly important for business owners, landlords, higher earners, or those with complex tax affairs. The cost of advice can often be outweighed by the tax savings you achieve.
6. File Early to Avoid Mistakes and Penalties
Filing your tax return early gives you more time to review potential reliefs, gather documentation, and get professional advice if needed. It also reduces the risk of last-minute errors or missed deadlines that could lead to penalties.
7. Stay Informed on Tax Law Changes
Tax rules change frequently. For example, recent reductions in capital gains and dividend allowances have affected how investors plan their taxes. Staying up to date, through HMRC updates, news articles, or financial blogs, can help you adjust in time and avoid surprises.
By proactively managing your finances and keeping on top of what’s available, you can make smarter tax decisions and avoid overpaying, whether you’re filing as an individual or managing a business.
Conclusion
UK taxpayers miss out on millions of pounds in unclaimed reliefs each year, not because they’re not eligible, but because they don’t know what to look for or how to claim it. From Marriage Allowance and pension contribution relief to business-related deductions and investment incentives, the system offers a wide range of legitimate ways to reduce your tax bill in 2025.
Whether you’re a salaried employee, self-employed, a landlord, or an investor, knowing which tax reliefs apply to you, and using them properly, can make a noticeable difference to your finances. In some cases, it could mean hundreds or even thousands of pounds saved each year.
If you haven’t reviewed your eligibility recently, now is the time. Use the guidance in this article to spot opportunities, get organised, and make sure you’re not leaving money on the table. If needed, speak to a tax professional who can help tailor your claims based on your situation.
Every pound you save in tax is a pound you can reinvest in your life, your business, or your future.
FAQ’S
1. What is the Personal Allowance for 2025/26, and is it changing soon?
For 2025/26, the Personal Allowance remains at £12,570. This threshold has been frozen until at least April 2028, meaning more taxpayers may move into higher tax bands due to “fiscal drag”
2. What are the UK tax year dates and key deadlines I need to know?
The UK tax year runs from 6 April to 5 April. For 2024/25, the deadline to file your Self Assessment return online is 31 January 2026. Before 5 April 2025, you must submit claims or contribute to qualifying schemes to use the 2024/25 allowances.
3. What is the Annual Investment Allowance (AIA) limit in 2025?
In 2025, businesses can claim 100% tax relief on qualifying plant and machinery under AIA up to a limit of £1 million per year.
4. What is the capital gains tax (CGT) exemption for 2025/26?
Each individual has a £3,000 annual CGT exemption for 2025/26. Married couples or civil partners can each claim this allowance.
5. How do I claim Foreign Tax Credit Relief if I paid tax abroad?
You can claim relief on overseas income or gains through Form SA106, limited to either the foreign tax paid or the UK tax due, whichever is lower.
6. What is the pension annual allowance and can I carry forward unused allowances?
The standard annual pension contribution limit remains £60,000 for 2025/26. Unused allowances from the previous three years can be carried forward. High earners may face tapering.
7. What is the current tax-free dividend allowance?
In 2025/26, the dividend allowance is £500. Dividends above this threshold are taxed at 8.75% (basic rate), 33.75% (higher rate), and 39.35% (additional rate)
8. Can I still claim Marriage Allowance in 2025, and how much is it worth?
Yes. If one spouse earns less than the £12,570 Personal Allowance and the other is a basic rate taxpayer, you can transfer up to £1,260 of allowance, saving up to £252 in tax per year.
9. What tax reliefs can I claim if I work from home?
You can claim £6 per week using HMRC’s flat-rate method, or a portion of actual home-running costs (like utilities and internet) if self-employed. Employees can no longer claim this unless they are required to work from home by their employer.
10. What are the tax benefits of Gift Aid donations in 2025?
Basic rate taxpayers allow the charity to reclaim 25p per £1 donated. Higher and additional-rate taxpayers can claim extra relief through Self Assessment, effectively reducing the real cost of giving.
11. How do I claim tax relief on pension contributions as a higher-rate taxpayer?
Your pension provider will automatically apply 20% basic-rate relief. If you’re a higher-rate or additional-rate taxpayer, you must claim the remaining 20% or 25% through your Self Assessment return.
12. Are there tax reliefs for investing in startups?
Yes. You may be eligible for Enterprise Investment Scheme (EIS) or Seed EIS, which offer up to 30% or 50% income tax relief respectively, plus exemptions on capital gains after three years.
13. What expenses can landlords still claim in 2025?
Landlords can deduct costs such as repairs, letting agent fees, insurance, council tax (if paid by the landlord), and replacements of domestic items. Mortgage interest relief is given as a 20% tax credit, not as a deduction.
14. Can I backdate any tax reliefs if I forgot to claim them last year?
Yes. You can claim certain tax reliefs (like Marriage Allowance, overpaid tax, and pension contribution relief) for up to four previous tax years. This must be done through amended returns or by contacting HMRC.
15. What happens if I miss the Self Assessment deadline?
If you miss the 31 January online filing deadline, you will receive a £100 late filing penalty. Additional fines apply if it’s more than 3 months late. Interest also accrues on unpaid tax from the due date.