Even if you’re meticulous about your financial plan, there are likely areas where it could be improved to better support your long-term goals and reduce your tax liability.

While some improvements may be complex, many people don’t realise there are simple steps they could take to save a significant amount each year.

Read on to discover five of the simplest ways to save tax and learn how you can start implementing them today.

1. Use your ISA allowances

Many people with investments and savings don’t make full use of their ISA allowance each year, meaning the returns they earn may not be as tax efficient as they could be.

In the 2025/26 tax year, you can save or invest up to £20,000 across your ISAs, and any withdrawals are completely tax-free. Over time, this can make a significant difference to your financial security.

For example, if you had a Stocks and Shares ISA and your investments grew by £100,000, you would keep the entire amount tax-free.

By contrast, if you were a higher-rate taxpayer with the same amount in a standard investment account, you would pay 24% Capital Gains Tax (CGT) on gains above the £3,000 annual allowance. On a £100,000 gain, that would result in a £23,280 tax bill, leaving you with only £76,720.

Making full use of your ISA allowance each year and balancing your wealth across Cash ISAs and Stocks and Shares ISAs could significantly improve your long-term tax efficiency.

A financial planner can help you maximise your allowances and create a balanced savings and investment strategy tailored to your situation.

2. Contribute to your pension

Pensions also grow tax-free and have the additional benefit of receiving tax relief at your marginal rate on contributions up to the Annual Allowance. In 2025/26, the Annual Allowance is £60,000 or 100% of your earnings, whichever is the lower of the two figures. As such, pension contributions are one of the best ways to ensure your money remains tax efficient.

Pension contributions can also help you avoid crossing thresholds that would take you into a higher tax band or see you lose certain benefits.

For example, if you earn £120,000, £20,000 of your income is liable for an effective Income Tax rate of 60%, as you also gradually lose your Personal Allowance on incomes over £100,000. This means you’ll only keep £8,000 of that portion of your income.

However, if you contribute that £20,000 to your pension, you’ll keep all of it and restore your full Personal Allowance. This could also have the benefit of restoring free childcare hours (as £100,000 is the earnings threshold), which could result in significant additional savings.

Moreover, for business owners, pension contributions can offer further tax advantages.

HMRC treats company contributions to your pension scheme as an “allowable expense”, which is not the case for salary payments. This means your limited company can offset pension contributions against its Corporation Tax bill. Additionally, no National Insurance (NI) is due on company pension contributions, helping reduce the business’s overall tax liability and boost efficiency.

If you compare pension contributions to taking the same money as salary, your business could save up to 40% in tax and NI.

Even when compared with taking funds as dividends, the benefits could be significant. For example, a £60,000 company pension contribution reduces Corporation Tax (25%) and avoids higher-rate Dividend Tax (33.75%), giving a total potential tax saving of over £35,000.

Maximising pension contributions can therefore be one of the most tax-efficient ways to save for the future.

3. Make use of your spousal allowances

If you’re married or in a civil partnership, several additional allowances can help reduce your tax liability and preserve your wealth.

For instance, the Marriage Allowance allows one spouse to transfer an unused portion of their Personal Allowance to the other. This can be particularly useful if either you or your partner is currently not working, perhaps to look after children.

Spouses and civil partners can also consider transferring investments or gains between one another before encashment. This means you can make use of both of your allowances, such as CGT exemptions, ensuring that more of your collective investment growth is tax efficient.

Finally, the Inheritance Tax (IHT) spousal exemption allows you to pass on assets to a spouse or civil partner tax-free, which can protect your wealth and support your beneficiaries.

By making use of these allowances, you and your partner can significantly improve your tax efficiency, both during your lifetimes and for future generations.

4. Explore estate planning strategies

In addition to the IHT spousal exemption, there are several other estate planning strategies that can help reduce the tax liability on the legacy you leave behind.

For example:

  • Gifting – You can give gifts to reduce the value of your estate, potentially lowering future IHT.
  • Trusts – Placing assets in trust takes them outside of your estate, which can help mitigate IHT.
  • Business Relief schemes – If you own a business or shares in a qualifying company, Business Relief can reduce the value of these assets for IHT purposes, sometimes by up to 100%.

By combining these strategies, you may be able to preserve more of your wealth for future generations. A financial planner can work with you to create an estate plan that boosts the efficiency of your legacy.

5. Speak to a financial planner

A financial planner can help you create a strategy that keeps your income and wealth tax-efficient both now and in the future.

They can help you maximise allowances, ensure your income meets your lifestyle needs, and design a plan to grow and protect your assets over the long term.

This may include structuring your investments, ISAs, pensions, and estate to minimise tax, manage risk, and provide for your family.

To speak to a financial planner, get in touch.

Email info@perennialwealth.co.uk or call 0117 959 6499.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate estate planning or tax planning.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

This article does not constitute tax, legal, or financial advice and should not be relied upon as such. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. For guidance, seek professional advice.