What is the easiest way to pay less tax in the UK?

For most employees it's paying more into a pension, ideally through salary sacrifice at work. It saves income tax at your top rate and, through salary sacrifice, National Insurance too. If you earn between £100,000 and £125,140 it saves around 60%.

Is London taxed differently from the rest of the UK?

No. Income tax is the same across England, Wales and Northern Ireland. Scotland has its own rates. London is expensive, but the tax rules are the same as in Manchester or Cardiff.

Can I claim tax relief for working from home?

Only if your employer requires you to work from home, not if you choose to. If it's required, you can claim £6 a week without receipts.

I moved to London from Australia or New Zealand. Is anything different for me?

Possibly a lot. For your first four UK tax years you may be able to leave out of UK tax the pay for days you worked outside the UK, and foreign income and gains. Both need a Self Assessment claim, and both mean giving up your personal allowance for that year, so they're only worth it if the numbers work.

How far back can I claim overpaid tax?

Usually four years from the end of the tax year you overpaid in.

How to pay less tax in London (legally)

Figures for England, Wales and Northern Ireland, checked against gov.uk on 27 October 2026. General information, not personal advice.

London salaries look generous until the tax comes out. The UK has no special London rate: everyone in England pays the same income tax. But a lot of people pay more than they need to, usually because of a wrong tax code, money left on the table in their pension, or a relief nobody told them about.

Here are the nine things worth checking, roughly in the order most likely to save you money.

1. Check your tax code

Your tax code tells your employer how much tax-free pay you get. The usual one is 1257L, worth £12,570 a year. If you started a job mid-year, changed jobs, or arrived in the UK recently, you may be on an emergency code such as 1257L W1, M1, BR or 0T, which often takes too much tax.

Check it in the HMRC app or your personal tax account on gov.uk. If it's wrong, you can update your details there and the overpayment usually comes back through your pay or as a refund after the tax year ends.

2. Pay more into your pension

Pension contributions are the biggest legal tax saving for most employees. Money you put in gets tax relief at your top rate: £100 in your pension costs a higher-rate taxpayer £60, and less again in the £100k trap.

Salary sacrifice (if your employer offers it) also saves National Insurance: 8% on pay up to £50,270 and 2% above. From April 2029 the National Insurance saving is limited to the first £2,000 a year sacrificed; the income tax saving isn't affected.
Personal contributions get 20% added by your provider. If you pay higher or additional rate tax, claim the rest through Self Assessment, or by asking HMRC to adjust your tax code. Many people never claim it.
You can put in up to £60,000 a year (or your earnings, if lower) and use unused allowance from the previous three tax years, provided you were in a UK pension scheme in those years.

3. Watch the £100k trap

Between £100,000 and £125,140 you lose £1 of your personal allowance for every £2 you earn, which works out at an effective 60% tax rate. You can get back below £100,000 with pension contributions or Gift Aid. Our guide to the £100k trap has a worked example.

4. Use your ISA allowance

You can put £20,000 a year into ISAs, and the interest, dividends and gains are tax-free forever. Outside an ISA you get only £500 of dividends and £3,000 of gains tax-free, and higher-rate taxpayers only £500 of interest. Since April 2026 dividend tax has been 10.75% for basic-rate and 35.75% for higher-rate taxpayers, and from April 2027 tax on savings interest rises by 2 percentage points, so sheltering money matters more. From April 2027, if you're 65 or under, only £12,000 of the £20,000 can go into a cash ISA.

If you're under 40 and saving for a first home costing £450,000 or less, a Lifetime ISA adds a 25% bonus on up to £4,000 a year.

5. Claim the rest of your Gift Aid

When you tick Gift Aid, the charity claims basic-rate tax back. If you pay higher or additional rate tax you can claim the difference for yourself through Self Assessment: on a £100 donation, that's £25 back for a higher-rate taxpayer. Gift Aid donations also count towards getting you out of the £100k trap.

6. Claim work costs your employer doesn't pay

You can claim tax relief on professional fees and subscriptions on HMRC's approved list (many accounting, legal, engineering and medical bodies), and on work costs you paid yourself and weren't reimbursed. Working from home only counts if your employer requires it. You can claim for the current year and the previous four.

7. Child Benefit and childcare

If you or your partner have adjusted net income over £60,000, part of your Child Benefit is clawed back, and all of it at £80,000. Over £100,000 you also lose Tax-Free Childcare and, in England, funded childcare hours. Pension contributions reduce adjusted net income, so they can protect all three.

8. Marriage Allowance

If you're married or in a civil partnership and one of you earns under £12,570 while the other is a basic-rate taxpayer, the lower earner can transfer £1,260 of their allowance, saving up to £252 a year. You can backdate it four years. It doesn't apply if either of you pays higher-rate tax.

9. Just moved here? The days you worked abroad

This is the one most Australians and New Zealanders in London miss. If you moved to the UK in the last four tax years and hadn't been UK resident for the ten years before, you may be able to leave out of UK tax the pay for days you worked outside the UK: client trips, conferences, working from Sydney or Auckland over Christmas. It's called Overseas Workday Relief.

It's capped at 30% of your employment income (or £300,000), it has to be claimed on a Self Assessment return, and claiming it means giving up your £12,570 personal allowance for that year. So it's worth it only when your days abroad outweigh the allowance you lose. If you earn over £125,140, your allowance is already gone, so the relief costs you nothing extra.

Worked any days outside the UK since you moved here?

If you moved to the UK in the last few years and travel for work, or work from home while visiting family, part of your pay may not be taxable in the UK. The free check tells you in two minutes whether it's worth claiming.

Do the free check

None of this is personal advice: the right mix depends on your income, your plans and where you're from. If your situation is more involved, for example income from property or investments back home, it's worth talking to an adviser.