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Legitimate Ways to Avoid Paying UK Tax

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Most people pay tax in one form or another but it can be annoying. It can seem that you pay too much tax and therefore there are some ways below that you may be able to avoid paying tax. These are currently right in the UK, but may be able to be applied in some other countries as well.

Pay into a pension
If you pay into a pension scheme then you do not pay tax on that money you pay in. Many people see the benefits by using an employer’s pension scheme and they will also gain form the employer paying in as well. Personal pension schemes also offer the same tax saving benefits. It is worth noting that you will have to pay tax on earnings above the tax limit even if they are from pensions and there has been talk in the UK to change the way that tax relief on pensions works, so it is worth keeping up to date with that.
Use a tax free account
There are some savings accounts that are free from tax. There is usually a limit in how much money you can put in them, usually a certain amount a year. These seem good, but it is worth comparing their interest rate with the net interest rate (interest after tax) of other savings accounts as you may find that here are some better deals around.
Use partners and children’s tax free allowance
Everyone can earn a certain amount of money before they get taxed. Therefore it is wise to look at other people in the household to see if they have a tax allowance that they are not using. If you are being taxed on interest from savings or investments, for example, then it may be beneficial to change them into another name, of a person that is not earning above the tax limit and therefore you will not have to pay tax. This is quite simple to do for a partner, but there are often limits on children’s accounts as to how much can be put in.
Buy Premium Bonds
Premium bonds are sold by the government in £100 blocks. You can currently buy up to £50,000 per person. There is no guaranteed return but each month there is a draw where winning bonds are picked. There are many prizes, from £25 to £1,000,000 and the odds of winning a prize change depending on changes to the interest rates and stock market. All prizes are tax free because it falls under the lottery / gambling law where prizes for those are also tax free. Obviously there is no guarantee that you will win but it could be something that you would like to try out.



Rachel Henderson is a professional freelance writer from the UK. She writes on many subjects but specialises in personal finance. As well as contributing to various blogs and websites she has her own website tracking her own money making process and sells her books through

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