After the barrage of tax hikes on workers, landlords, savers and homeowners this year, it is now even harder to hold on to your hard–earned cash without losing chunks to the taxman.
Last month’s Budget announced yet more tax grabs – and frozen thresholds mean the amount you hand over in tax is likely to rise further in 2026.
But there are still plenty of ways to protect your money – if you are clever about how you take advantage of the available allowances.
Calculations for The Mail on Sunday reveal that a family of four, with one higher–rate taxpayer, one non–earning spouse and two children, could protect more than £500,000 by using every tool in their tax armoury.
Here’s how to do it.
Could you Put £220,000 into your pension pot?
Tax relief was left unscathed in Rachel Reeves’ Budget, and will become even more important for keeping pensions in good health once the salary sacrifice cap of £2,000 is introduced
The Budget introduced a cap on the amount of money workers can put into their pensions to benefit from salary sacrifice.
But tax relief was left unscathed, and will become even more important for keeping pensions in good health once the salary sacrifice cap of £2,000 is introduced.
Workers can save 100 per cent of their earnings, up to a maximum of £60,000 a year, into a pension while still enjoying tax relief – but if you have not been maxing out your allowance, it is possible to stash away even more.
The relief means that for basic–rate taxpayers, for every £80 you put into your pension it is topped up to £100 by the taxman, and for higher and additional rate taxpayers it’s £60 and £55 respectively for the taxman to top up to £100.
Chris Etherington, private client tax partner at consultants RSM UK, says: ‘Pension contributions remain the most valuable item in a family’s tool kit to lower and defer an income tax liability.’
Carry forward rules allow savers to use up unused pension allowance from the past three tax years. That means someone who has been a member of a pension scheme during those years, but not saved anything, could put up to £220,000 into their pot this year.
This would involve saving the maximum of £60,000 for the 2025–26, 2024–25 and 2023–24 tax years and the £40,000 limit that was allowed in 2022–23.
Rob Morgan, of Charles Stanley, says the rules that allow you to take advantage of unused allowances from earlier years are particularly useful for those with ‘lumpy earnings’ – for example self–employed workers. He adds: ‘Take great care to understand the rules or take professional advice as it is easy to get it wrong.’
Non–earning spouse and children can save £10,800 a year
Savers can contribute up to £2,880 a year to their pension and will get 20 per cent tax relief
Non–earners get a smaller pension allowance, but it is still worth using.
This is a good way of ensuring that one partner’s savings pot does not get completely left behind if they are taking time out of work.
Savers can contribute up to £2,880 a year to their pension and will get 20 per cent tax relief on this – even if they are not in work.
This tops up the maximum contribution to £3,600 a year.
Children can also benefit from this tax perk, so you can put up to £2,880 a year into a pension for a child and earn tax relief.
Non–earners cannot take advantage of the carry forward rules, though.
Isas are worth £40,000 a year for a couple
After months of speculation, the Chancellor confirmed the amount that can be put into a cash Isa each year will be reduced to £12,000 in April 2027 for those under the age of 65
The cash Isa allowance might have got the chop, but the overall amount you can save each year remains unchanged.
After months of speculation, Chancellor Rachel Reeves confirmed the amount that can be put into a cash Isa each year will be reduced to £12,000 in April 2027 for those under the age of 65, while the total allowance has stayed at £20,000.
That means couples can still save £40,000 a year between them, with all the gains sheltered from the taxman, as long as they are willing to make use of a stocks and shares Isa to invest at least some of their allowance.
Morgan says: ‘Isas are the first port of call to save and invest flexibly and tax–efficiently.
‘Unlike pensions, they can be accessed at any time and there is no tax to pay on income or gains.’
… And Junior Isas for two make £18,000
The number of parents and grandparents saving for kids has surged as families look to protect wealth from further tax raids.
Financial services company Hargreaves Lansdown said the number who took full advantage of their Junior Isa allowance last year was up 32 per cent.
You can save up to £9,000 a year into a Junior Isa for children from birth to age 18 and, as with an adult…
Read More: Every trick possible to dodge Labour’s looming tax raid, by our financial