Tax-Free Allowances You Might Be Missing in 2025 – A UK Guide
Every year, thousands of UK taxpayers overlook valuable tax-free allowances that could significantly reduce their liabilities. In 2025, understanding and utilising these tax-free allowances you might be missing can mean more money in your pocket—whether you’re an employee, sole trader, landlord, or limited company director.
Here’s a rundown of commonly overlooked allowances and how to make the most of them.
1. Personal Allowance – Up to £12,570
Everyone is entitled to earn up to £12,570 tax-free in the 2024/25 tax year. If your income is below this threshold, you pay no income tax. If your income exceeds £100,000, your personal allowance is gradually reduced.
2. Marriage Allowance – Save Up to £252
If one spouse earns less than the personal allowance and the other is a basic-rate taxpayer, you may transfer £1,260 of unused personal allowance. This can save up to £252 in tax.
Tip: Claims can be backdated for up to four years.
3. Dividend Allowance – £500 (2025)
If you receive dividends from shares (e.g. as a company director), the first £500 of dividend income is tax-free in 2025 (down from £1,000 in previous years).
4. Savings Allowance – Up to £1,000
Basic-rate taxpayers can earn £1,000 of interest on savings tax-free. Higher-rate taxpayers get £500, and additional-rate taxpayers receive no savings allowance.
5. Trading Allowance – £1,000
If you earn a small income from freelance work, side hustles, or casual trading, the first £1,000 is tax-free under the trading allowance.
6. Property Allowance – £1,000
Earn rental income on property (e.g., Airbnb or renting out your driveway)? The first £1,000 is tax-free if you’re not claiming other property-related expenses.
7. Rent-a-Room Relief – Up to £7,500
Letting a furnished room in your home? You can earn up to £7,500 per year tax-free. This is separate from the property allowance and only applies to your main residence.
8. ISA Allowance – £20,000
You can invest up to £20,000 tax-free in an Individual Savings Account (ISA). Interest, dividends, and capital gains within an ISA are free from tax.
9. Capital Gains Tax (CGT) Annual Exempt Amount – £3,000 (2025)
When selling assets like shares or property (not your main home), the first £3,000 of gains are tax-free. Plan disposals across tax years to maximise this allowance.
10. Pension Contributions and Tax Relief
Pension contributions receive tax relief at your marginal rate, and contributions up to £60,000 (or 100% of income, whichever is lower) may qualify. Unused allowance from the past three years can be carried forward.
11. Gift Aid on Donations
When donating to UK charities, ticking the Gift Aid box boosts the value of your donation. Higher-rate taxpayers can also claim additional relief via Self Assessment.
12. Blind Person’s Allowance – £2,870
If you’re registered blind (or severely sight impaired), you’re entitled to an additional £2,870 tax-free allowance.
How Eclat Accountancy Can Help
At Eclat Accountancy, we help individuals and businesses:
- Identify and maximise all available tax-free allowances
- Plan strategically to reduce personal and business tax
- Stay compliant with HMRC reporting obligations
Final Thoughts
Missing out on tax-free allowances in 2025 can cost you hundreds or even thousands of pounds. With the right guidance, you can make sure every penny you’re entitled to stays in your hands—not HMRC’s.
Contact Eclat Accountancy today to ensure you’re claiming all the allowances you’re eligible for.
