The Marriage Allowance lets you transfer £1,260 of your Personal Allowance to your husband, wife or civil partner. Your Personal Allowance is the amount you can earn before paying Income Tax (£12,570 for the 2026–27 tax year). This transfer can reduce your partner’s tax by up to £252 in the tax year subject to the conditions outlined below.

To benefit as a couple, the lower-earning partner must usually have an income below their Personal Allowance, and the higher-earning partner must be a basic rate taxpayer. In practice, this normally means their partner's income is between £12,571 and £50,270 in the current 2026–27 tax year. For those living in Scotland, the thresholds are slightly different.

When you transfer part of your Personal Allowance, your own tax position may change, and you might pay some tax yourself. However, as a couple you will usually pay less tax overall.

For example, if you earn £11,500 and your partner earns £20,000, transferring £1,260 reduces your partner’s taxable income and can lower your combined Income Tax bill. In this case, the couple saves £214 in tax overall.

You can backdate a claim for Marriage Allowance to 6 April 2022 if you are eligible. The transfer continues automatically each year unless you cancel it, for example if your circumstances or income change.

Many taxpayers are surprised to learn that once their income exceeds £100,000, they can face an effective tax rate of 60%, although officially, no such rate appears to exist. This happens when the personal allowance (currently £12,570) is gradually withdrawn once adjusted net income goes above £100,000.

Under the tax rules, if a taxpayer earns over £100,000 in any tax year, their personal allowance is gradually reduced by £1 for every £2 of adjusted net income exceeding £100,000. This ceiling applies regardless of age, meaning that any taxable receipt that pushes their income above this threshold will lead to a reduction in their personal tax allowance.

This is best demonstrated by way of an example. If a taxpayer earns exactly £100,000 they would usually benefit from the full personal allowance. However, if their income increases by £1,000 to £101,000 then:

• £1,000 is taxed at 40% = £400
• Their personal allowance is reduced by £500
• That £500 is now also taxed at 40% = £200

Total tax on the extra £1,000 = £600, creating an effective tax rate of 60%.

This continues until adjusted net income reaches £125,140, at which point the personal allowance is fully withdrawn.

Adjusted net income refers broadly to a taxpayer’s total taxable income before personal allowances, minus certain tax reliefs such as trading losses, charitable donations, and pension contributions.

Affected taxpayers should consider financial planning strategies to avoid this personal allowance trap. Reducing income below £100,000 could be achieved through options such as increasing pension contributions, making charitable donations, or participating in certain investment schemes.

Dividends are taxed differently from other types of income, with separate allowances and tax rates that depend on your overall level of income. You do not pay tax on dividends that fall within your Personal Allowance (2026-27: £12,570), and there is also a separate tax-free dividend allowance of £500 each year. Any dividend income above these allowances is taxable.

The rate of tax you pay on dividends depends on your Income Tax band.

For the 2026–27 tax year, the rates are:

• Basic rate: 10.75%
• Higher rate: 35.75%
• Additional rate: 39.35%

To determine which rate applies, your dividend income is added to your other income. This means dividends can push you into a higher tax band and / or can be taxed across more than one rate.

If you receive up to £10,000 in dividends you can ask HMRC to change your tax code and the tax due will be taken from your wages or pension, or you can enter the dividends on your self-assessment tax return, if you already fill one in. You do not need to notify HMRC if the dividends you receive are within your dividend allowance for the tax year.

If you have received over £10,000 in dividends, you will need to complete a self-assessment tax return. If you do not usually send a tax return, you need to register by 5 October following the tax year in which you received the relevant dividend income.

If your taxable income for the 2026–27 tax year is less than £17,570, you will not pay any tax on the interest you receive. This figure combines the £5,000 starting rate for savings (taxed at 0%) with the £12,570 personal allowance.

In addition, the Personal Savings Allowance (PSA) provides further tax-free savings interest: basic-rate taxpayers can earn up to £1,000 in interest tax-free, while higher-rate taxpayers can earn up to £500. Those who pay the additional rate of tax on income over £125,140 are not eligible for the PSA. This means that a basic-rate taxpayer with no other income could receive up to £18,570 in tax-free interest.

It is important to understand that if your total non-savings income exceeds £17,570, you are no longer eligible for the starting savings rate. However, if your non-savings income falls between £12,570 and £17,570, the starting rate is reduced by £1 for every £1 your income exceeds your personal allowance.

Interest earned from ISAs or premium bond winnings is not included in these thresholds and remains tax-free. Those with higher savings in tax-free accounts can continue to benefit from their applicable PSA.

Banks and building societies no longer deduct tax from interest payments automatically. If you do owe tax on savings income, you must declare it through a self-assessment tax return.

If you have overpaid tax on your savings interest, you can submit a claim for a refund. Claims can be backdated up to four years from the end of the current tax year. For the 2022–23 tax year, the deadline to make a claim is 5 April 2027.

If you are self-employed or a member of a partnership, you may be able to claim tax relief when your business makes a loss. There are several ways trading losses can be used, but each loss can only be used once and specific conditions apply.

For the 2025–26 tax year, losses can be set against your total income for the same year and/or the previous tax year (2024–25). You must use the loss as far as possible in one year before applying any remaining amount elsewhere. If losses are not fully relieved against income, any remaining balance may, in some cases, be set against chargeable gains.

A claim can also be made for losses made in the first 4 years of trade known as early trade losses relief. This allows losses to be carried back against income of the three earlier tax years (2022–23, 2023-24 and 2024–25), starting with the earliest year. Claims must generally be made by 31 January 2027.

Unused losses can be carried forward and set against future profits of the same trade. In certain cases, where a business is incorporated, losses may be set against income from the company (known as pre-incorporation relief).

If your business ceases, terminal loss relief may apply. Losses arising in the final 12 months can be carried back against profits of the same trade for up to three previous tax years, starting with the most recent.

Relief may be restricted if the trade is not commercial or is carried on without a view to profit. In addition, an overall cap applies to certain income tax reliefs, limiting claims to the higher of £50,000 or 25% of adjusted total income.