Taxes in England: Can You Pay Less and How Is It Possible?

Introduction to Taxes in England

Taxes in England are a mandatory obligation for everyone earning income within the United Kingdom. Many consider the UK tax code strict, with high rates and limited opportunities to save. Is this true? This question requires careful analysis. This article explores whether you can legally pay less tax in England in 2025 and how to do so within the law.

Taxes in the UK are significant compared to some countries. Approximately 40% of high income and inherited property is taxed. Yet, entrepreneurs and investors continue to choose the UK for its tax system. The state provides several legal ways to minimise taxation, ensuring compliance with HMRC regulations. The tax regime in England is not as harsh as some claim. Until you explore the possibilities for tax savings, it’s hard to judge the UK’s fiscal system accurately.

Who Must Pay Tax in England?

Everyone earning income in the UK—whether an individual or a company—must pay tax. It doesn’t matter if you’re a resident or a temporary visitor. The UK’s principle is clear: if you earn money in England, you owe tax on that income, regardless of the amount. Residents are taxed on UK income, and after April 2025, the new Foreign Income and Gains (FIG) regime governs how foreign income is taxed for new residents.

You can check your tax residency status using HMRC’s Statutory Residence Test calculator. Unlike some countries where residency takes years to establish, in England, you may become a tax resident by spending 183 days or more in the UK during the tax year (6 April to 5 April).

More information on UK tax is available on the Foundry Accounting website.

How to Legally Pay Less Tax in England

Despite high tax rates, the UK offers legal ways to reduce your tax burden in 2025:

1. Leverage the FIG Regime

The non-domicile regime was abolished on 6 April 2025, replaced by the FIG regime. If you’ve been non-UK resident for 10 years before moving to the UK, you can claim a 100% exemption on foreign income and gains for your first four years of UK residency. These funds can be brought to the UK tax-free during this period, but electing the FIG regime means forgoing personal allowances.

2. Use the Temporary Repatriation Facility (TRF)

For those previously under the non-dom regime, the TRF allows you to bring pre-6 April 2025 foreign income and gains to the UK at reduced tax rates (12% in 2025/26 and 2026/27, 15% in 2027/28).

3. Claim Tax Reliefs

Individuals can reduce taxable income through pension contributions or Gift Aid. Businesses can benefit from R&D tax credits or capital allowances to lower corporation tax (19–25% in 2025).

4. Benefit from Double Taxation Treaties

The UK’s treaties with over 100 countries prevent double taxation. Taxes paid abroad can be offset against UK tax, reducing your overall liability.

5. Bring Net Capital Tax-Free

Before becoming a UK tax resident, transfer foreign capital (“net capital”) to a UK account tax-free. Keep it separate from UK income to avoid tax complications.

For personalised tax strategies, contact Foundry Accounting.