Feeling the tax squeeze? Here’s one smart move to ease it

With the highest tax burden since WW2, reducing your tax bill matters more than ever.

August 24, 2025

The number one thing I get asked about is how to optimise taxes.

At the moment there is a growing sentiment that we have the highest tax burden since WW2 and not much to show for it.

Lowlights on tax include:

  • Fiscal drag from frozen tax thresholds dragging millions into paying tax at higher brackets

  • The 60% tax trap for people who earn over £100,000

  • The 111% tax trap for parents who earn over £100,000

So how can you reduce taxes?

Well, that depends on what taxes you’re talking about? For most people it is usually income tax.

But that also depends on how you’re taxed.

If you’re an employee you pay tax at source via PAYE which makes it harder to optimise taxes and longer to get rebates.

If you’re a sole trader or business (Ltd company) owner, there’s more you can do (and more need for a proper tax advisor).

But here’s one thing that applies to all

Your One Simple Step this week is to consider

Contributing to your workplace pension

Pros include:

  • Free money from your employer who also has to contribute

  • Reduction in your taxable income which saves you tax (especially good if you’re a higher rate payer)

  • Deductible expense for companies to reduce corporation tax

Cons include:

  • You don’t get the money now - your net wages paid out will be lower

  • You can’t access the money until you’re at least 55

  • You will still have to pay tax when you withdraw your pension

  • You don’t know how much tax you’ll have to pay as the rules change wit htime (e.g. you used to be able to take out 55% tax free. not it’s dropped to 25%)

This was just one way you could try to reduce your tax burden.

There is lots to know about tax and how to reduce it.

And since so many of you are interested in that I have created a guide to understand and optimising tax.

It covers more than just income tax - I want it to be a definitive guide to taxes for you.

Let me know if you have any questions on it, or anything else.

Til next time,

Pernia | Your Finance Travel Buddy