Budgeting and tax
The unglamorous bits that move the most: know your number, keep a cushion so you never need to borrow, and use every tax allowance.
Where to begin
Know your number
Work out what’s left each month once the essentials are paid. Move it on payday, before it finds something else to do.
Keep a cushion
Three months of essentials in an easy access account. It’s what stops a broken boiler turning into borrowing.
Use the allowances
ISAs and pensions shelter money from tax. They say nothing about whether what’s inside is halal, so check that separately.
The details
Staying out of interest
Overdrafts, credit cards, store cards and buy now, pay later all charge interest or fees when things slip. Ask your bank to remove an overdraft you don’t want, and don’t let a card become the emergency fund. If you’re already paying interest from before, clearing it comes first, ahead of saving or investing.
If you’re already in debt
StepChange, National Debtline and Citizens Advice give free, confidential help, and MoneyHelper offers free guidance. Ask early, and be wary of anyone charging you to manage debts.
Tax on savings profit
Expected profit is generally treated like interest for UK tax, so your personal savings allowance applies. A Cash ISA shelters it.
Tax on investments
Growth and withdrawals in a stocks and shares ISA are free of UK tax. Pensions get tax relief going in, and part of what you take out is usually taxed as income.
Zakat and tax
They’re separate. Paying one doesn’t reduce the other, though Gift Aid adds to what you give to charity. Gift Aid and your zakat.
General information, not tax advice. Tax rules depend on your circumstances and can change, so check gov.uk or ask an accountant.