10 smart steps before 5 April

It’s important to be aware that the following information is based on our current understanding of taxation law and practice in the UK. Tax rules can change and the impact of taxation, and any tax relief, depends on your personal circumstances and where you live.

Important dates

• 5 April – End of the current tax year 2025/26
• 6 April – Start of the new tax year 2026/27

As the UK tax year draws to a close on 5 April, it’s a good idea to get ahead of the curve and start thinking about what you could be doing to save money and potentially pay less tax. Sounds good right? Here are 10 smart actions to consider before the deadline.

1. Maximise your ISA allowance – or lose it

An Individual Savings Account (ISA) is a tax-efficient way to save or invest up to £20,000 each tax year.

You can mix and match between different types of ISA stocks and shares or cash – as long as the total combined amount you invest doesn’t go over the annual allowance of £20,000.

This allowance doesn’t roll over into the next tax year, so if you haven’t used it yet, now’s the time to consider taking action, or you will lose it.

Remember, the value of a stocks and shares ISA can go down as well as up so you might not get back the amount you put in.

Please note, it was announced in the Autumn Budget that the cash ISA allowance will reduce to £12,000 from April. The overall yearly limit remains at £20,000 until then. Over 65s however, retain the full cash ISA annual allowance of £20,000 after this date.

2. Review and consider transferring your ISA

Consider whether your current ISA is still the best fit for you. You can transfer funds from a cash to a stocks and shares ISA (and from a stocks and shares to a cash ISA), without affecting your annual allowance.

A stocks and shares ISA could offer better long-term growth depending on your risk appetite. Please be aware that investments held in stocks and shares have a greater risk than those held in cash.

Your current provider might charge you to transfer your stocks and shares ISA. During the time it takes to transfer, your money won’t be invested. So you might miss out on any increase in its value, but also you won’t lose out if it decreases. You should check with your provider to see how any charges could affect you.

3. Make the most of your pension allowance and potentially reduce tax

Unused pension funds and death benefits will be brought into the scope of inheritance tax (IHT) from April 2027. This marks a major shift in estate planning strategy. Previously, pensions were largely exempt from IHT. Under the new rules, any unused pension savings could be added to your estate, unless passed to a spouse, civil partner, or registered charity. We recommend discussing this with your adviser to see how this change could affect you.

Given the income tax relief you get on the money you save into your pension, it still provides one of the best ways to save for your retirement. Topping up your pension can result in a higher income when you retire, so it’s worth considering whether you should take action before 5 April. Remember, the value of your investment can go down as well as up so you might get back less than you put in.

• Take advantage of your pension allowance. The pension annual allowance is the maximum amount you can save into pensions yearly while still getting tax relief. It is set at £60,000 for the 2025/26 tax year, though it reduces for high earners, and depends on your income, or if you have accessed your pension. It covers contributions to all your pensions, and if you exceed it, you may face a tax charge. You may be able to ‘carry forward’ unused allowances from the previous three years.
• Potential to reduce the amount of tax you may need to pay. Saving more into your pension, especially if your salary or bonus will take you into a higher tax band, is worth considering. For example, if you were to make a £5,000 gross pension contribution (£4,000 plus £1,000 tax relief) your ‘adjusted net income’ would reduce by £5,000, potentially avoiding a higher rate of tax.
• Workplace pensions: Depending on which arrangement your workplace pension uses, you may be able to pay into a workplace pensions scheme from your gross pay, which is known as salary sacrifice. As your pension contributions are deducted from your pay before income tax, you benefit from tax relief and so could reduce your tax bill. In the Autumn Budget it was announced that salary sacrifice for pension contributions will be limited to £2,000 from April 2029. So this will mean that the first £2,000 of employee contributions using salary sacrifice will be exempt from national insurance contributions. And anything over £2,000 will be subject to them.
• Personal pensions: Most personal pension providers will claim 20% tax relief for you and add it to your pension. Higher rate taxpayers will need to claim any additional tax relief either through self-assessment tax return or by contacting HMRC directly.

4. Are your savings working efficiently?

Review your savings to check they’re earning as much interest as possible across both variable and fixed-term savings accounts.

Your personal savings allowance depends on your income tax band. Basic rate taxpayers can earn £1,000 of interest on their savings, whilst higher rate taxpayers can only earn £500 before paying tax. If you’re approaching the threshold you might want to consider moving some savings into a cash ISA – where you won’t pay income tax or capital gains tax on any interest earned. Tax on savings income will increase by 2% across all bands from April 2027 – as announced in the Autumn Budget. An extra 2% will also be added to the rates of tax on dividends. This will take place from April 2026, a year earlier than the changes to the savings rates.

5. Plan for Capital Gains Tax

If you’re planning to sell any investments or property, apart from your main residence, you will need to pay Capital Gains Tax (CGT) this tax year on any gains over £3,000.

Speak to your adviser if you want to look at how you could reduce the CGT you have to pay. There are options around spreading the sale or transfer of assets (known as disposals) over tax years or transferring assets to a spouse.

6. Giving a ‘gift’ could reduce your inheritance tax liability

Giving a ‘gift’ or making a donation to charity could help if you’re looking to potentially reduce inheritance tax liability, and at the same time help your loved ones or a charity.

Maximising your gifting allowance each year makes sense – as these cash gifts won’t be included in your estate and eligible for inheritance tax.

You can gift £3,000 tax free per year, or £6,000 in total as a couple. If you haven’t used last year’s gifting allowance, you can gift £6,000 or £12,000 as a couple (carrying forward last year’s unused allowance).

Other gifts include:

• Small gifts up to £250 to as many people as you like each tax year, as long as you’ve not already used another allowance on the same person (i.e. they’ve already received the £3,000 annual exemption).
• Wedding gifts of up to £5,000 for children, £2,500 for grandchildren or great-grandchildren, and £1,000 for anyone else if made before the wedding.
  Donations to charities like museums, universities, community amateur sports clubs, and political parties.

For more information on the rules around gifting, visit: www.gov.uk/inheritance-tax/gifts

7. Self-employed or running a business – review expenses

If you’re self-employed or running a business, you may be able to claim allowable expenses to help reduce taxable profits. You could also explore whether making capital investments or pension contributions through your business qualifies for tax relief, and this will depend on your circumstances and the current tax rules.

8. Use your personal allowances wisely

Each person has a tax-free personal allowance, and couples may benefit from the marriage allowance or by transferring assets to balance income. Reviewing your household’s financial structure can help maximise these allowances.

9. Contribute to a Junior ISA

You can invest up to £9,000 per child in a Junior ISA each tax year. It’s a great way to build a tax-free savings pot for your child’s future. And you can also consider using the £3,000 annual gifting allowance to reduce potential inheritance tax liabilities. However any money saved/invested can’t be accessed until the child turns 18.

10. Review income and tax bands

The income tax and national insurance (NI) thresholds freeze will be extended for another three years from 2028 until April 2031 as announced in the Autumn Budget.

Where thresholds are frozen and incomes increase: non taxpayers start to pay basic rate tax, basic rate taxpayers start paying higher rate tax and so on.

So check if you’re nearing these thresholds or the high income child benefit charge. You could consider deferring income or bonuses, for example, to stay below
these limits.

Also consider phasing pension withdrawals across tax years to reduce the risk of exceeding annual thresholds in a single year.

View current income tax rates, including the personal allowance, on www.gov.uk/income-tax-rates. If you live in Scotland visit www.gov.uk/scottish-income-tax

Here to help

The end of the tax year is a golden opportunity to tidy up your finances and make smart, tax-efficient decisions. Don’t leave it too late – take action now to make the most of what’s available.

We appreciate tax year end planning can be quite complex, depending on your personal circumstances. Speak to your adviser if you’re interested in maximising your allowances and reducing the tax you may need to pay. We’re here to help.

You can also get information by contacting HMRC directly.

This information is based on our current understanding of taxation law and practice in the UK. Tax rules can change and the impact of taxation, and any tax relief, depends on your personal circumstances and where you live.