Here’s how to make the most of tax year end

Here’s how to make the most of tax year end

The build-up to tax-year end is always crucial for financial planning. April 5 is the last day of the current tax year, so you still have until then to make the most of several allowances – and potentially give your savings a boost.

Here’s a rundown of the main areas to think about.

Max out your ISA

One of the easiest ways to grow your savings tax-free is by using an Individual Savings Account (ISA). The annual allowance is £20,000 for the current tax year.

  • Cash ISA: Great for short-term savings, offering tax-free interest.
  • Stocks and Shares ISA: A long-term investment option with growth potential.
  • Lifetime ISA (LISA): Ideal if you’re saving for a first home or retirement, with a 25% government bonus on contributions up to £4,000.
  • Junior ISA: Save up to £9,000 per child tax-free.

While some annual allowances can be carried forward into the new financial year, when it comes to ISAs it’s a case of ‘use it or lose it’.

Boost your pension pot

Paying extra into your pension could help you reduce your tax bill thanks to Income Tax Relief. The pension annual allowance is currently £60,000 or 100% of your earnings (whichever is lower), although this includes any employer contributions. The good news is that if you don’t use all your £60,000 annual allowance you can carry it forward to the next financial year for a maximum of three years.

There are some stringent rules around this however and depending on your circumstances, your allowance may be lower than the usual £60,000. This is just one example where financial advice based on your personal circumstances is vital.

Income Tax Relief allows you to exclude some of your income from assessment when you invest in your pension this way. If you’re able to do this early on and ‘frontload’ your pension pot, you’ll also reap the benefits of earning compound interest.

Use your Capital Gains Tax allowance

If you have investments outside of an ISA, you might be subject to Capital Gains Tax (CGT) when selling them. CGT allowance is now just £3,000 – half of what it was last financial year, and a fraction of the old rate of over £12,000. But it’s not all bad news. Unless you’ve been lucky enough to sell off a Monet in the last year, it’s perfectly possible that you won’t be too much above that threshold, so you won’t face a nasty tax bill.

If you’re in a position to be able to comfortably sell such assets, you could generate a tax-free sum that you’re able to invest in an ISA or your pension.

Review your dividend allowance

If you earn income from dividends, be aware that the tax-free dividend allowance is reducing from £1,000 to £500 next tax year. If you hold dividend-paying shares outside an ISA, consider moving them into an ISA to protect your income from tax.

Gift money tax free

If you’re thinking about estate planning, using your annual gifting allowances can help reduce a potential inheritance tax bill.

  • Annual exemption: You can give away £3,000 each tax year without it being subject to IHT.
  • Small gift allowance: Gifts of up to £250 per person are also tax-free.
  • Regular gifts from income: If you have surplus income, you can make regular tax-free gifts, as long as they don’t affect your standard of living.

Check other allowances

And finally, if you’re married (or in a civil partnership) making the most of your Marriage Allowance can help reduce your tax liability by increasing your personal allowance.

Around 2 million eligible couples in the UK are missing out on this opportunity. If your spouse or civil partner doesn’t work or earns less than their personal allowance (£12,570), then – providing you earn more than them but are still a basic rate taxpayer – they can gift you £1,260 of their personal allowance. It may not be a huge tax saving, but every little helps.

So, the message is, don’t wait until it’s too late; check to see whether you’re making the most of these allowances. If you need help please get in touch.

In the meantime here is some interesting further reading:

Why Trumps tariff turbulence is worse than imagined

Tariff wars are often short, their legacies are not

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