Our Guide to the Tax Year End

• Maximising Your ISA allowance

There is a common theme across the preparatory tips I give ahead of the tax year end: you either use it or lose it.

A key example of this is making full use of your ISA allowance. Each year, you can invest up to £20,000 into an ISA, however, this allowance cannot be carried forward, meaning any unused portion is lost at the end of the tax year. Therefore, if you intend to utilise your allowance, it is important to ensure contributions are made before the tax year end.

This year, due to the bank holiday, many providers will bring forward their effective deadlines. For most, the final date to submit payments will be 2 April, just ahead of the long weekend. It is therefore necessary to act promptly and work to this deadline to ensure your contribution is processed in time.

If you have fully utilised your own ISA allowance, it may be worth considering investment opportunities across your family, such as a partner or child’s account.

• Using Your Pension Allowances

For higher-earning individuals, the Tapered Annual Allowance may apply which is where you have a reduced allowance if your threshold income exceeds £210k and your adjusted income exceeds £260k.

For those not subject to the tapered allowance, you can contribute up to the lower of £60,000 or 100% of your taxable UK earnings into a pension each tax year. If you have not used your full allowance in previous years, you can also take advantage of Carry Forward, which allows you to utilise any unused allowance from the previous three tax years.

When using Carry Forward, you must first utilise the current tax year’s allowance, followed by any unused allowances from previous years, starting with the earliest. It’s advisable, particularly for those with higher earnings or who have recently received lump sum payments, to review and make use of their available allowances where appropriate. Do note, that in order to maximise the current year first, you need sufficient earnings in the present tax year to support the contribution.

In some cases, using all available allowances (both current and from the previous three years) in one tax year can be highly tax efficient. However, in other scenarios, it may be more beneficial to use only part of the available allowance and defer the remainder.

For example, if you are a higher-rate taxpayer, using all allowances in one year could reduce your taxable income to a level where part of your pension contribution only attracts 20% tax relief rather than 40%. In such cases, it may be more advantageous to defer some contributions to the following tax year, ensuring they benefit from 40% tax relief in full, rather than partially at the basic rate in the present year.

Lastly, sacrificing part of your salary into your pension is currently one of the best ways to reduce your taxable income. If you are due to receive a large bonus at the end of this month and can afford to sacrifice all or part of it into your pension, the amount contributed will not be taxed as income. Because the contribution is made before income tax is applied, the sacrificed amount is not treated as taxable income, thus reducing your overall tax bill.

• Minimising Your Tax as a Business Owner

Business owners have a £500 dividend allowance and a £12,570 personal allowance. This is another example of use it or lose it allowances, so it’s encouraged to use them in full where possible, as they allow you to receive income tax-free.

A reliable strategy for minimising tax can be to employ a spouse or children of working age within your business. It is important to emphasise that, for this to be appropriate, they must undertake a genuine role.

Each individual can be paid up to the Personal Allowance of £12,570. Applying this in practice, employing both a partner and a child could allow up to £25,140 to be extracted from the business without incurring Income Tax.

• Spousal Planning

An area I’d encourage couples to consider is spousal planning. Transfers between spouses or civil partners are free of capital gains tax (CGT), meaning there is no detriment to transferring assets between spouses.

It can be tax efficient to transfer assets to the lower rate taxpayer so that any gains are realized in their name. This can help reduce the overall Capital Gains Tax liability, particularly where one spouse pays tax at a lower rate or has unused allowances.

There is also the Marriage Allowance, which allows a spouse or civil partner earning below the £12,570 Personal Allowance to transfer up to £1,260 of their unused allowance to their partner, provided the recipient is a basic-rate taxpayer. This can reduce the couple’s tax bill by up to £252 per year.

• Maximising your Allowances

As previously mentioned, everyone has a Personal Allowance, which is currently £12,570. If you earn less than £12,570, you will not pay any Income Tax. You could also save up to £5,000 of interest tax-free under the Starting Rate for Savings, however this isn’t available if your non-savings income is £17,570 or more. In addition, as a basic rate taxpayer, you may receive up to £1,000 of tax-free savings interest through the Personal Savings Allowance.

In unique circumstances, you could save up to £18,570 untaxed, this is mainly applicable for individuals who don’t have a solid income, but do have funds elsewhere that they are able to withdraw from. For example, in this Citywire article, I explain how I helped a client receive £18,570 tax-free by withdrawing funds from her offshore bond and subsequently investing the proceeds into an ISA.

This article has been designed to help you prepare in advance of the tax year end and highlight key factors that can easily be overlooked. The guidance above provides a solid and reliable foundation to help you maximise your savings and minimise your tax liability.

Some concepts and processes can be more complex than others, so if you ever require further clarification or support, the Colmore Partners team are always happy to assist and provide additional reassurance.

 

Colmore Partners is an Appointed Representative of Best Practice IFA Group Limited which is authorised and regulated by the Financial Conduct Authority, the registration number is 223112.

This article does not constitute tax, legal or financial advice and should not be relied upon as such. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. For guidance, seek professional advice.

The Financial Conduct Authority does not regulate estate planning or tax planning.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available.

Approved by Best Practice IFA Group Limited on 23/03/2026