How to maximise savings and minimise liabilities before the 5 April deadline

As the 5 April tax year deadline approaches, many individuals overlook valuable opportunities to arrange their finances more tax-efficiently.

This guide highlights key areas of personal taxation, from making the most of your pension and ISA allowances to strategic planning for Capital Gains Tax and Inheritance Tax. It also explores the benefits of charitable giving and provides a checklist of final actions to consider before the end of the tax year.

The aim is to equip you with the knowledge to make informed decisions. However, personal finance is complex and individual circumstances vary significantly. This guide is therefore intended as an introduction rather than a substitute for tailored professional advice.

Understanding the Foundations of Tax Planning

Effective tax planning is not about tax avoidance. It is the legitimate process of arranging your financial affairs so you make full use of the allowances, reliefs and exemptions available under UK tax law.

The principles of year-end tax planning centre on a few key actions:

  • Maximising contributions to tax-efficient savings vehicles

  • Strategically realising gains or losses

  • Making full use of annual exemptions

Taking proactive steps before the deadline can have a significant positive impact on your long-term financial position.

Because personal tax circumstances vary — depending on income, marital status and investment holdings — strategies that benefit one person may not suit another. Professional guidance can help you navigate these complexities and create a plan aligned with your financial goals.

Maximising Your Pension Contributions

Pensions remain one of the most tax-efficient ways to save for retirement.

When you contribute to a personal pension, the government provides tax relief which boosts your savings. For example, a £80 contribution from a basic-rate taxpayer becomes £100 in their pension fund.

Higher-rate and additional-rate taxpayers may claim further relief through their tax return, reducing the effective cost of contributions even further.

For the 2025/26 tax year, the annual allowance for pension contributions is £60,000 for most individuals. This allowance includes contributions from:

  • You

  • Your employer

  • Any third party

Personal contributions that qualify for tax relief are limited to 100% of your relevant UK earnings or £3,600, whichever is lower.

If you have unused pension allowances from the previous three tax years, you may also be able to use the carry-forward rule, enabling significantly larger contributions.

Considerations for High Earners

For individuals with higher incomes, the Tapered Annual Allowance may apply.

If your adjusted income exceeds £260,000 and your threshold income exceeds £200,000, your annual allowance may be reduced to as little as £10,000.

Additionally, pension rules include limits on tax-free lump sums, known as the Lump Sum Allowance and Lump Sum and Death Benefit Allowance, which determine how much can be taken tax-free from pension savings.

Understanding how these complex rules apply to your circumstances is essential when planning pension contributions.

Making the Most of Your ISA Allowance

Individual Savings Accounts (ISAs) are a cornerstone of tax-efficient saving in the UK.

Every adult has an annual ISA allowance of £20,000 for the 2025/26 tax year. Any interest, dividends or capital gains earned within an ISA are free from Income Tax and Capital Gains Tax.

The allowance can be split between different ISA types, including:

  • Cash ISAs

  • Stocks and Shares ISAs

  • Innovative Finance ISAs

The key principle is “use it or lose it.” If you do not use your full allowance by 5 April, it cannot be carried forward.

Strategic Use of ISAs for Couples

Couples can increase tax efficiency by ensuring both partners maximise their ISA allowances.

Assets can be transferred between spouses or civil partners without triggering Capital Gains Tax. This allows one partner to transfer investments to the other so that both allowances can be used each year.

For investors with existing portfolios outside tax wrappers, a strategy known as “Bed and ISA” may also be used. This involves selling investments and repurchasing them within an ISA to protect future growth from tax.

Capital Gains Tax Planning

Capital Gains Tax (CGT) applies to profits made when selling or disposing of assets that have increased in value, such as shares, investment properties or valuable personal possessions.

Each individual has an annual CGT exemption of £3,000 for the 2025/26 tax year (£1,500 for most trusts).

Because this allowance has been reduced significantly in recent years, proactive management of gains has become increasingly important.

One strategy is to realise gains up to the annual allowance before the tax year ends, ensuring that profits within the exemption remain tax-free.

Managing Gains and Losses

CGT planning often involves balancing gains with losses.

If you have investments showing losses, selling them can offset gains realised elsewhere in your portfolio. These capital losses must be registered with HMRC and can be carried forward to offset future gains.

Married couples and civil partners can also transfer assets between themselves on a “no gain, no loss” basis, allowing both partners to use their CGT exemptions. This can potentially allow couples to realise up to £6,000 in tax-free gains each year.

Inheritance Tax: Gifting and Allowances

Inheritance Tax (IHT) is generally charged at 40% on estates above the £325,000 nil-rate band, which remains frozen until 2031.

There are several gifting strategies that can help reduce the potential tax burden on your estate.

Annual Gifting Allowance

Each individual can gift £3,000 per tax year, which immediately falls outside their estate for IHT purposes.

If unused, this allowance can be carried forward for one year, allowing a potential £6,000 gift.

You can also make small gifts of up to £250 per person to as many people as you like, provided they have not received any other gift from your annual exemption.

Larger Gifts

Larger gifts, known as Potentially Exempt Transfers (PETs), may become completely free from IHT if you survive seven years after making the gift.

If death occurs within this period, taper relief may reduce the tax payable depending on how long the donor survived after making the gift.

Gifts From Surplus Income

Another useful but often overlooked exemption is gifts made from surplus income.

Regular gifts can be immediately exempt from IHT if:

  • They come from surplus income

  • They are made regularly

  • They do not affect your standard of living

Accurate record-keeping is essential to demonstrate this pattern of gifting.

Charitable Donations and Tax Relief

Making donations to registered charities can provide both philanthropic and tax benefits.

When donations are made using Gift Aid, charities can reclaim 25p for every £1 donated, at no additional cost to the donor.

Higher-rate taxpayers can claim additional tax relief through their Self Assessment tax return, effectively reducing the overall cost of the donation.

For example:

  • A £100 donation becomes £125 with Gift Aid

  • A higher-rate taxpayer can reclaim £25

Donations must be covered by sufficient Income Tax or Capital Gains Tax paid during the tax year.

Donating shares or securities to charity can also provide Income Tax relief on the full value of the donation while being exempt from Capital Gains Tax.

Final Checks Before the Tax Year Ends

As the 5 April deadline approaches, a final financial review can help ensure you have not missed important opportunities.

Consider the following checklist:

  • Have you used your full ISA allowance?

  • Have you maximised your pension contributions, including carry-forward allowances?

  • Have you realised any capital gains within your CGT allowance?

  • Have you recorded any capital losses that could offset gains?

  • Have your charitable donations been properly documented for tax relief?

  • Have you used your Inheritance Tax gifting allowances?

The Importance of Professional Advice

Year-end tax planning is an ideal time to review your financial strategy with a professional adviser.

An adviser can:

  • Assess your overall financial position

  • Ensure compliance with tax regulations

  • Identify additional planning opportunities

  • Help structure your finances for long-term tax efficiency

Acting early provides time to implement strategies effectively rather than rushing decisions close to the deadline.

Planning Ahead

Taking time now to review your estate and retirement planning strategy can help identify risks before they become problems.

Early planning provides greater flexibility to:

  • Protect your wealth

  • Honour your financial wishes

  • Provide security for future generations

Posted by Andrew Flowers

Andrew is the managing partner of Vizion Wealth and has been involved in the offshore and onshore financial services industry for over 25 years. Andrew was the driving force behind Vizion Wealth after years of experience in a number of advisory roles within high profile wealth management, private banking and independent financial advisory firms in the UK.

All Posts Website

Leave a reply

Your email address will not be published.