As the 2025/26 tax year draws to a close on 5 April 2026, now is the ideal time to review your finances and ensure you are making full use of available allowances and tax reliefs.
Effective tax year-end planning can help you reduce your tax bill, strengthen long-term investments, and take advantage of government incentives before they reset in April. Below are five key areas to consider before the deadline.
1. Make the Most of Your ISA Allowance
Individual Savings Accounts (ISAs) remain one of the most effective ways to protect your money from tax. For the 2025/26 and 2026/27 tax years, the annual ISA allowance is £20,000.
Any income or gains generated within an ISA are completely free from Income Tax and Capital Gains Tax. You can split your allowance across different types of ISAs — including cash ISAs, stocks and shares ISAs, or innovative finance ISAs — or invest it all in one option.
The key is to act before 5 April 2026, as unused ISA allowances cannot be carried forward. When the new tax year begins on 6 April, your allowance resets, creating a new opportunity to save or invest tax-efficiently.
2. Boost Your Pension Contributions
Pensions remain one of the most tax-efficient vehicles for long-term saving. In the 2025/26 tax year, you can contribute up to £60,000 per year, or 100% of your earnings, whichever is lower.
The annual allowance includes all contributions, including those made by your employer. However, the 100% earnings limit applies only to personal contributions that qualify for tax relief.
Pension contributions benefit from tax relief at your highest marginal rate. For example, a basic-rate taxpayer contributing £80 will see £100 credited to their pension fund. Higher and additional-rate taxpayers can claim further relief through self-assessment, but only on contributions matched by income taxed at those rates.
If you have unused allowances from the previous three tax years, the carry forward rule may allow you to make larger contributions. Even non-earners can contribute up to £2,880 per year, with £720 added in tax relief.
Making pension contributions before the tax year ends can reduce your taxable income while strengthening your retirement provision.
3. Use Your Personal Allowance Wisely
Everyone has a personal allowance, currently £12,570, which is the amount you can earn each year without paying Income Tax.
Married couples and registered civil partners may also benefit from the Marriage Allowance, which allows a non-taxpayer to transfer £1,260 of their personal allowance to a basic-rate-taxpaying partner. This can reduce the recipient’s tax bill by up to £252 in the 2025/26 tax year. Claims can be made retrospectively for up to four years.
Where appropriate, holding savings or investments in the name of the lower-earning partner may help reduce overall tax liabilities. Since unused personal allowances cannot be carried forward, careful planning is essential to ensure both partners make full use of their allowances each year.
4. Review Your Inheritance Tax Position
Inheritance Tax (IHT) is charged at 40% on estates exceeding £325,000, a threshold frozen until April 2030. An additional £175,000 residence nil-rate band may apply if your home is passed to direct descendants.
You can reduce future IHT exposure by making gifts during your lifetime. Everyone has an annual gifting allowance of £3,000, which can be carried forward for one year if unused. You can also make unlimited small gifts of up to £250 per recipient each year.
Larger gifts may fall outside your estate if you survive for seven years after making them. Regular gifts made from surplus income — such as helping with a grandchild’s school fees — may also be exempt if structured correctly.
Reviewing your estate plan annually helps ensure you are making the most of these allowances.
5. Manage Your Capital Gains
If you hold investments outside tax-efficient wrappers, consider reviewing them before the tax year ends.
For 2025/26, the Capital Gains Tax (CGT) annual exempt amount is £3,000 (or £1,500 for trusts). Gains above this threshold are taxed at:
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18% for basic-rate taxpayers (where gains fall within the basic-rate band)
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24% for higher and additional-rate taxpayers (or where gains push income above the basic-rate band)
Couples can transfer assets between themselves without triggering CGT, allowing both exemptions to be used. Making strategic disposals before 5 April 2026 may help you realise gains efficiently and reduce tax exposure in future years.
Final Thoughts
Tax year-end planning is an opportunity to take control of your finances before allowances reset. Early action can help reduce tax, enhance long-term outcomes, and ensure your money is working as efficiently as possible.
