With the 5 April tax year-end deadline fast approaching, now is the time to review your finances and take advantage of available tax reliefs and allowances. A well-structured strategy can help you reduce your tax liability, maximise savings, and protect your wealth for the future.
1. Maximise Pension Contributions
Pensions offer significant tax benefits, with an annual allowance of £60,000 or 100% of your earnings (whichever is lower). If you haven’t used your full allowance before year-end from the previous three tax years, you may be able to carry forward unused contributions to reduce taxable income.
2. Use Your ISA Allowance
ISAs allow for tax-free growth and withdrawals, making them a valuable savings tool. Each UK adult can contribute up to £20,000 per year. If you haven’t used your full allowance, consider topping up before the deadline. Parents can also invest up to £9,000 per child in a Junior ISA for tax-free savings.
3. Reduce Capital Gains Tax (CGT) Liability
The CGT exemption for 2024/25 is just £3,000, meaning more investors could face tax on capital gains. Strategies such as realising gains within the exemption limit, transferring assets between spouses, or moving investments into ISAs or pensions can help reduce CGT exposure.
4. Plan for Inheritance Tax (IHT) Efficiency
With the IHT threshold frozen at £325,000, proactive estate planning is key. You can use the £3,000 annual gifting exemption or explore trusts and tax-efficient investments to reduce IHT liability over time.
5. Review Tax-Efficient Investments
Venture Capital Trusts (VCTs) and Enterprise Investment Schemes (EIS) offer income tax relief of up to 30%, but they come with higher risks. Seeking professional advice is essential.
Download our free guide to maximise your tax efficiency before 5 April tax year-end deadline