Tax Year-End Planning Guide – 2025/2026

With the end of the tax year approaching, it’s a good time to organise your finances and make sure you make the most of your tax allowances, reliefs and exemptions.

Some of these allowances will be lost if you don’t use them each tax year, while others will be reduced in the new tax year due to legislative changes.

This guide explains the key areas to plan for before the end of the tax year.

Individual Savings Accounts (ISAs)

• You can contribute up to £20,000 to your ISA in the current tax year.
• You need to use this allowance by 5th April 2026, or it will be lost.
• No tax is payable on any of the income or growth within your ISA, and you can usually withdraw money without penalty. If your ISA is a Flexible ISA, any money withdrawn can usually be replaced in the same tax year without using further allowance.
• A Cash ISA may be suitable if you expect to need the money within the next five years. Interest rates have fluctuated since 2025 and may continue to change in 2026. Consider easy-access versus fixed accounts based on your goals and needs.
• A Stocks and Shares ISA might be for you if you are seeking long-term growth and can cope with some potential market volatility. You can switch between Cash and Stocks and Shares later if you wish.
• Consider a Lifetime ISA (LISA) if you are saving for a first home. Note: Withdrawals for non-qualifying purposes may incur a 25% government charge.

Please note: Your capital is at risk. Past performance is not a reliable indicator of future results. Investments can go down as well as up. Tax treatment depends on individual circumstances and may change.

Pension Contributions

• Pensions are extremely tax-efficient due to tax relief on your contributions.
• It is generally wise to opt into any pension scheme provided by your employer.
• It’s worth making the maximum contribution to your pension, depending on your available allowances and personal budget.
• In 2025-26, the maximum annual allowance for pension contributions is £60,000 or 100% of your earnings (whatever is lower). This limit includes employer contributions.
• Check you are reclaiming higher and additional rate tax relief if you pay the 40% or 45% rate, particularly if you are making personal pension contributions.
• Higher and additional rate taxpayers can also use pension contributions to reduce their effective earnings and bring them into a lower tax band.
• Consider using any carried forward allowances if available.
• If you have already taken taxable benefits from your pension, you might have triggered the Money Purchase Annual Allowance. If triggered, the Money Purchase Annual Allowance currently limits contributions to £10,000 per year.
• Check if your adjusted income will exceed £260,000 in 2025-26 (including employer pension contributions), as this will also reduce your annual allowance.

Please note: Pension investments can go down as well as up. Access is normally at age 55 (rising to 57 in 2028). Tax benefits depend on HMRC rules, which may change. Making retirement decisions without guidance is risky. Seek advice from a financial adviser or Pension Wise before making pension-related decisions.

Income Tax Allowances

You have a number of income tax allowances that can help to increase your net household income. If you arrange your income and assets efficiently, there is still time to make the most of these before the end of the tax year. For example:

• Personal Allowance – you can earn up to £12,570 before paying tax. If you are taking income from a pension or planning a withdrawal from a bond, you can use this allowance to offset tax. Similarly, if you own a business, it’s a good idea to take some of your income as a salary to make use of this allowance.
• Marriage Allowance – a lower-earning spouse can transfer up to £1,260 of their tax-free personal allowance to their higher-earning partner, potentially reducing the family’s tax bill by up to £252.
• Dividend Allowance – dividends of up to £500 per year may be drawn (from your own company or from investments) without tax liability.
• You can transfer assets to your spouse if they pay a lower rate of tax, or to make use of both savings allowances.
• Tax-free interest – you can earn up to £1,000 from interest without paying tax if you are a basic rate taxpayer. For someone on the higher rate, the Personal Savings Allowance is £500.

Capital Gains Tax Exemptions

• When you sell investments or property, you might need to pay Capital Gains Tax (CGT) on the profits.
• You can use your annual exemption to avoid building up large taxable gains. You can realise gains of up to £3,000 without paying tax.
• If you sell shares to realise a loss, the loss can be carried forward to set against gains in future years.
• Allocating shares to your spouse or civil partner does not incur tax and means you have double the exemption to set against gains.

Inheritance Tax Planning

• You can reduce your estate (and potential IHT liability) by making gifts to individuals, charities, or trusts. Charitable gifts are immediately outside your estate.
• You can gift up to £3,000 per year, and this is immediately set outside your estate. You can also carry forward this allowance by up to one tax year.
• A couple could potentially gift up to £12,000 by using two tax years’ worth of allowances. Some other exemptions are also available.
• If no exemptions apply, most gifts drop out of your estate after seven complete years, so making the gift now starts the clock ticking earlier.


Please note: The Financial Conduct Authority does not regulate will writing, trusts, or estate planning services. Tax laws may change, affecting estate planning strategies. This content is not legal advice. Consult a solicitor or estate planning professional.

Tax-Advantaged Investments

• Consider investing in smaller, early-stage companies to save on tax.
• This can be done via Alternative Investment Market (AIM) listed shares, Enterprise Investment Schemes (EIS) or Venture Capital Trusts (VCT). These are very high-risk investments and are only suitable for experienced investors who can afford to lose the money. Advice is strongly recommended.
• EIS investments offer income tax relief of up to 30%. SEIS investments (a separate scheme) can offer relief of up to 50%.
• An EIS investment offers the added advantage of carrying back relief to the previous tax year and the option to defer CGT on gains realised from other investments.
• AIM and EIS investments are also considered business assets, and they previously enjoyed 100% inheritance tax relief if held for at least 2 years. However, starting in April 2026, eligible assets will qualify for relief up to a £2.5 million “cap”.

Please note: These are high-risk investments. They may be illiquid, and investors could lose all their capital. Not suitable for all investors. Seek independent financial advice before investing.

Charitable Gifting

• Make any charitable gifts you were planning before the end of the tax year. Gift Aid can increase the value of the gift in the hands of the charity, as well as reducing your tax bill.
• Remember to claim tax relief on any gifts made in 2025-26, as you can carry back tax relief to the previous tax year, providing this is done before your tax return is due. This can be useful if your tax bill was higher last year.
• Think about gifting shares. No capital gains tax is due when you gift the shares, or when the charity eventually sells them.

Saving for Children

• Top up any Junior ISAs for your children or grandchildren. You can contribute up to £9,000 in the current tax year.
• Consider making pension contributions for your child. Anyone can contribute up to £2,880 per year (grossed up to £3,600) to a pension for tax-efficient growth.

Please don’t hesitate to contact a member of the team if you would like to find out more about planning for the tax year-end.

Please note: This content is for information only and does not constitute financial advice. Seek independent financial advice before making investment or tax planning decisions.Tax planning is not regulated by the FCA. Tax treatment depends on individual circumstances and may change. Seek professional tax advice.