| Start thinking about making the most of tax-efficient opportunities before the end of the 2025/26 tax year | You can contribute as much as you like into your pension, but there’s a limit on the amount of tax relief you will receive each year | You can make gifts worth up to £3,000 in each tax year, these gifts will be exempt from IHT on your death, even if you die within 7 years |
As the 2025/26 tax year draws to a close, now is the perfect time to take stock and make sure you’re maximising your tax-efficient opportunities before the new financial year begins on 6 April 2026. A little planning now can go a long way. Here are some key areas to consider:
Make the most of your ISA allowance
The Individual Savings Account (ISA) allowance for 2025/26 is £20,000. You can place the full amount in a Cash ISA (until the allowance changes in 2027), invest entirely in a Stocks and Shares ISA, or split it between the two. Junior ISAs work similarly, with a £9,000 annual limit per child. Ensuring your allowance is used before the tax year-end can help your savings grow tax efficiently.
Review your pension contributions
You can contribute as much as you like to your pension, but tax relief is capped by the Annual Allowance, currently £60,000. An individual can’t use the full £60,000 Annual Allowance where ‘relevant UK earnings’ are less than £60,000, although your employer still could. You may be able to carry forward unused allowances from the past three years, provided you were a pension scheme member during those years. For every £2 of adjusted income (total taxable income including all pension contributions) over £260,000, an individual’s Annual Allowance is reduced by £1 until the minimum Annual Allowance of £10,000 is reached. Checking your contributions now helps ensure you don’t miss out on valuable tax relief.
Gifting for Inheritance Tax (IHT) Planning
You can gift up to £3,000 per year free of IHT, with any unused allowance carried forward one year. Additional exemptions exist for wedding gifts (£5,000 for a child, £2,500 for a grandchild or great grandchild, £1,000 for others) and gifts up to £250 per recipient per tax year. Under current HMRC rules, gifts outside the above categories normally cease to count for IHT purposes upon the donor’s survival for seven years, with reductions in the event of death after at least three years. Thoughtful planning around gifting can help protect your wealth for future generations.
Other tax year-end considerations
Don’t forget to review your Capital Gains Tax (CGT) allowance and Dividend Allowance to make sure you’re making the most of all available reliefs.
A review now can ensure you enter the new tax year with confidence, clarity and control over your finances.
It is important to take professional advice before making any decision relating to your personal finances. Information within this article is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored advice and is for guidance only. Some rules may vary in different parts of the UK.