As the tax year-end approaches it is important to ensure that your financial affairs are in order so that you can take advantage of any remaining reliefs, allowances, and exemptions before they are lost.

Many providers will have specific deadlines for accepting applications to top up plans such as ISAs or Pensions, so time is of the essence.

Here are some tax planning suggestions to consider before 5th April 2025 to help you grow, protect and preserve your finances:

1. Check Your PAYE Tax Code

Your tax code determines how much you can earn before tax is applied and guides your employer or pension provider on how much tax to deduct. If you have multiple employers or pension providers, you may have more than one tax code. Ensure your code is correct to avoid overpaying or underpaying HM Revenue & Customs (HMRC).

2. Transfer Part of Your Personal Allowance

Married couples and registered civil partners can transfer 10% of their Personal Allowance (£1,260 in 2024/25) if one partner is a non-taxpayer and the other is a basic rate taxpayer (or a starter, basic, or intermediate rate taxpayer in Scotland). This allowance can be backdated to include any tax year since 5th April 2019 if you were eligible for the Marriage Allowance.

3. Pension Tax Relief

When you contribute to a pension, the government provides tax relief at your highest income tax rate. Even without pensionable income, you can contribute up to £3,600 gross and receive tax relief. For 2024/25, the annual pension contribution limit (Annual Allowance) is 100% of your salary or £60,000, whichever is lower. If your threshold income exceeds £200,000 and your adjusted income exceeds £260,000, your Annual Allowance will be tapered. The carry forward rules allow unused Annual Allowance to be utilised for up to three tax years, so 5th April 2025 is the last opportunity to use any available allowance from the 2021/22 tax year.

4. Individual Savings Accounts (ISAs)

Each tax year, you have an ISA allowance. Funds within an ISA grow free of income and capital gains tax (CGT). You can invest in a Cash ISA, a Stocks & Shares ISA, or a combination of both. The allowance for the 2024/25 tax year is £20,000. Any unused ISA allowance is lost at the end of the tax year.

5. Junior ISAs (JISAs)

Contribute up to £9,000 into your child’s JISA. Funds in a JISA grow free of income and CGT until your child reaches age 18, at which point they can be withdrawn or rolled over into an adult ISA. Relatives and friends can also contribute to the JISA, provided the annual allowance is not exceeded.

6. Tax-Free Savings and Dividend Allowances

For 2024/25, savings income up to £1,000 for basic rate taxpayers and £500 for higher rate taxpayers is tax-exempt. The tax-free Dividend Allowance is £500 for all taxpayers. Married couples and registered civil partners can save tax by ensuring each person has enough of the right type of income to utilise these allowances.

7. Capital Gains Tax (CGT)

CGT is charged on the profit made when selling an asset that has increased in value. You only pay CGT on gains above the tax-free Annual Exempt Amount, which is currently £3,000. If you realise capital gains and/or losses in the same tax year, the losses offset the gains before the CGT exempt amount is deducted. Where CGT is payable it is charged at 20% for basic-rate taxpayers, and 24% for higher rate taxpayers for disposals made on or after 30th October 2024.

8. Inheritance Tax (IHT)

Utilise the annual £3,000 gift exemption to reduce the size of your estate for IHT purposes. Any unused amount can only be carried forward for one year, so last year’s gift exemption will be lost on 6th April 2025 if not used. Unlimited individual gifts of £250 can also be made, provided you haven’t used another exemption on the same person.

9. Make and Review Your Will

If you die without a Will, your assets will be divided according to intestacy rules. Your surviving spouse or registered civil partner may only receive a portion of your estate, and IHT will be due at 40% on anything above £325,000 (up to £500,000 if the Residence Nil Rate Band is available). Leaving at least 10% of your net estate to charities reduces the IHT on the remainder to 36%.

10. Regular Financial Reviews

Regularly reviewing your financial plans helps you make the best use of tax-efficient investment strategies and ensures that you do not pay more in taxes than necessary.

If you would you like more detailed information on any of these points or require assistance with any aspect of your financial planning please contact us.

Please note:

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

The content was accurate at the time of writing, changes in circumstances, regulation and legislation after the time of publication may impact on the accuracy of the article.

This information is based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from, taxation are subject to change and tax implications will be based on your individual circumstances.

The value of your investment(s) and the income derived from it, can go down as well as up and you may not get back the full amount you invested.

The Financial Conduct Authority does not regulate advice on taxation, Estate Planning, and Will writing.

You should seek legal advice to ensure that your Will reflects your wishes and is legally binding.

FP-2024-485 – this content was last updated in November 2024