Make the most of your allowances before the end of the tax year

With the end of the tax year on 5 April fast approaching, now is an ideal time to review your finances and ensure you are making full use of the allowances and reliefs available to you.

Chartered financial planner Emma Cherrington highlights the key areas for you to consider:

1. Pensions

Pensions remain one of the most tax-efficient ways to save for retirement. Contributions benefit from tax relief, and up to 25% of the fund can usually be taken tax-free  from age 55, rising to 57 in 2028.

You can receive tax relief on pension contributions up to 100% of relevant earnings, subject to the £60,000 annual allowance (with possible tapering for high earners). Unused allowances from the previous three tax years may also be carried forward. Contributions can be particularly valuable for higher earners, especially those affected by the loss of Personal Allowance, or the High Income Child Benefit Charge.

Employees may be able to sacrifice salary or bonuses into pensions too, while business owners can make employer contributions from pre-tax company profits. Non-earners can still contribute up to £2,880 net (£3,600 gross) per year with tax relief, which is often popular for parents and grandparents when planning for their younger family members.

Announced in the recent Budget, from April 2029, only the first £2,000 of pension contributions made via salary sacrifice will be exempt from National Insurance, which leaves plenty of time still to maximise any opportunities.

Given the complexity of pension rules, professional financial advice is strongly recommended, especially if you are unsure.

2. Income Tax

The Personal Allowance remains at £12,570 but tapers once Adjusted Net Income exceeds £100,000, reducing to zero at £125,140. Pension contributions and charitable donations can help reduce taxable income and preserve allowances.

The High Income Child Benefit Charge applies from £60,000 of income, increasing by 1% for every £200 above this level.

3. ISAs (Individual Savings Accounts)

ISAs allow savings and investments to grow free of income tax and capital gains tax. The annual ISA allowance is £20,000 and remains frozen until April 2030 for Stocks and Shares versions.

ISAs are especially valuable as savings interest above £1,000 (basic-rate taxpayers) or £500 (higher-rate taxpayers) is taxable as ‘income’ outside an ISA.

4. ISA Allowances (2026/27)

The £20,000 allowance can be split across Cash ISAs, Stocks & Shares ISAs, Innovative Finance ISAs, and Lifetime ISAs (up to £4,000).

As announced in the recent Budget, from April 2027, the Cash ISA allowance will be capped at £12,000 for those under 65, with the remainder allocated to Stocks & Shares ISAs.

5. Couples and ISA Inheritance

Couples can shelter up to £40,000 per year using their combined ISA allowances. ISAs can also be passed to a spouse or civil partner on death while retaining their tax-efficient status.

6. Junior ISAs

Junior ISAs allow tax-free saving for children, with a £9,000 annual allowance for 2026/27. Growth is free from income and capital gains tax, and accounts can be held in cash, stocks and shares, or both.

7. Capital Gains Tax

Most personal assets are exempt, but gains on investments held outside ISAs and pensions may be taxable. The CGT annual exemption remains at £3,000 for 2026/27. Rates are 18% for basic-rate taxpayers and 24% for higher-rate taxpayers. Planning strategies include using both spouses’ allowances and offsetting losses.

8. Dividend Tax

The dividend allowance remains at £500. Dividends above this level are taxed according to income tax band when held outside tax-advantaged accounts.

9. Inheritance Tax

The IHT nil-rate band (£325,000) and residence nil-rate band (£175,000) remain frozen until April 2030. Making use of annual gifting allowances, small gift exemptions, and gifts from surplus income can help reduce potential IHT liabilities. Accurate record-keeping is essential.

10. Marriage and Other Allowances

Eligible couples may benefit from the Marriage Allowance, transferring 10% of the Personal Allowance to a basic-rate-taxpaying spouse. Those nearing State Pension age may be able to boost entitlement by filling gaps in National Insurance records.

From April 2026, the State Pension will rise under the Triple Lock, increasing weekly payments for both the new and basic State Pension.

Given the complexity of tax planning and the importance of ensuring your financial arrangements remain up to date, we always recommend speaking to a qualified and trusted financial planner to ensure you are confident with the financial decisions you are making.