How to Prepare for the End of the Tax Year

With the start of a new tax year on the horizon, it's important to take the time to consider how you can take advantage of the various planning opportunities available ahead of the tax year end to optimise your finances.
 

It's also important to note that the upcoming Spring Statement on 26th March has the potential to add fuel to the fire. 

While expectations are that there will be no new significant policies revealed, it is possible that further changes could be announced.

Read on for an overview of some key strategies to consider before the 5th of April deadline.
 

Review your Pension Contributions
 

The end of the tax year is a final chance to maximise your pension contributions for 2024/2025. 
 

Pension schemes are a highly tax-efficient saving vehicle to build wealth, including tax-relief on contributions invested, tax-free investment growth and 25% tax-free from retirement age. 
 

Individuals are generally able to contribute up to £60,000 per tax year and can carry forward any unused allowance from the previous three tax years.
 

• Action: Review your pension contributions made this tax year and consider topping up before the tax year ends to maximise your tax-efficient savings.
   
   

Make the most of your ISA Allowances
 

If you haven't maxed out your ISA this year, it may be worth considering making a last-minute contribution before the 5^th of April.
 

ISAs shelter your investments from income and capital gains tax (CGT) and funds can be accessed any time tax-free. 
 

Individuals can put up to £20,000 per annum into an ISA in line with the corresponding tax year, and up to £9,000 can be put into Junior ISAs for children or grandchildren.
 

• Action: Consider if it is possible to take advantage of any unused ISA allowance.

Capital Gains Tax (CGT) Planning
 

Individuals have an allowance of £3,000 to use each tax-year and interspousal transfers are tax-free, meaning that a married couple has up to £6,000 available to use in the 2024/2025 tax-year.
 

• Action: Review your investment portfolio and consider whether it is prudent to realise gains within the tax-free allowance.
   
   

Venture Capital Trusts (VCTs)
 

A VCT investment provides a number of taxation benefits, including income tax relief of up to 30%, an income stream in the form of tax-free dividend payments and tax-free gains on disposal.
 

• Action: For those who have used their pension / ISA allowances, and have an appropriate appetite for risk, consider investing into VCTs. 
  
   

Enterprise Investment Schemes (EIS)
 

As with VCTs, EIS schemes receive 30% tax credit up front and exemption from CGT on disposals.
 

Additionally, they also benefit from the ability to roll over capital gains, receive IHT relief and benefit from loss relief if your investment falls in value. 
 

It is worth nothing though that these investments carry higher risk and should be carefully considered, so you may want to seek professional advice.
 

• Action: For those who have used their pension / ISA allowances, and have an appropriate appetite for risk, consider investing into EIS schemes. 
   

National Insurance and State Pension Planning

To get any new State Pension you usually need 10 qualifying years on your National Insurance record and to get the maximum you must usually have about 35 qualifying years. 

If you have gaps on your record, you can make top up contributions which can represent a favourable investment.
 

• Action: Check your NIC record and see if there are any gaps.
   

Gift Allowances and Inheritance Tax Planning
 

For those who have control over income taken, perhaps from company, trust or investment portfolios, it is worth looking to ensure that this has been maximised from a tax-efficiency perspective. 
 

• Action: IHT planning is complex and there are a number of factors at play, therefore this is something that is worth discussing with your Financial Planner or accountant (or ideally, both!)
   

Unpaid Tax Considerations
 

It is important to note that from 6th April 2025, the interest payable on unpaid tax due to HMRC will increase by 1.5 percentage points (from the Bank of England base rate plus 2.5 to base rate plus 4). 

Whilst taxes should of course be paid on time, it is worth remembering that the penalties for late payments will become more severe.

• Action: Speak to your accountant if you believe that you have any unpaid taxes, it could be the best time to settle up!

General Income planning
 

For those who have control over their income taken, such as flexible pension withdrawals or distributions from a business, it can be worth using available allowances or lower tax bands to maximise the net income received. 

• Action: Speak to your adviser or accountant to see if there are any opportunities to draw from your portfolio, business or alternative structure in a tax-efficient manner. 
  
   

What to do next?

The end of the tax year is approaching quickly. Take time to review your financial strategy and make informed decisions before the April 5th deadline.
 

The end of the tax year is approaching quickly and presents a window of opportunity for strategic financial planning. If you’d like to explore any potential avenues open to you, get in touch! 
 

Our team of expert financial planners are ready to review your circumstances and develop a tailored strategy aligned with your financial goals.
 

*This article is for information only and should not be seen as advice or a recommendation to take action. Note that the value of investments can go down as well as up and you are not guaranteed to get all your capital back. Information is correct at time of publishing.