1. Use Your ISA Allowance
You can save or invest up to £20,000 in an Individual Savings Account (ISA) this tax year. ISAs provide a tax-free wrapper for savings and investments, meaning no tax on interest, dividends, or capital gains. If you haven’t used your allowance yet, now is the time to do so—any unused allowance does not carry over into the next tax
year.
2. Maximise Pension Contributions
Pension contributions benefit from tax relief, making them one of the most tax-efficient ways to save. The annual contribution limit is £60,000, or 100% of your earnings, whichever is lower. If you haven’t used the full allowance in the past three years, you may be able to carry forward unused amounts and contribute even more this year.
3. Make Use of Capital Gains Tax (CGT) Allowances
The CGT annual exemption for 2024/25 is just £3,000, down from previous years. If you plan to sell assets like shares, property (excluding your main home), or investments, consider whether realising gains within this allowance could help reduce your overall tax liability.
4. Take Advantage of Gift Aid for Charitable Donations
Donating to charity through Gift Aid allows charities to reclaim an extra 25% from the government, and if you're a higher-rate taxpayer, you can claim additional tax relief via your Self-Assessment tax return. Donating before the tax year ends can also help reduce your taxable income.
5. Plan for Inheritance Tax (IHT) Efficiency
Gifting can be an effective way to reduce potential inheritance tax liabilities. Each individual can give away £3,000 per year tax-free, and if you didn’t use this allowance last year, you can carry it forward one year. Regular gifts from surplus income may also be IHT-free if structured correctly.
6. Review Salary Sacrifice Options
If your employer offers salary sacrifice schemes, such as exchanging part of your salary for additional pension contributions, it can be a tax-efficient way to reduce your taxable income and National Insurance contributions. This can be particularly useful for those near the higher tax brackets.
7. Prepare for Tax Law Changes
Upcoming changes may impact your tax position. For example, from April 2025, the Furnished Holiday Lettings tax regime will be abolished. If you own rental properties, reviewing your financial strategy now can help you mitigate tax implications.
8. Optimise Your Investment Strategy
Regularly reviewing your investment portfolio ensures you’re aligned with your financial goals and risk appetite while also making use of tax-efficient structures such as ISAs and pensions. This could be an ideal time to rebalance your holdings for tax efficiency.
9. Use the Dividend Allowance
For those who receive dividend income, the dividend allowance for 2024/25 is just £500. This means only a small amount of dividends can be earned tax-free, so it’s worth considering whether you should restructure income sources or reinvest profits tax-efficiently.
10. Seek Professional Financial Advice
Tax planning can be complex, and making the wrong decisions can be costly. A Chartered Financial Planner can help you navigate the tax rules and ensure you’re making the most of available allowances and reliefs.
Final Thoughts
With the tax year-end fast approaching, reviewing your finances now could lead to significant tax savings. Taking advantage of allowances before they reset on 6 April 2025 ensures you’re keeping as much of your hard-earned wealth as possible.
If you’d like personalised financial advice tailored to your situation, get in touch with our team—we’d be happy to help.
