With just under 3 months until tax year end, it’s a good time to review the less visible aspects of your finances, such as allowances, reliefs, and thresholds. This simple exercise can have a meaningful impact on your long-term financial planning.
Below you’ll find seven simple things you can do to keep more of what you’ve earned.
Maximise pension contributions
Pensions remain one of the most tax‑efficient options available to long term savers and higher earners. You can contribute up to £60,000 each year (dependent on earnings) and benefit from tax relief at your highest marginal rate. If you have scope to contribute more, you may also be able to increase contributions by carrying forward unused allowances from the previous three tax years.
Making pension contributions can help reduce your taxable income, potentially enabling you to recover allowances that are tapered for higher earners, such as the personal allowance or the 30 free hours of tax-free childcare.
Pension funds are not accessible until retirement age. In addition, from 2027 onwards, pensions will form part of your estate for Inheritance Tax (IHT) purposes.
Ensure you use your ISA allowance
ISAs remain one of the most straightforward and tax-efficient tools available. Each adult can invest up to £20,000 per year free from income and capital gains tax.
Using your full allowance early can boost long-term growth. Couples can invest up to £40,000 each year tax‑efficiently, making it a simple way to build wealth.
You also have Junior ISAs, where you can invest up to £9,000 per year, which could be accessed by your children when they turn 18 or converted into a Cash or Stocks and Shares ISA.
Revisit your investments outside of pension and ISA
With capital gains and dividend allowances having been reduced in recent years, portfolio efficiency has become increasingly important. Reviewing which assets are held within your accounts, are the right investments wrapped up or do you hold these personally.
If you have unrealised gains, consider crystallising up to the current CGT allowance (£3,000) before the tax year resets. While the allowance is relatively small, using it each year can add up to meaningful tax savings over time.
If you do hold investments outside of an ISA, then remember that dividends are also taxed above the £500 allowance.
Gifting and legacy planning
Proactive planning is particularly important now, especially with changes due to take effect from April 2027, when pensions will be included in an individual’s estate for Inheritance Tax (IHT) purposes.
Gifting can be an effective strategy when used thoughtfully and over time. Each year, you can gift up to £3,000 without triggering IHT, and larger gifts can also fall outside your estate if you survive seven years from the date of the gift.
For those supporting children or grandchildren, gifting can be a meaningful way to pass on wealth while seeing the benefit during your lifetime, while also helping manage future tax liabilities.
If you’re not doing this yet, a financial adviser can help you assess whether this approach is right for you and ensure it fits within your wider financial plan.
Could an Offshore Bond be part of your Tax strategy?
With upcoming pension and Inheritance Tax changes, as well as recent reductions in capital gains allowances, offshore bonds are becoming more popular.
Offshore Bonds should be considered after first looking at ISAs and pensions and may be suitable for those higher earners already using allowances for dividends and capital gains. If you have extra cash to invest or want a more tax efficient income, an offshore bond may be a highly effective way to maximise your tax efficiency.
To learn more about this Tax vehicle visit our website: Investing in offshore bonds:
Maximise your investments with Venture Capital Trusts (VCTs)
There are other investment vehicles, such as Venture Capital Trusts (VCTs), which can offer income tax relief, tax‑free capital gains, and tax‑free dividends. However, these investments are not suitable for everyone. If you have any questions or would like to find out whether you may be eligible, please get in touch with our financial advisers here.
Create/review your current financial plan
Small decisions can have a meaningful impact on your overall financial position. Making effective use of salary sacrifice arrangements, maximising allowances between spouses, and ensuring income is structured in line with your longer‑term objectives can all contribute to more efficient financial planning.
If you already have a plan in place, it may be worth speaking with your adviser to ensure you are making full use of available allowances and also understand what and why you are invested in.
If you do not yet have a financial plan, now may be an appropriate time to create one. Continuing without a clear strategy can limit your ability to plan effectively. Our advisers can support you with an initial, no‑obligation meeting to review your current position and discuss appropriate next steps.
With financial planning more important than ever—particularly for higher earners—having a clear strategy can provide confidence and clarity around which contributions will best support your long‑term financial goals.
Changes after 5th April you should consider?
- VCT Tax Relief will be reduced from 30% to 20%.
- IHT relief on qualifying business and agricultural assets will be capped at £2.5m per person (£5m per couple)
- AIM-listed shares will lose their full IHT Business Relief exemption – down to 50%
- Entrepreneurs’ Relief CGT Rate tax is going up to 18%
