“There is just one month to go before the start of a new tax year, so now is the time to get your financial affairs in order and make the most of this year’s allowances while you still can.
“Everyone’s financial circumstances are different, so where possible you should seek professional financial advice to ensure you are making the best possible choices for you.
Check your tax code
“Most people can earn up to £12,570 – currently frozen until the 2028/29 tax year – from income such as your salary or rent before paying income tax. This is known as the personal allowance. To ensure you are not paying too much tax, you should check that you are on the right tax code. This can be found on your last payslip. If you think it is wrong, you should contact HMRC as soon as possible. If you are a business owner, it may also be a beneficial to check your balance of salary and dividends to help make the most of your personal allowance and lower tax rate on dividends.
Make the most of your savings allowances
“Each tax year you can save up to £20,000 into an ISA which grows free of income tax and capital gains tax (CGT) liabilities. It is important to remember that this allowance does not carry over between tax years, so it’s a use it or lose it situation. If you have been meaning to save into an ISA, do so as soon as possible to ensure you make the most of this tax year’s allowance. It is also worth noting that you can pay into both your individual ISA as well as up to £9,000 into a child’s junior ISA, so long as you do not exceed the allowances.
“If you have a Flexible ISA - which allows you to replenish funds you’ve withdrawn from an ISA, even if in excess of the annual subscription limit - you must replenish the funds in the same tax year as the withdrawal was made. If you wait until the next tax year, you lose this ability and your ISA subscription allowance will reset to the standard £20,000.
“The limits for different ISAs for the 2024/25 tax year are as follows:
Cash / Stocks and Shares ISA £20,000
Junior ISA £9,000 a year
Lifetime ISA £4,000 a year
Help to Buy ISA £200 a month for existing accounts
Minimise your CGT liabilities
“As the tax year end approaches, it's crucial to consider how you can minimise your Capital Gains Tax (CGT) liabilities, especially with the recent increases in CGT rates effective from 30 October 2024. Basic-rate taxpayers now pay 18% CGT on gains, up from 10%, while higher and additional-rate taxpayers now pay 24% CGT, up from 20%. The tax rate for selling second homes or rental properties remains at 18% for basic-rate taxpayers and 24% for higher-rate taxpayers.
“To make the most of the remaining time in this tax year, there are several strategies you can employ to reduce the amount of tax you pay. Each person can make £3,000 in gains tax-free each year by using their CGT annual exemption. By selling part of an investment before 5 April and the rest after, you can effectively spread your gains across two tax years, potentially reducing your tax liability.
“Transferring assets to a spouse or civil partner can also be advantageous, as there’s no tax to pay when transferring between partners. This allows both of you to utilise your tax-free allowances, maximising your combined exemptions.
“If you’ve experienced losses on investments in the last four years, you may be able to offset these losses against your gains, thereby reducing your overall tax bill. Additionally, considering the timing of your sales can be beneficial; selling over multiple tax years rather than all at once can help manage and potentially lower your CGT bills.”
Top up your pension pot
“Saving into your pension pot is one of the best ways to save for retirement, particularly as you receive income tax relief on the money you put in. Most people can save up to £60,000 this tax year, or 100% of your salary – whichever is lower. While there is still time to top up your pension pot if you are able, if you do not use all of your personal allowance this year then you may be able to ‘carry it forward’ for up to three years.
Gift to your loved ones
“If you have the funds to do so, gifting money to loved ones will not only help them, but it can also mitigate inheritance tax (IHT). Each tax year you can gift up to £3,000 IHT free, and a couple can combine their allowances so £6,000 can be gifted. If you have any unused allowance, you can carry it over for one year. It is important to remember that any gifts over this amount may be liable for IHT.
Check if you can regain your child benefit
“If either you or your partner’s income is over £60,000, you will have lost some or all of your child benefit. However, by keeping your taxable income below that threshold you may be able to regain some of your allowance. This can be done by making personal contributions into your pension.
Utilise ‘bed & ISA’
“If you are yet to make full use of your ISA allowance this year, a ‘bed and ISA’ transfer may be worth considering. Bed and ISA transfers are a handy tool that allows you to move investments from a taxable environment into an ISA where it no longer attracts CGT, while utilising your annual ISA allowance of £20,000. With a bed and ISA transfer, your non-ISA investments can be sold - any CGT arising at that point should be paid - and the cash proceeds of the disposal are then used to fund an ISA subscription where they can continue be invested free of CGT.
“If you are considering making use of a bed and ISA transfer, it is a good idea to speak with a financial adviser before you do so as there is a potential CGT liability on the disposal of non-ISA assets depending on your personal circumstances. It is also important to be aware that the value of your investments can go down as well as up.”
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