Dean Butler, Managing Director for Retail Direct at Standard Life comments: “With the rush to get everything in order before the end of the tax year behind us, we’ve entered a new tax year framed by uncertainty and unsettled markets. In such circumstances it would be easy to put off reviewing our finances and ignore the opportunity to plan for the tax year ahead. However, with allowances and reliefs resetting, it’s worth reviewing your finances to make sure you’re making the most of the benefits available and, if your finances allow, to potentially take advantage of the lower market prices when investing.
“There are a number of tax savvy ways to save and invest, including ISA’s and tax-efficient investments like National Savings & Investments (NS&I). One area that’s often overlooked until the last minute – if looked at all – is pensions, but getting a head start on your retirement savings can make a real difference. Irrespective of market conditions, pensions remain one of the most tax-efficient ways to save, and higher contributions within your yearly allowances, boosted by compound investment growth, can build up over time to leave you in a much stronger position by the time you come to retire.”
Dean Butler’s top tax-year tips to boost your finances in 2025/26:
Use your pension annual allowance - “The pension annual allowance is the maximum amount you, your employer, and any third party can contribute to your pension each year while still benefiting from tax relief. For the 2025/26 tax year, this stands at £60,000 or 100% of your earnings, whichever is lower. However, this could be reduced if you’re a higher earner or have already accessed your pension savings. “If you can afford to, making pension contributions earlier in the tax year means you benefit from tax relief sooner and give your savings more time to grow. Plus, your contributions can be used to offset your taxable income.
Use your ISA allowance for tax-free saving - “ISA’s (Individual Savings Accounts) are a great way to maximise the return on your savings. You can contribute up to £20,000 this tax year across all types of ISAs including cash ISAs, stocks and shares ISAs and Lifetime ISAs. You can open multiple ISAs, within that £20,000 limit. It’s worth doing a bit of research to find the best options for you and consider shopping around as returns can vary between providers.
Prepare for capital gains and dividend tax – “If you have any investments outside of ISAs or pensions, you should consider how capital gains and dividend taxes might impact your finances. The annual capital gains tax exemption is £3,000 this tax year, so any gains above this amount are taxable. Similarly, the tax-free dividend allowance is £500. If you hold investments outside of ISAs, planning when and how to take your gains can help you reduce your tax liability.”
Consider using your bonus to boost your retirement savings – “While the prospect of a work bonus is always exciting, many find themselves disappointed when they see the impact of tax and national insurance deductions. If you have the option, putting some or all of your bonus into your pension is a great way to save on such deductions, leaving you with more of your bonus over the longer term.
Pay more into your pension plan and increase your child benefit – “Child benefit can be worth thousands of pounds a year to some families. However, families with an income of £60,000 or over are subject to the high-income child benefit tax charge. This means a reduction in the amount of child benefit available, with the charge standing at 1% of your child benefit for every £200 of income between £60,000 and £80,000. By the time you or your partner earn over £80,000, you lose your child benefit altogether with the charge cancelling out the full amount of child benefit.
“If your income falls in this range, don’t worry – there’s a solution. Increasing your pension contributions can help reduce your adjusted net income, allowing you to recover some or all of your child benefit, while boosting your retirement pot at the same time.
“If your earnings are over £60,000, you can choose not to take child benefit payments. However, it’s still worth filling in the child benefit claim form as this ensures you get National Insurance credits, which contribute to your state pension later in life.”
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