Key Steps to Reduce Your Tax Bill Before 5 April
With the end of the tax year on 5 April 2026, now is the ideal time to review your finances and ensure you are making full use of the available tax allowances and reliefs.
Many tax-saving opportunities are lost simply because action wasn’t taken before the deadline. While this is not an exhaustive list, below are some of the most effective year-end tax planning strategies to consider.
Make full use of your personal allowance and tax bands
For the 2025/26 tax year, the personal allowance remains at £12,570.
If you are married or in a civil partnership, it is worth reviewing how income is split between you. Transferring income-producing assets (where appropriate) can help ensure both individuals fully utilise their allowances and lower tax bands.
You should also consider:
- Marriage Allowance – allows eligible individuals to transfer £1,260 of their personal allowance
- Dividend Allowance – £500 for 2025/26
- Personal Savings Allowance – £1,000 (basic rate) or £500 (higher rate)
If your income is close to higher or additional rate thresholds, planning steps such as pension contributions or charitable donations can help reduce the amount taxed at higher rates.
Use your £20,000 ISA allowance before it’s gone
ISAs remain one of the simplest and most effective tax planning tools available.
For 2025/26, individuals can invest up to £20,000 across:
- Cash ISAs
- Stocks and shares ISAs
- Innovative finance ISAs
- Lifetime ISAs
All interest, dividends and capital gains are tax-free within an ISA.
Importantly, ISA allowances cannot be carried forward, so if you don’t use it before 5 April, it’s lost.
Boost pension contributions and claim tax relief
Pension contributions are one of the most powerful ways to reduce your tax bill.
- Basic rate tax relief is applied automatically
- Higher and additional rate taxpayers can claim further relief via their tax return
- Unused annual allowance can be carried forward for up to three years
Making contributions before the tax year end can:
- Reduce your taxable income
- Potentially bring you below higher tax thresholds
- Increase your long-term retirement savings
Don’t waste your capital gains tax allowance
For 2025/26, the annual capital gains tax (CGT) exemption is £3,000.
If you have investments or assets standing at a gain, consider:
- Realising gains before 5 April to utilise the exemption
- Transferring assets to a spouse or civil partner to use both allowances
Remember, the CGT allowance cannot be carried forward, so unused amounts are lost.
If gains exceed the exemption, you may also consider:
- Realising losses to offset gains
- Reviewing timing of disposals
However, be careful of rules such as share matching if assets are repurchased shortly after disposal.
Make charitable donations and claim Gift Aid relief
Charitable giving can also provide tax benefits.
Under the Gift Aid scheme:
- Basic rate relief is applied automatically
- Higher and additional rate taxpayers can claim extra relief through their tax return
Making donations before the tax year end can:
- Reduce your overall tax liability
- Potentially be carried back to the previous tax year (if beneficial and claimed correctly)
Consider inheritance tax planning opportunities
Simple inheritance tax (IHT) planning can start with annual exemptions.
You can give away up to £3,000 per year without it being included in your estate for IHT purposes. If unused, this exemption can be carried forward for one year only.
Using this exemption regularly can reduce the value of your estate over time and mitigate future IHT exposure.
Reduce the High Income Child Benefit Charge
If your income exceeds £50,000, you may be subject to the High Income Child Benefit Charge, which gradually claws back child benefit.
Planning options include:
- Making pension contributions
- Using Gift Aid donations
These can reduce your adjusted net income, potentially lowering or eliminating the charge.
Final thoughts: Don’t leave it too late
The tax year end is one of the most important opportunities to review your finances and take action.
Many of these strategies require action before 5 April, and once the deadline passes, the opportunity is lost.
Early planning can ensure:
- Income is taxed as efficiently as possible
- Allowances are not wasted
- Future tax liabilities are reduced
Need help with your year-end tax planning?
At Merranti Accounting, we help individuals and business owners make the most of available tax reliefs and avoid costly missed opportunities.
If you would like a tax year-end review or tailored advice, get in touch with our team today.
