Five ways to make the most of the end of the tax year 2025

With just weeks to go before the end of the tax year on 5 April, check that you’re making the most of your annual allowances.

Some tax allowances were reduced in the 2024/25 tax year, and are set to fall again in the future. By reviewing your financial situation before the end of the tax year, you can make use of your current available allowances to grow your wealth.

Here’s a rundown of some of the allowances you might want to make use of over the coming weeks.

1. Use your ISA allowance

You can put up to £20,000 into tax-efficient individual savings accounts (ISAs) in the current tax year. Your gains within an ISA are free from capital gains tax (CGT) so it makes financial sense to use this allowance, particularly if you’re a higher or additional-rate taxpayer. Also, no income tax is payable on interest or dividends received within an ISA. If you’re married or in a civil partnership, you could save more between you, effectively doubling your combined allowance to £40,000.

You may choose to follow the so-called ‘bed and ISA’ process, which involves selling non-ISA investments to realise a capital gain and then buying these back immediately inside an ISA. This will enable future gains to remain CGT exempt. However, you may want to seek financial advice before using this tactic. Bed and ISA may involve a short period out of the market which could potentially affect your investment gains.

2. Boost your pension

Checking how much you’ve paid into your pension so far this tax year could flag an opportunity to increase your retirement savings. The maximum tax-relievable amount you can save into a pension each tax year is £60,000 or 100% of your earnings (whichever is lower). However, your pension annual allowance may be smaller if you are a high earner. For every £2 your ‘adjusted income’ exceeds £260,000 a year (and your ‘threshold income’ is more than £200,000 a year), your annual allowance reduces by £1.

Note that the minimum reduced annual allowance you can have in the current tax year is £10,000. Your pension annual allowance applies to both your personal and workplace pension contributions. If you breach the allowance, you’ll be liable to pay tax charges.

It’s important to note that if you’re not working but are under age 75, you are still able to contribute to a pension and receive income tax relief. You can pay up to £2,880 each tax year into a pension, boosted by tax relief to £3,600.

3. Make financial gifts

You have a certain amount of money that you can give away each year that won’t be liable to inheritance tax (IHT). This allowance may also be something you want to make use of before the end of the tax year.

You can give away up to £3,000 each tax year without this money being included in the value of your estate for IHT purposes. You can also give as many £250 gifts per person as you want during each tax year, provided you haven’t already given a gift to the same person using your £3,000 exemption.

If you want to give a larger lump sum to your children, for example, to put towards a property deposit or for any other purpose, this money may be exempt from IHT provided you live for at least seven years after making the gift.

4. Use your capital gains tax (CGT) allowance

You can make tax-free gains of up to £3,000 in the current tax year. This allowance cannot be carried forward into the next tax year, and it’s important to make the most of it to reduce future CGT liabilities. A financial adviser can help you use this allowance.

Carla Morris, Wealth Director at RBC Brewin Dolphin, says: “Transferring assets between spouses enables you to use both annual CGT exemptions. Make sure you are using other available allowances too, such as your ISA allowance as gains are exempt from CGT. You may have unused losses from previous tax years that could also be offset against gains to reduce your CGT bill.

“Investments held within a pension are also exempt from CGT.”

For gains made before 30 October 2024, basic-rate taxpayers pay CGT at 10%, rising to 18% if the gains are from residential property. Higher and additional-rate taxpayers will pay CGT at 20% and 24%, respectively. For gains made after 30 October 2024, basic-rate taxpayers pay CGT at 18%, while higher and additional-rate taxpayers pay CGT at 24%.

5. Consider your income tax personal allowance

Everyone has a personal allowance which is the amount of money they can earn each tax year without being liable to tax. The personal allowance in the current tax year is £12,570.

If you’re married or in a civil partnership, you may want to move some of your assets into the name of the person who is the lower-rate taxpayer or who doesn’t work, so you can minimise your tax liability. If your income is lower than the personal allowance, the marriage allowance may allow you to transfer up to £1,260 to your partner. You are unable to carry any unused personal allowance forward to the next tax year.

Get expert advice

Tax is a complicated subject, so seeking professional advice from a financial or tax adviser is recommended. An adviser will help ensure you’re maximising all your tax reliefs, allowances and exemptions, explain your options, and advise on the best course of action for your individual circumstances.

The value of investments, and any income from them, can fall and you may get back less than you invested. This does not constitute tax or legal advice. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. You should always check the tax implications with an accountant or tax specialist. Information is provided only as an example and is not a recommendation to pursue a particular strategy.