End of Tax Year Planning

Published: January 2026

As you look towards the start of Spring and an early Easter in 2026, please do not forget the end of the tax year on 5 April, which is fast approaching.

This is a good opportunity to ensure that you have all your planning arrangements in place before the new tax year and some of these key considerations include:

Income Tax

It is important to ensure that you are best managing your income around your Income Tax Personal Allowance and tax bands.  In addition, if eligible, consider whether you should apply for the Marriage Allowance.  You can also check whether pension contributions and/or Gift Aid can be used to adjust net income i.e. to lower your tax band and/or avoid high income child benefit charge (starting from earnings over £60,000 pa).

Pension

This provides you with the opportunity to maximise your pension contributions within your annual allowance.  Personal contributions will have 20% tax relief applied directly and for higher/additional rate taxpayers, extra tax relief can be reclaimed through your tax return or from HMRC directly.

Your employer may allow Salary Sacrifice pension contributions.  Although the Government recently announced a cap, this will not be applied until April 2029.  Salary Sacrifice can also be a tax efficient way of transferring part or all a forthcoming bonus into your pension.

ISA

The annual ISA allowance for adults is currently £20,000 (but from April 2027, cash ISA allowances will be reduced to £12,000 for the under 65’s).  The ISA allowance cannot be carried forward – you either “use it or lose it”.  ISAs allow you to build up cash and investments tax efficiently, with no taxable interest, dividends nor capital gains and no tax returns are required for ISAs.

An ISA also provides you with the opportunity to “Bed and ISA” (i.e. sell investments outside an ISA, rebuy inside an ISA) and split ISA allowances between spouses to use two allowances.

Capital Gains Tax (CGT)

The CGT annual exemption is £3,000 per tax year and will be utilised against the gains arising from asset disposals.  Rebalancing a taxable investment portfolio allows this exemption to be best utilised now, rather than allowing the gains to grow and generate an increased CGT tax charge in the future.

In addition, you can consider selling assets before year-end and rebuying them later (after 30 days) to crystallise gains.  You can also consider transferring assets to a spouse to use both your exemptions and/or lower CGT tax rates.

You can carry forward losses in a tax year to offset future gains. Losses must be claimed within four years of the end of the tax year in which it arose. You can claim a loss by including it on your tax return or contacting HMRC directly. Once claimed, the losses can be carried forward indefinitely to offset future gains.

Gift Aid and Charitable Giving

Gift Aid donations allow you to both extend your basic rate band and reclaim higher/additional rate relief.  In addition, donations can sometimes be carried back to the previous tax year, depending on your tax band.  Not only do these gifts benefit the charities, but they are also tax efficient.

Estate Planning

You have an annual gift exemption of £3,000 per tax year (or up to a further £3,000 if not used within the previous tax year), which is free of Inheritance Tax (IHT).  In addition, you can also gift up to £250 per person under the small gift allowance (if you have not used another allowance on the same person).  There are also exemptions on gifts for weddings and civil partnerships.  Finally, the gift from surplus income exemption is also available (within the rules) but not always used.

These should provide good opportunities to gift to your family either directly or into their long-term investments (ISAs and pensions).

As the deadline approaches, do not leave it too late and please arrange a meeting with one of our Chartered Financial Planners to ensure that your “end of tax year planning” fully utilises the allowances, exemptions, and tax bands available to you in the current tax year.  Please contact us on 01223 233331 or email info@mmwealth.co.uk.

Disclaimer

Opinions constitute our judgment as of this date and are subject to change without warning.  This article is for general information only and does not constitute advice.  All contents are based on our understanding of current taxation and legislation, which is subject to change.

The information in this article is not intended as an offer or solicitation to buy or sell securities or any other investment, nor does it constitute a personal recommendation.

The Financial Conduct Authority does not regulate estate planning and tax planning.