If you have even the slightest interest in money and finance, you probably have 6 April marked on your calendar as the start of the new tax year.
With just over a month to go, now is your final chance to maximise this year’s tax-efficient saving and investing opportunities before they reset for the 2025/26 tax year.
Taking action before the deadline could help you make the most of your allowances, reduce your tax liability, and set yourself up for the financial year ahead.
So, read on to discover four ways to boost your efficiency before the tax year ends.
1. Make full use of your ISA allowance
In the 2024/25 tax year, you can contribute up to £20,000 across all your ISAs, allowing you to earn tax-efficient interest and returns on your savings.
You can also contribute up to £9,000 into a Junior ISA (JISA) on behalf of a child, in addition to your own ISA allowance. This allows you to support your child’s financial future while also improving the overall efficiency of your wealth.
There are several types of ISAs to choose from, each suited to different financial goals and time frames.
For example, Cash ISAs may be better suited for your short-term goals, as they offer guaranteed interest. Stocks and Shares ISAs, on the other hand, could be better for long-term goals as they are more likely to keep up with inflation over long time horizons.
Indeed, a report by Unbiased found that in the last decade, the average return on Stocks and Shares ISAs has been 9.64% annually, versus 1.21% for Cash ISAs.
Whichever ISA you opt for, if you haven’t yet maximised your allowance for this tax year, now is the time to review your options and take full advantage before 6 April.
2. Contribute more to your pension
Pension contributions come with valuable benefits as your interest and returns are tax-free and you typically receive an automatic 20% tax relief on your contributions. Moreover, if you’re a higher- or additional-rate taxpayer, you may be able to claim an extra 20% or 25% in England, Wales, and Northern Ireland, and 22%, 25%, or 28% in Scotland through self-assessment – all of which helps you build valuable wealth for retirement.
Each tax year, the “Annual Allowance” limits how much you can contribute to your pension without incurring a tax charge.
In 2024/25, it stands at £60,000 or 100% of your earnings, whichever is lower. However, if you earn above a certain threshold or have accessed your pension flexibly, your allowance may be reduced to as little as £10,000.
If you haven’t fully used your Annual Allowance in previous years, you can carry forward any unused allowance for up to three tax years. This means you have until 6 April 2025 to take advantage of any remaining Annual Allowance from 2021/22 onwards.
With the tax year-end approaching, now is the perfect time to maximise your pension contributions to optimise your efficiency and boost your retirement savings.
3. Use your annual gifting exemption
Gifting wealth during your lifetime can be a useful way to reduce your estate’s future Inheritance Tax (IHT) liability and pass on more to your loved ones.
Each tax year, you can take advantage of the annual gifting exemption, which allows you to give away a certain amount without it being considered part of your estate for IHT purposes.
For 2024/25, the exemption is £3,000. If you didn’t use your full allowance in the previous tax year, you can carry forward any unused amount. Anything you gift above the exemption is considered a potentially exempt transfer for seven years, and if you die during that time, it will be taxed at a tapered rate.
While this won’t boost your immediate efficiency, gifting wealth before the end of the tax year could help your beneficiaries in the years to come.
4. Maximise any other allowances and exemptions you’re eligible for
There may be additional allowances and exemptions available to you in the 2024/25 tax year, depending on your wealth circumstances.
For instance, the Capital Gains Tax (CGT) Annual Exempt Amount allows you to make gains of up to £3,000 before CGT applies.
While this exemption cannot be carried forward, you can transfer assets to your spouse tax-free. This means that if one of you hasn’t used their full allowance, it may be more tax-efficient for that partner to make the sale instead.
Moreover, if you’re a business owner or shareholder, you may receive dividend payments as part of your income, and the Dividend Allowance lets you receive up to £500 before Dividend Tax applies.
Taking advantage of all the allowances available to you can help you boost your financial efficiency. So, it’s worth reviewing your situation to ensure you’re making the most of them.
Get in touch
A financial planner can help you make full use of your available allowances, improve your overall efficiency, and ensure you are well set up for the financial year ahead.
To speak to a financial planner, get in touch.
Email us at hello@vwmwealth.com or call us on 0141 229 4004.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The Financial Conduct Authority does not regulate estate planning or tax planning.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
