End of tax year checklist: what do you need to do?

We know we shouldn’t leave things until the last minute, yet many of us still do.  

This can be particularly true regarding maximising our annual tax allowances and exemptions. 

Despite having 365 days to organise our affairs, we often scramble weeks, days, or even hours before the tax window closes, shuffling spare cash into individual savings accounts (ISAs) and pensions and making gifts to our offspring. 

For those leaving things late this year, there’s no need to panic, as you still have time. 

Here are some simple tips to streamline your personal tax affairs before the 5 April deadline. 

1. Top up your ISA  

ISAs are an effective way to save and invest for your financial future. With many to choose from, an allowance of £20,000, and tax-free growth and income, there’s lots to like.

While the capital gains tax allowance is £3,000 (£1,500 for trusts) for the 2024/25 tax year and the dividend allowance is £500, it’s still worth considering an ISA.

The most common ISAs are cash and stocks and shares. Which one is right for you depends on your personal circumstances, future goals and attitude to risk.

But as a rule of thumb, if you are comfortable with the value of your savings moving up and down and are looking to invest for five years or more, then a stocks and shares ISA might be the best option to grow your money.  

If peer-to-peer lending is your thing, an innovative finance ISA could be worth considering.

The lifetime ISA, meanwhile, allows you to pay £4,000 a year to fund your first home or save for retirement.

It also comes with the added attraction of a 25% bonus, up to a maximum of £1,000 a year.

The final type is the junior ISA, or JISA for short, which we'll cover later in this article.

2. Use your inheritance tax (IHT) allowance 

Dubbed the UK’s most hated tax, reducing IHT is a key goal for many of us.

With a flat rate of 40%, it can take a sizeable chunk out of your inheritance.  

It is for good reason that IHT was once dubbed “the voluntary tax,” as there are ways it can be mitigated or avoided completely. 

However, there are major planned changes to IHT and pensions in the future.

While you don’t pay IHT on pensions, this will change, as inherited pensions will be brought into IHT from April 2027. 

This is a huge change for retirement planning as people tend to access their pensions last, as they are currently not seen as part of your estate.  

If you’re concerned about the impact of IHT on your pension in the future, financial advice is recommended.  

Now, we'll reveal a simple tip to reduce the value of your estate and potentially reduce your IHT bill.

Every year, you can give away £3,000 without IHT applying, called the annual exemption.

What’s more, if you didn’t give any money away last year, you can carry forward a further £3,000, raising the total to £6,000. 

Anything you gift above £3,000 may still be tax-free as long as you prove it came out of normal expenditure.

If you can't, it will be classified as a potentially exempt transfer, or PET for short, which becomes IHT-free if you survive seven years after the gift was made.

Making a PET can still often prove worthwhile, but it is key to seek professional advice first.

3. Use your capital gains tax (CGT) allowance

The annual CGT exemption (the profit you can realise each year without paying tax) is £3,000 in the 2024/25 tax year after being reduced over many years.

With less allowance to play with, and given the rate of CGT is 24% for residential property and gains from other chargeable assets, failing to use this allowance can be costly. 

Even if you have no plans to use the money for investments you hold outside of tax wrappers, it can make sense to use your allowance and shift the proceeds into a pension or an ISA. 

And if you’re married or in a civil partnership, you can transfer assets between each other and not pay CGT.

However, before taking action, it is wise to speak to a regulated financial adviser to be confident you’re making the right choice. 

4. Give your kids or grandkids a helping hand 

From helping them onto the property ladder to giving their retirement savings an early boost, putting money away for a child’s future can be one of the greatest gifts they receive.

You can pay £9,000 into a JISA for your child every year, and the money is accessible to them at age 18.

As with all ISAs, growth and income are free from tax, and anything you pay in does not count towards your own £20,000 ISA allowance. 

If you’re uncomfortable with your child receiving a sizeable lump sum at age 18 to spend and would like more control over when the money is gifted, you could always top up your own ISA if you have some allowance spare.

As there are pros and cons to this approach, it’s worth consulting an expert before investing. 

A further option is a junior self-invested personal pension (SIPP), which is an effective way of giving your child’s retirement savings a head-start.

You can pay in up to £2,880 a year, grossed up to £3,600 due to tax relief, and like an ISA, there’s no tax to pay on any growth and income.

However, you must be aware that, under current rules, the earliest your child can access the money is age 55 (57 from April 2028).

5. Top up your pension

Paying a lump sum into your pension before 5 April will not only give your retirement savings a welcome boost, but it can help you pay less income tax.

Paying into a pension can enable you to retain valuable state perks such as child benefit (which is reduced for anyone earning above £60,000 and stops for those earning over £80,000), and your personal income tax allowance. 

In most cases, the maximum you can pay into a pension each year and receive tax relief is the lower of £60,000 or 100% of what you earn.

As this figure could be higher or lower depending on your personal circumstances, it is important to seek advice before paying in hefty lump sums. 

Any growth, interest, and income are free from tax, and if the worse were to happen to you before you reach age 75 (if you haven’t bought an annuity), anything left in the pot will pass to your heirs, again tax-free. 

However, from April 2027, IHT will be charged on pension wealth you pass on to your loved ones.

6. Review your state pension contributions

From April 2025, you won't be able to top up national insurance (NI) contributions back to April 2006.

Instead, you'll only be able to fill in gaps over the last six tax years.

It's important to check your NI record, as this can have an impact on how much state pension you'll receive when you reach state pension age.

If you need to make voluntary NI contributions beyond the last six tax years, now's the time to do so.

7. Claim tax relief on your donations

If you're a higher or additional rate taxpayer, you can claim tax relief on Gift Aid donations.

When you donate through Gift Aid, charities and community amateur sports clubs can claim an extra 25p for every £1 you give.

Claiming tax relief on these donations may be beneficial as you can legally pay less tax.

Need some help? 

Tax can be complicated, even at the best of times. And making the wrong choice could move you further from your financial goals. 

Everyone’s tax-saving needs are unique, and the action you take must be what’s right for you and your loved ones. 

The good news is help is available should you need it. 

By speaking with a regulated financial adviser, you can ensure you don’t pay more tax than you need to.