Midnight on 5 April marks the end of the 2025/26 tax year — and with taxes rising across the board, the clock is ticking to sort your finances beforehand.
A series of recent changes has tightened the squeeze on savers and investors: the Chancellor’s Autumn Budget extended the income tax threshold freeze to 2031, capital gains tax (CGT) has already risen, and further increases to dividend, savings and rental income tax are on the way.
Making full use of your tax‑free allowances has rarely mattered more.
Here’s a checklist of eight steps you should take before the deadline.
1. Use your ISA allowance
Sheltering savings and investments inside an ISA protects interest, dividends and capital gains from tax.
Every adult gets an annual £20,000 ISA allowance – but if you don’t use it by 5 April, it’s gone for good with no rollovers.
Tom Stevenson, investment director at Fidelity International, says: “ISAs are one of the simplest and most effective ways to invest tax efficiently. If your goal is to grow your wealth over time, using your ISA allowance each year can make a meaningful difference to long-term outcomes because your returns are sheltered from tax.”
2. Pay more into your pension
Pension contributions are one of the most effective ways to reduce income tax liability.
Alice Haine, personal finance analyst at Bestinvest, says: “Saving into a pension not only boosts your future retirement income but can also reduce your income tax bill today as contributions attract tax relief at your marginal rate. Basic rate taxpayers receive 20 per cent tax relief, while those paying higher-rate (40 per cent) or additional-rate (45 per cent) can claim a further 20 and 25 per cent respectively, typically through their self-assessment tax return.”
Most people can contribute up to £60,000 a year into a pension, and receive tax relief at their marginal rate. If you’re close to crossing into a higher tax band, a pension top-up before year-end could pull your taxable income back down.
3. Consider ‘bed and ISA’ or ‘bed and pension’
If you hold investments outside a tax wrapper, you could move them into one before the end of the tax year using a strategy known as ‘bed and ISA’ or ‘bed and pension’.
This involves selling investments held in a general investment account and repurchasing them within an ISA or pension. You may incur CGT on the sale, but you can use your annual CGT exemption to offset some gains.
“With the annual allowance for tax-free dividends slashed to just £500 at the start of the 2024/25 tax year and the annual CGT exemption cut to £3,000, down from £12,300 it was in the 2022/23, shifting investments into a tax-protected ISA or pension is becoming increasingly attractive,” says Haine.
4. Make the most of spousal allowances
Marriage for tax purposes may not be romantic, but it can cut your bill.
If one spouse earns below the personal allowance, they can transfer 10 per cent of their allowance to their partner under marriage allowance rules.
Couples can also shift savings or shares into the lower earner’s name to reduce tax on interest, dividends and potentially capital gains – with transfers between spouses usually free of CGT.
5. Use your capital gains and dividend allowances
The capital gains tax exemption is far less generous than it once was, so use it or lose it before 5 April if you’re planning to sell shares, funds or a second property.
Similarly, the dividend allowance has been reduced sharply.
If you own shares outside an ISA and are able to control the timing of dividend payments – for example through a family company – review whether bringing income forward makes sense.
6. Cut your future IHT bill
Careful planning can reduce the amount of inheritance tax (IHT) eventually paid by your family. Under the annual exemption, you can give away up to £3,000 each tax year free of IHT.
Emma Sterland, chief financial planning officer at Evelyn Partners, says: “This £3,000 annual allowance can be brought forward for one tax year if not used, which means a possible £12,000 per couple could be available to gift before the end of the tax year on 5 April. That can be given to one individual or split across several.”
Small gifts of up to £250 per person are also exempt, as are regular gifts out of surplus income.
7. Check your tax code
Your tax code determines how much income tax is deducted through PAYE. If you’ve changed jobs, started receiving benefits in kind, or have multiple sources of income, errors can creep in.
Checking your tax code on your payslip can prevent overpaying – or underpaying – tax.
8. Prepare for Making Tax Digital
Self-employed workers and landlords with income of more than £50,000 need to be set up for Making Tax Digital from 6 April.
Those above the threshold will need to start keeping digital records and submitting quarterly updates, plus an end of year statement, using HMRC-compatible software.
Registering early and choosing software now can make the transition smoother – and avoid a last-minute scramble.
When investing, your capital is at risk and you may get back less than invested. Past performance doesn’t guarantee future results.
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