With the 2025/26 tax year ending on 5 April, now is the time to review your finances and make sure you’re not leaving money on the table. Whether you’re a sole trader, company director, or simply a higher-rate taxpayer, a bit of planning in the next six weeks can save you thousands.
Here are ten practical steps to consider before the tax year closes.
1. Use Your ISA Allowance
The annual ISA allowance for 2025/26 is £20,000. Any unused allowance is lost on 6 April — it doesn’t carry forward. If you have spare cash, even a partial contribution into a Cash ISA or Stocks and Shares ISA shelters future returns from income tax and capital gains tax.
2. Maximise Pension Contributions
The annual allowance for pension contributions is £60,000 (or 100% of earnings, whichever is lower). You can also carry forward unused allowance from the three previous tax years. For higher and additional-rate taxpayers, pension contributions are one of the most tax-efficient moves available — effectively turning 60p or 55p of net income into £1 of pension savings.
3. Review Your Capital Gains
The capital gains tax annual exempt amount for 2025/26 is £3,000 — significantly reduced from previous years. If you’re sitting on investments with unrealised gains, consider whether it makes sense to crystallise up to £3,000 of gains tax-free before April. Equally, if you have losses, realising them now can offset future gains.
4. Make Use of the Dividend Allowance
The tax-free dividend allowance is £500 for 2025/26. If you’re a company director who takes a mix of salary and dividends, make sure you’ve drawn at least enough to use this allowance. Above that, dividends are taxed at 8.75% (basic rate), 33.75% (higher rate), or 39.35% (additional rate).
5. Check Your Marriage Allowance
If you’re married or in a civil partnership and one of you earns below the personal allowance (£12,570), the lower earner can transfer up to £1,260 of their allowance to the higher earner. That’s worth up to £252 in tax savings — and you can backdate claims for up to four years.
6. Settle Any Outstanding Tax Bills
Interest on late-paid tax continues to accrue daily. HMRC’s late payment interest rate is currently 7.25%, which is significantly higher than most savings accounts. If you have outstanding self-assessment liabilities, paying them sooner rather than later reduces the interest burden.
7. Consider Charitable Donations
Gift Aid allows higher and additional-rate taxpayers to claim back the difference between their rate and basic rate on charitable donations. If you’ve been meaning to make a donation, doing so before 5 April means you can include it on your 2025/26 tax return. You can also elect to carry back donations made before the filing deadline to the previous tax year.
8. Review Your Trading Structure
With Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) now applying to sole traders and landlords with income above £50,000, it’s worth reviewing whether your current trading structure is still the most efficient. Incorporation isn’t right for everyone, but the combined effect of corporation tax rates, dividend taxation, and national insurance means the numbers have shifted in recent years.
9. Check Your National Insurance Record
Gaps in your National Insurance record can affect your state pension entitlement. You can check your record online through your Personal Tax Account and make voluntary contributions to fill gaps. The deadline to fill gaps for tax years 2006/07 to 2015/16 has been extended, but it won’t stay open forever.
10. Plan for What’s Coming
The Spring Statement is expected in March, and the government has signalled further changes to the tax landscape. Employer National Insurance rises to 15% from April 2025, and the threshold drops to £5,000. If you employ staff, make sure you’ve factored these increased costs into your budgets for the new tax year.
Don’t Leave It to the Last Minute
Tax year end planning isn’t glamorous, but it’s where real savings are made. If any of the points above apply to you and you’d like to discuss your specific circumstances,
get in touch with Tanous — we’re here to help.
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