What Should You Consider Before the Tax Year End?

As the end of the tax year approaches on 5 April, it’s a good opportunity to review your finances and ensure you are making the most of the tax allowances available. Many allowances are “use it or lose it”, meaning once the deadline passes, the opportunity is gone.

Below are some key areas to consider before the tax year-end.

Make the Most of Your ISA Allowance

Everyone has an annual ISA allowance of £20,000, which can be used across Cash ISAs, Stocks & Shares ISAs, or a combination of both. Any unused allowance cannot be carried forward, so acting before 5 April can be highly tax efficient. From April 2027, for those under the age of 65, the Cash ISA subscription limit is expected to reduce to £12,000 per tax year.

Flexible ISAs

A Flexible ISA allows you to withdraw money and replace it within the same tax year without reducing your ISA allowance.

For example, if you invest £20,000 into a flexible ISA and later withdraw £5,000, you can still replace the £5,000 before the end of the tax year without affecting your allowance, provided the replacement is made into the same ISA.

Flexible ISAs can be useful for managing short-term cash needs while keeping long-term savings tax efficient. However, not all ISAs offer flexibility, and the rules must be followed carefully, so it’s important to check with your provider.

Review Pension Contributions

Pensions remain one of the most tax-efficient ways to save for retirement. Before the tax year end, it may be worth reviewing whether you can increase contributions or make a one-off payment.

Workplace pensions may benefit from employer contributions or salary sacrifice, while personal pensions can attract tax relief. Reviewing contributions before 5 April can help ensure you are maximising the allowances available to you.

Don’t Forget Carry Forward

If you haven’t fully used your pension annual allowance in the previous three tax years, you may be able to use carry forward to make a larger contribution this year.

Carry forward allows unused annual allowance from the previous three tax years to be added to your current year’s allowance, potentially enabling significant additional contributions. To use carry forward, you must have been a member of a registered pension scheme during the relevant years, and you must use the current year’s allowance first.

This can be particularly valuable for business owners, those receiving bonuses, or individuals who have had fluctuating income. However, high earners should also consider the impact of the tapered annual allowance and ensure contributions remain within permitted limits.

Consider Capital Gains Tax Planning

If you hold investments outside tax wrappers, such as in a General Investment Account, you may wish to review any unrealised gains.

Using your annual Capital Gains Tax allowance or transferring investments into an ISA where appropriate (often referred to as “Bed and ISA”), can help reduce future tax liabilities. Any planning should be approached carefully, particularly during periods of market volatility.

Venture Capital Trust (VCT) Considerations

For higher earners who have already used their ISA and pension allowances, Venture Capital Trusts (VCTs) can form part of tax-efficient planning.

Currently, VCT investments offer 30% upfront income tax relief, provided the shares are held for at least five years. In addition, dividends are typically tax-free and there is no Capital Gains Tax on disposal.

However, this generous 30% rate is due to reduce to 20% from April 2026. That means the current tax year may represent one of the last opportunities to access the higher level of relief.

For investors who are already considering VCTs as part of their strategy, bringing plans forward before the change could make a meaningful difference. That said, VCTs invest in smaller, higher-risk companies and are not suitable for everyone.

As with all tax planning, suitability and risk should be carefully assessed before acting.

Check Other Allowances

Before the tax year end, it may also be worth checking whether you are using other available allowances, such as:

• Savings and dividend allowances
• Junior ISA contributions for children or grandchildren

Small adjustments made before 5 April can make a meaningful difference over time.

Final Thoughts

Tax year end planning is about ensuring your finances remain aligned with your longer-term goals, rather than making rushed decisions at the last minute. As providers become busier approaching the deadline, leaving things too late can increase the risk of missed opportunities.

Tax rules are complex and individual circumstances vary, so this information is for general guidance only. Taking advice from your Beechwood adviser can help ensure any actions taken are appropriate for your personal situation.