Tax Year End Planning: What to Consider Before 5 April

As the end of the tax year swiftly approaches, it is a good time to review your financial position and consider whether you are making full use of the allowances available to you.

For many, the tax year end serves as a natural point to pause and reflect on their finances. Many allowances reset on 5 April and, if unused, may be lost. Taking the time to review your position now can help ensure any decisions are considered and aligned with your longer term financial goals.

Below are some key areas you may wish to consider.

Making use of your ISA allowance

Each individual currently has an annual ISA allowance of £20,000. ISAs provide a tax-efficient environment, meaning any growth is free from income tax and capital gains tax.

If you have not used your full allowance this tax year, you may wish to consider doing so before 5 April.

Reviewing pension contributions

Pensions can be a tax-efficient way of saving for retirement. Contributions typically benefit from tax relief, subject to your individual circumstances and relevant allowances.

Most individuals can contribute up to £60,000 per tax year, although this may be lower depending on factors such as earnings and also the tapered annual allowance for higher earners. It may also be possible to carry forward unused allowances from the three previous tax years.

Capital gains tax planning

If you hold investments outside of tax-efficient wrappers, you may wish to review your position in relation to capital gains tax.

Each individual has an annual exemption, and using this strategically over time may help reduce future tax liabilities.

Gifting and inheritance tax considerations

There are a number of gifting exemptions that can be used each tax year which may help reduce the value of your estate for inheritance tax purposes.

Regular gifting, where appropriate, can form part of a longer term estate planning strategy.

Planning for children and grandchildren

Junior ISAs and pensions can provide a tax-efficient way to save for younger family members. Reviewing contributions ahead of the tax year end can help ensure allowances are fully utilised where appropriate.

Timing and practical considerations

It is important not to leave planning until the last minute. Some transactions, particularly those involving investments or pensions, can take time to process.

Starting early allows for considered decision making rather than rushed actions close to the deadline.

Final thoughts

Tax year end planning is not simply about using allowances, but about ensuring your financial arrangements remain aligned with your longer term goals.

If you are unsure what actions are appropriate for you, seeking professional advice can help ensure any decisions are suitable for your personal situation.

With the tax year end approaching, now is the time to act. If you would like support in making the most of your allowances, get in touch to arrange a review.

The value of an investment with St. James's Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up.  You may get back less than you invested.

The levels and bases of taxation, and reliefs from taxation, can change at any time.  The value of any tax relief is generally dependent on individual circumstances.