As we step into the new tax year, it’s the perfect time to review your finances and make the most of the valuable tax allowances and reliefs available. By taking advantage of these opportunities, you can ensure your hard-earned money is working as efficiently as possible for you and your loved ones.
The government provides a range of tax-free allowances that can significantly reduce your tax liability if utilized properly. From maximizing your ISA contributions to carefully planning gifts and asset sales, there are several strategies to consider implementing in the new tax year.
Additionally, the new tax year brings important dates for self-assessment taxpayers to diarize, ensuring you remain compliant while taking full advantage of the annual allowances and reliefs. By getting organized now, you can approach the coming months with confidence, knowing your financial affairs are in order.
- Make the most of tax free ISA allowances
Each year the government allows individuals to save a certain amount of cash tax free through an Individual Savings Account (ISA). There are four types of ISA you can choose from: cash ISAs, stocks and shares ISAs, innovative finance ISAs, and Lifetime ISAs. Putting money into your ISA at the beginning of the tax year allows longer periods of time for it to be invested, if you have a stocks and shares ISA.
The tax free ISA limit for the 2025/2026 tax year is £20,000. This amount can either be saved in one type of ISA, or split amongst multiple types, however, only a maximum of £4,000 can be paid into a Lifetime ISA.
Remember that tax free savings can also be made for children under the age of 18 through a Junior ISA (JISA). The savings limit for the 2025/2026 tax year is £9,000.
- Consider topping up your pension
Individuals in the UK have an annual allowance that they can save in a pension pot in a tax year before they must pay tax. This is currently £60,000, or 100% of earnings, whichever is lower.
You may also be able to carry forward any annual allowance that you did not use from the previous 3 tax years. Working out how much you can put into your Pension over the coming year will mean that you work towards your retirement goals without much effort.
- Reduce your Inheritance Tax bill
Making gifts throughout your lifetime is an effective way to ensure that you are leaving as much behind to your loved ones as possible. For this, there is an annual exemption of £3,000 which can be rolled forward up to one tax year. You can also gift out of income, as long as your living standards don’t drop, and gift £250 per person as often as you like as a small gift allowance, provided you haven’t used another allowance on that recipient.
