Maximise Your Tax Reliefs Before the Financial Year End 

With the financial year-end on the horizon, individuals and business owners have limited time to utilise key tax reliefs before the 5 April deadline. If this deadline passes without action, you could miss out on valuable allowances and face unnecessary tax liabilities. Acting now can help ensure you keep more of your hard-earned money while remaining fully compliant with HMRC regulations. 

At Accounting People, we make your tax return simple and stress-free. We’ll handle the details, ensure you’re fully compliant, and help you claim every relief you’re entitled to. So, you can relax knowing your taxes are sorted, and your money is working harder for you. 

1. Maximise Your ISA Allowance 

Individual Savings Accounts (ISAs) are one of the most tax-efficient ways to save and invest. The annual ISA allowance for the 2024/25 tax year is £20,000. Any income or gains generated within an ISA are exempt from Capital Gains Tax (CGT) and Income Tax, making ISAs an excellent vehicle for growing your savings tax-free. There are several types of ISAs to choose from, including: 

By contributing to your ISAs before the 5 April deadline, you ensure you fully utilise this year’s £20,000 tax-free allowance. This maximises your tax-free savings potential and positions you for greater financial growth in the long term. 

2. Pension Contributions: A Smart Investment 

Contributing to a pension is one of the most effective strategies for reducing taxable income while securing your future. For most individuals, the annual pension contribution limit is £60,000 or up to 100% of your earnings (whichever is lower). Importantly, contributions to pension schemes receive tax relief at your marginal tax rate, effectively reducing the amount of income on which you pay tax. 

High earners have a reduced pension annual allowance; for every £2 of adjusted income earned over £260,000 per year, and if their threshold income exceeds £200,000 per year, their pension savings allowance decreases by £1. 

Additionally, if you have not used your full pension allowances in the previous three tax years, you might be eligible to carry forward those unused amounts. This carry-forward rule means you could make a larger lump-sum contribution before the year-end, boosting your pension fund and further reducing this year’s taxable income. It’s a smart investment in both your retirement and tax efficiency. 

3. Utilise Your Capital Gains Tax (CGT) Allowance 

In the 2024/25 tax year, individuals can realise up to £3,000 in capital gains without incurring any CGT. This is your annual CGT allowance, and it cannot be carried over into the next tax year – if you don’t use it by 5 April, it’s lost. You should review your investment portfolio to determine whether it makes sense to dispose of certain assets (such as stocks, funds, or other investments) before the deadline to take full advantage of the tax-free gains limit. 

Keep in mind that any capital gains above the £3,000 allowance will be taxed. However, gains on certain assets remain completely exempt from CGT – notably, any investments held within ISAs or growth within pension funds are not subject to capital gains tax. For assets outside of these wrappers (for example, shares held in a regular brokerage account or a second property), the CGT rates depend on your income tax bracket and the type of asset: 

Basic-rate taxpayers: 10% on most chargeable gains (18% on residential property gains; the residential property rate is set at 18%, reflecting a recent adjustment as of 30 October 2024). 
 

Higher and additional-rate taxpayers: 20% on most chargeable gains (rising to 24% on residential property gains for sales completing after 30 October 2024). 

Strategic planning around the timing of asset sales can help you minimise CGT. By using your allowance and being mindful of these rates, you can reduce your tax liability while still optimizing the returns on your investments. 

4. Gift Allowances for Inheritance Tax (IHT) Planning 

Gifting money or assets before the tax year-end can be an effective way to reduce the value of your estate for future Inheritance Tax (IHT) purposes. UK tax law provides several gift allowances that enable you to pass on wealth to loved ones tax-free, within limits. Key allowances to consider include: 

Annual Gift Exemption: You can give away up to £3,000 each tax year without it being added to your estate for IHT calculations. This £3,000 annual exemption can be split among multiple gifts or given to one person. If you didn’t use last year’s £3,000 exemption, you are allowed to carry it forward one year, potentially gifting £6,000 this year free of IHT implications. 
 

Small Gifts Allowance: You may give as many small gifts as you like of up to £250 per recipient per tax year. These small gifts are also exempt from IHT, provided each recipient has not received part of your £3,000 annual exemption. This is a useful way to give modest amounts to many friends, grandchildren, or other relatives each year without eroding your IHT threshold. 
 

Seven-Year Rule (Potentially Exempt Transfers): Larger gifts that exceed your annual exemptions can become fully exempt from IHT if you (the donor) survive for seven years after making the gift. This is often referred to as the seven-year rule. If you pass away within seven years, the gift may still be subject to IHT (with taper relief potentially reducing the tax due if death occurs between three and seven years after the gift). Essentially, planning larger gifts well in advance can significantly lower future IHT, provided you live for seven years after gifting. 

By making use of these gift allowances each year, you can gradually transfer wealth to your beneficiaries and potentially save a substantial amount of inheritance tax. It’s a prudent strategy for estate planning that ensures more of your assets go to your loved ones rather than the taxman. 

Why Act Now? 

With allowances tightening and HMRC rules frequently changing, taking action before the 5 April deadline is essential. At Accounting People, we’ll help you with your tax return, ensure complete tax compliance, and support you through tailored cloud accountancy and wealth management solutions. 

Secure your tax savings today—let’s build your financial future together. 

📞 0333 023 1300 
🌐 www.accountingpeople.co.uk