With the new tax year starting on April 6, now is the time to make sure you’ve used valuable tax-free allowances before they reset
Do your end of tax year checklist now(Image: Prostock-Studio via Getty Images)
Vicky Parry of MoneyMagpie speaks to financial experts including Jasmine Birtles and Ruby Layram about the simple moves – from ISAs to pensions and investments – that could help households protect their savings and keep more of their money.
Many of the tax allowances that help people protect their savings and investments from the taxman reset on April 6, and if you don’t use them, you usually lose them.
That means the next few weeks are an opportunity to boost savings, cut tax bills and potentially grow your investments faster.
Jasmine Birtles, founder of MoneyMagpie, says the key is not to leave it until the last minute. She explains: “People often panic in the final days before the tax year ends and rush into financial decisions.
“But the smartest thing to do is take a calm look at your allowances now. Even small steps – like putting money into an ISA or pension – can make a huge difference over time.”
Here’s what experts say you should be doing before the new tax year arrives.
Use your ISA allowance before it disappears
Every adult in the UK has a £20,000 annual ISA allowance. That means you can save or invest up to £20,000 in ISA s each tax year without paying tax on the interest, dividends or investment growth.
But the allowance doesn’t roll over. If you don’t use it by April 5, it’s gone. Ruby Layram, investment editor at MoneyMagpie, says ISAs remain one of the most powerful tax-free tools available.
“ISAs are one of the easiest ways to protect your savings and investments from tax,” she says.
“Whether it’s a Cash ISA for savings or a Stocks and Shares ISA for investing, using your allowance each year can build a tax-free pot worth tens of thousands over time.”
If you’re considering investing, a Stocks and Shares ISA allows you to invest in funds, shares and bonds while keeping any gains completely tax-free.
Check your investments before the tax year ends
Investors should also review their portfolios before the new tax year. One important allowance to be aware of is the capital gains tax (CGT) allowance, which is now just £3,000.
This means you can make up to £3,000 in profit from selling investments before paying tax. Experts often suggest using a strategy known as “bed and ISA”, where you sell investments and then repurchase them inside an ISA.
Ruby Latham explains: “This can be a really useful way to move investments into a tax-efficient wrapper. You sell the asset outside the ISA and buy it again inside the ISA so future growth becomes tax free.”
However, investors should always check fees and timing, as markets can move while the transactions happen.
Top up your pension
Pensions are another area where you can gain tax advantages. Most people can contribute up to £60,000 a year into a pension and receive tax relief.
That means for every £80 you pay in, the government effectively adds £20 for basic-rate taxpayers. Jasmine Birtles says pensions are one of the most overlooked ways to cut your tax bill.
“A pension contribution doesn’t just boost your retirement savings – it can also reduce your taxable income,” she says.
“For higher earners in particular, it can be a powerful way to keep more of what you earn.” Even small contributions can benefit from tax relief.
Make use of your partner’s allowances
Couples may also be able to reduce their tax bills by sharing allowances. The Marriage Allowance allows a lower earner to transfer part of their personal allowance to a partner who pays basic-rate tax.
This could reduce the household tax bill by up to £252 a year. Couples can also each use their ISA allowance, effectively protecting up to £40,000 a year between them.
Don’t forget Junior ISAs
Parents and grandparents can also make use of Junior ISAs. Children can receive up to £9,000 per year into a tax-free account that they can access when they turn 18.
While the money is locked away, it can grow tax-free for years. Ruby Layram says this can be a powerful long-term strategy.
“Starting early gives investments more time to grow. Even modest contributions each year could turn into a significant fund by the time a child becomes an adult.”
The new tax year checklist
If you want to get your finances in shape before April 6, experts suggest running through this quick checklist:
- Use as much of your cash £20,000 ISA allowance as possible
- Consider a Stocks and Shares ISA for long-term investing
- Review investments and consider moving them into ISAs
- Check if you can use your £3,000 capital gains allowance
- Top up your pension contributions to benefit from tax relief
- Make sure both partners are using their tax allowances
- Check if you’re eligible for the Marriage Allowance
- Consider contributing to a Junior ISA for children
- Review your savings to ensure they’re earning competitive interest
- Set financial goals for the new tax year ahead
Birtles says the biggest mistake people make is thinking tax planning is only for the wealthy. “In reality, these allowances exist for everyone,” she says.
“If you use them year after year, they can quietly build serious financial security.” And with the new tax year just weeks away, the window to use them is closing fast.
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