As the end of the 2025/26 tax year approaches, it’s the ideal time to ensure you’re making the most of tax-efficient opportunities before the new financial year begins on 6 April 2026.
Here’s a reminder of three of the main tax planning opportunities…
Your Individual Savings Account (ISA)
The ISA allowance is £20,000 for the 2025/26 tax year. You can put all the £20,000 into a Cash ISA (until the allowance is cut in 2027), or invest the whole amount into a Stocks and Shares ISA. You can also mix and match as long as the combined amount doesn’t exceed your annual ISA allowance. Junior ISAs work in the same way but the maximum annual investment is £9,000 per child.
Your pension
You can contribute as much as you like into your pension, but there is a limit on the amount of tax relief you will receive each year. The Annual Allowance is currently £60,000. An individual can’t use the full £60,000 Annual Allowance where ‘relevant UK earnings’ are less than £60,000, although your employer still could.
You may be able to carry forward unused allowances from the past three years, provided you were a pension scheme member during those years. For every £2 of adjusted income (total taxable income including all pension contributions) over £260,000, an individual’s Annual Allowance is reduced by £1 until the minimum Annual Allowance of £10,000 is reached.
Gifting for IHT purposes
You can make gifts worth up to £3,000 in each tax year. These gifts will be exempt from IHT on your death, even if you die within seven years. You can carry forward any unused part of the £3,000 exemption to the following year but if you don’t use it in that year, the exemption will expire.
Certain gifts don’t use up this annual exemption, however, there is still no IHT due on them e.g. wedding gifts of up to £5,000 for a child, £2,500 for a grandchild (or great grandchild) and £1,000 to anyone else. Individual gifts worth up to £250 per recipient per tax year are also IHT free.
Under current HMRC rules, gifts outside the above categories normally cease to count for IHT purposes upon the donor’s survival for seven years, with reductions in the event of death after at least three years.
And don’t forget about Capital Gains Tax (CGT) and your Divided Allowance!
- Time for an end of tax year review? Contact us at hello@cailean.co.uk or call 01577 212577 to book a consultation.
The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.