Make the Most of Your ISA Allowance

Individual Savings Accounts (ISAs) provide a tax-efficient way to save or invest. For the 2024/2025 tax year, the annual ISA allowance remains at £20,000, which can be allocated to a Cash ISA, a Stocks and Shares ISA, or split between both types.

Importantly, the ISA allowance operates on a “use it or lose it” basis—any unused allowance does not roll over into the next tax year.

By maximising your ISA contributions before the 5th April 2025 deadline, you can shield your savings and investments from income tax and capital gains tax, making it a smart move for long-term financial planning.

Consider Saving for Your Children

If you have children or grandchildren, a Junior Individual Savings Account (JISA) is a valuable option to help secure their financial future. For the 2024/2025 tax year, the annual JISA contribution limit is £9,000, and it offers the same tax advantages as an adult ISA—meaning no income tax or capital gains tax on interest or investment returns.

You can contribute to a JISA for a child under the age of 18, and while the child can take control of the account at 16, they cannot withdraw funds until they turn 18.

As with adult ISAs, the JISA allowance operates on a “use it or lose it” basis—any unused portion cannot be carried forward to the next tax year. Many JISA providers accept contributions from multiple people, making it an excellent way for parents, grandparents, and other family members to contribute towards a child’s savings.

Maximise Your Pension Contributions

Contributing to your pension is one of the most tax-efficient ways to save for retirement. For the 2024/2025 tax year, the annual pension contribution allowance is £60,000, or 100% of your annual earnings—whichever is lower. Contributions receive tax relief at your marginal rate, which means a £60,000 contribution could effectively cost just £36,000 for a higher-rate taxpayer.

If you haven’t used your full allowance in the last three tax years, you may also be able to “carry forward” those unused allowances—potentially allowing total contributions of up to £200,000 this tax year, provided you have sufficient earnings to support the contribution.

However, for high earners, the annual allowance may be tapered. If your total income (including pension contributions) exceeds £260,000, your annual allowance is reduced by £1 for every £2 over that threshold, down to a minimum of £10,000.

By making the most of your pension contributions before the 5th April 2025 deadline, you not only boost your retirement savings but also reduce your current tax bill. It’s a smart financial move that can deliver long-term benefits.

Boost Pensions for Your Spouse or Children

You can contribute up to £2,880 per tax year into a Self-Invested Personal Pension (SIPP) for a non-earning spouse or partner, or into a Junior SIPP for your child. Thanks to 20% tax relief from the government, this contribution is automatically topped up to £3,600, even if the recipient has no earnings.

This strategy is a smart way to support a spouse who is currently out of the workforce or to give your child a head start on their retirement savings. “It’s a great way to boost the pension of a spouse while they are out of the workforce. It can also give your child a real leg up the retirement ladder”

If you’ve already maximised your own pension contributions for the year, this can also be an efficient and tax-advantaged use of extra funds.

Don’t Miss Out on Pension Tax Relief

Tax relief on pension contributions can be a significant benefit—but it’s not always applied automatically, especially for higher and additional rate taxpayers.

If you’re contributing to a pension scheme set up under the relief at source method (such as a SIPP or some workplace pensions), only basic rate tax relief (20%) is added automatically. Contributions are made after tax, and your pension provider reclaims 20% from HMRC. If you’re a higher-rate (40%) or additional-rate (45%) taxpayer, you’ll need to claim the extra tax relief—typically through your Self Assessment tax return or by contacting HMRC.

On the other hand, if your pension uses a net pay arrangement—where contributions are deducted before tax—you receive full tax relief at your marginal rate automatically, so there’s no need to reclaim anything.

The same applies to salary sacrifice arrangements, where your employer makes contributions directly from your pre-tax salary. In these cases, the tax relief is already factored in.

To avoid missing out, check with your pension provider to confirm how your scheme is set up, and take action if additional relief needs to be claimed.

Top Up Your National Insurance Record to Boost Your State Pension

If you’re a man born after 5 April 1951 or a woman born after 5 April 1953, you still have time to fill gaps in your National Insurance (NI) record going back to 2006—but only until 5 April 2025. After that date, you’ll only be able to backfill up to six tax years, which could significantly limit your ability to increase your State Pension entitlement.

NI gaps can occur for various reasons, such as taking time out of work to care for children or loved ones. These gaps can affect the amount of State Pension you’re entitled to receive.

To find out if you’re on track, check your State Pension forecast. If there are shortfalls, you may be able to fill them for free through backdated benefit claims, or by making voluntary contributions to top up your record.

Acting before the April 2025 deadline could make a meaningful difference to your retirement income.

Capital Gains Tax Allowance: Use It or Lose It

If you’ve made capital gains this tax year, it’s important to take advantage of your Capital Gains Tax (CGT) annual exempt amount. For the 2024/2025 tax year, the allowance has been reduced to £3,000 per individual (down from £6,000 in 2023/2024). Any unused allowance does not roll over, so if you don’t use it by 5 April 2025, it’s lost.

By strategically timing the sale of assets and making full use of available exemptions and reliefs, you can help reduce your CGT liability.

If you’ve made capital losses, you can use them to offset gains in the same tax year. If your losses exceed your gains, you can report them on your tax return and carry them forward to reduce taxable gains in future years. Even if you forgot to report losses previously, you can still claim them within four years of the end of the tax year in which the loss occurred.

Planning ahead can make a significant difference—so it’s worth reviewing your position before the tax year ends.

Make Use of the Marriage Allowance

The Marriage Allowance allows a non-taxpaying spouse or civil partner to transfer up to £1,260 of their personal allowance to their partner, potentially reducing the couple’s overall tax bill by up to £252 for the 2024/2025 tax year.

To qualify, the partner receiving the allowance must be a basic rate taxpayer, and the transferring partner must have income below the personal allowance threshold (currently £12,570).

If eligible, this is a simple and effective way for couples to reduce their tax liability—and claims can be backdated for up to four tax years, potentially resulting in a refund of over £1,000.

It’s worth checking your eligibility and making a claim if you haven’t already done so.

Consider Inheritance Tax Planning

Inheritance Tax (IHT) can take a substantial portion of your estate, but with strategic planning, you can reduce its impact and pass on more to your loved ones.

One key strategy is to use your annual gift allowances. Each tax year, you can give away up to £3,000 free from IHT under the annual exemption. If unused, this can be carried forward for one tax year. You can also gift up to £250 per person to as many individuals as you like—provided they haven’t received part of your £3,000 exemption.

Additionally, wedding gifts are exempt up to certain limits:

• £5,000 to a child
• £2,500 to a grandchild or great-grandchild
• £1,000 to anyone else

Most lifetime gifts are classified as Potentially Exempt Transfers (PETs)—they become fully exempt from IHT if you survive seven years from the date of the gift.

With the right approach, you can significantly reduce your estate’s exposure to IHT while supporting your family during your lifetime.

Investing in Tax-Advantaged Schemes

Investments in qualifying Venture Capital Trusts (VCTs), the Enterprise Investment Scheme (EIS), or the Seed Enterprise Investment Scheme (SEIS) offer generous tax incentives for UK taxpayers willing to take on higher risk.

Depending on the scheme, benefits can include:

• Income tax relief of up to 30% (EIS and VCT) or 50% (SEIS),
• The ability to offset tax relief against the current or previous tax year,
• Capital Gains Tax (CGT) exemption on qualifying gains,
• CGT deferral (EIS),
• Loss relief if the investment performs poorly,
• And Inheritance Tax (IHT) exemption after two years under Business Relief rules (EIS and SEIS).

However, these schemes are considered high-risk investments, typically involving early-stage or smaller companies. They are most suitable for UK-resident taxpayers with an appropriate risk appetite and relevant personal financial circumstances.

It’s highly advisable to seek independent financial advice before investing in these schemes.

Avoid the 60% Tax Trap

For the 2024/25 tax year, once your income exceeds £100,000, your personal allowance (£12,570) is gradually withdrawn—reduced by £1 for every £2 earned above that threshold. This results in an effective marginal tax rate of 60% on income between £100,000 and £125,140.

To avoid or reduce this high marginal tax rate, one effective strategy is to make pension contributions. By contributing income above £100,000 into your pension, you can reduce your adjusted net income, retain more of your personal allowance, and benefit from higher-rate tax relief.

This approach not only lowers your immediate tax bill but also boosts your long-term retirement savings. More strategies to follow.

Conclusion – Make the Most of Tax Planning Before 5 April 2025

Smart tax planning is key to maximising your financial efficiency and minimising your tax liabilities. By acting before the 5th April 2025 deadline, you can take full advantage of the reliefs, allowances, and opportunities available in the 2024/25 tax year.

Whether it’s making the most of your ISA and pension allowances, avoiding high marginal tax traps, or planning for the future through gifting and inheritance strategies, timing and tailored advice make all the difference.

Tax planning can be complex, and a one-size-fits-all approach rarely works. That’s why at Naail & Co Chartered Certified Accountants, our experienced team of accountants and tax advisors is here to provide personalised, expert guidance—helping you make informed decisions and stay financially ahead.

Get in touch with us today to discuss how we can support your tax planning goals.