🎉 It’s that time again—the countdown to the end of the tax year (5 April) is on, and so you now have limited time to implement any tax year-end planning!
So right now is the perfect moment to check if you’re making the most of your tax reliefs and allowances before they reset.
There’s a lot to think about, but here are some straightforward steps that most taxpayers—including employees, self-employed individuals, and company directors—can take to keep more of their hard-earned money.
Maximising Your Income Tax Allowances – for individuals
Are you fully using your tax-free allowances?
The standard personal allowance is £12,570 for 2024/25, which applies to income from any source.
But there are other allowances, too!
- Dividend allowance and savings allowance can help reduce your tax bill on investment income. If you have flexibility, consider adjusting the timing of income—bringing it forward or deferring it—to stay tax-efficient (see below).
- Spouses and civil partners can make transfers between them to maximise tax-free allowances. For example, shifting savings or shareholdings could mean making better use of allowances that might otherwise be lost. You can find out more by viewing our Video on Marriage Allowance here.
- ISAs are an easy win! Interest and capital gains within a cash ISA or a stocks and shares ISA are completely tax-free. For now…
The Little-Known ‘Starting Rate for Savings’
💡 If you have low earned income but some savings interest, you might qualify for the Starting Rate for Savings, which allows up to £5,000 of interest to be completely tax-free.
However, this rate is gradually reduced by £1 for every £1 of other income over £12,570—so it’s mostly beneficial for those with modest earnings but significant savings.
If this could apply to you, it’s worth reviewing how much interest you’re earning and whether you can restructure income to benefit from this little-known perk!
🎥 For more on this, check out our video on the subject here.
Capital Gains Tax (CGT): Use It or Lose It!
Capital Gains Tax (CGT) planning has become even more important now that the CGT exemption has been cut to just £3,000 for 2024/25 onwards. Since this allowance can’t be carried forward, think about whether it’s worth selling some assets to crystallise capital gains in the current tax year.
💡 Watch out! If you buy back the same shares within 30 days, special rules apply, known as ‘Bed and Breakfasting’ (unless you use an ISA or your spouse/civil partner makes the purchase instead).
If you’re holding assets that are currently at a loss, selling them before 5 April could crystallise that loss—allowing you to offset it against other taxable gains.
Tax Planning for Limited Company Directors & Shareholders
If you’re a director or shareholder of a limited company, there are extra opportunities to reduce tax before the year ends:
1. Take Dividends Before 5 April 💰
If you’re planning to pay yourself dividends, remember that the dividend allowance is only £500 for 2024/25. Anything above that is taxed at:
- 8.75% (basic rate taxpayers)
- 33.75% (higher rate taxpayers)
- 39.35% (additional rate taxpayers)
(Depending on what other income you have in the tax year.)
If you have room in a lower tax band, consider declaring dividends before 5 April to make the most of your current tax-free and lower-rate allowances.
2. Use a Director’s Loan Account (DLA) Wisely 🏦
If you’ve taken money from your company that isn’t salary or dividends, check your Director’s Loan Account (DLA).
If the company owes you money, you could withdraw it tax-free. But if you owe the company more than £10,000, there could be extra tax and National Insurance charges unless you are paying a market rate of interest on the loan.
The company could also have a tax bill to pay unless you repay the DLA (of whatever amount) within nine months of the company’s year-end😱
Understanding what a DLA is and how it works is complex – check out our video here for (hopefully) a super simple explanation.
3. Make Company Pension Contributions 📈
Limited companies can contribute to your personal pension, and these payments count as an allowable business expense—reducing the company’s Corporation Tax bill.
Plus, there’s no National Insurance or income tax on these contributions!🥳
You need to make sure payment is made before the end of the company’s tax year to get the deduction – and be mindful of not exceeding your annual contributions limit in the tax year!
Inheritance Tax: Small Steps Now, Big Savings Later
Inheritance Tax (IHT) might seem like a distant concern, but early planning makes all the difference.
Did you know that:
- Gifts made more than seven years before death fall outside your taxable estate?
- There’s a £3,000 annual exemption for gifts, which can be carried forward one year if unused?
- Spouses and civil partners each have their own separate allowances?
Additionally, some gifts—such as those made regularly out of surplus income—are also exempt, but proper record-keeping is key. If this applies to you, keeping clear notes and a written record is a smart move.
Certain other gifts—such as those to charities, political parties, or for the care of elderly or dependent relatives—are completely tax-free, with no limit.
Boost Tax Relief with Gift Aid
If you’ve donated to charity this year, don’t forget about Gift Aid!
When you tick the Gift Aid box, charities can claim an extra 25p for every £1 you donate, at no extra cost to you.
Higher and additional-rate taxpayers can also claim back extra tax relief on their donations via their self-assessment tax return—reducing their tax bill for the year.
And if you act before 5 April, you can even carry back donations to the previous tax year for an immediate tax-saving boost.
More Tax-Saving Opportunities You Might Be Missing
1. Claiming Marriage Allowance 💍
If you’re married or in a civil partnership, you might be missing out on the Marriage Allowance, which lets a lower-earning partner transfer £1,260 of their personal allowance to their spouse. This can save up to £252 in tax each year and can be backdated for up to four years!
2. Avoiding the Child Benefit Tax Charge Trap 👶
For the 2024/25 tax year, the High Income Child Benefit Charge (HICBC) affects individuals with an adjusted net income over £60,000. The charge increases gradually for incomes between £60,000 and £80,000, fully withdrawing Child Benefit at £80,000.
To reduce or eliminate this charge:
- Consider reducing your taxable income if possible —perhaps by paying into a pension—to bring it below the threshold and retain more of your Child Benefit.
3. Maximising Workplace Benefits 💼
Some employer benefits, like salary sacrifice schemes (e.g., pension contributions, cycle-to-work schemes, or electric car leasing), offer great tax savings.
If your employer provides these, using them before 5 April could reduce your taxable income and save on National Insurance too!
4. Self-Employed? Check Your Expenses! 📝
If you’re self-employed, ensure you’re claiming all allowable expenses before the tax year ends. This includes:
- Home office costs
- Professional subscriptions
- Equipment purchases
Consider bringing forward purchases (like a new laptop or business insurance) before 5 April to maximise deductions for this year.
Final Thought: A Quick Review Could Save You Money
A simple year-end financial check-up could reveal quick wins on tax savings.
Reviewing your income, investments, and potential gains now could help you reduce tax immediately—or set you up for future savings.
👉 Practical Tip: Don’t forget about pension contributions!
These still attract tax relief at your highest rate and can be particularly valuable if you’re earning over £100,000, where every £2 of extra income means losing £1 of your personal allowance—creating an effective tax rate of up to 60%. Making a pension contribution could reduce your taxable income and bring back some of that allowance.
Time is ticking—make sure you act before 5 April! ⏳
🔗 Official guidance on Income Tax Rates and Personal Allowances: Visit GOV.UK for the latest tax rules
