The End of the Tax Year: Don’t Let Your Allowances Go to Waste

As we approach the end of the tax year on 5 April, it’s a good time to pause and check whether you’ve made the most of the allowances available to you. Many of these reset at the start of the new tax year, and once they’re gone, they’re gone for good.

Below is a simple overview of the main allowances and account types available in the UK tax system, and why they’re worth paying attention to before the tax year ends.

ISAs – Tax‑Free Savings and Investing

Individual Savings Accounts (ISAs) remain one of the most straightforward ways to grow your money tax‑efficiently. You can invest or save up to £20,000 per tax year across all ISAs, and any growth or income is free from Income Tax and Capital Gains Tax.

There are several types of ISA, including Cash ISAs, Stocks & Shares ISAs, Lifetime ISAs (LISAs), and Innovative Finance ISAs. You can’t carry unused ISA allowance forward, so if you don’t use it by 5 April, it’s lost.

For many people, ISAs form a core part of long‑term planning due to their simplicity and tax efficiency.

Pensions – Powerful Tax Planning

Pension contributions benefit from generous tax relief and can be one of the most effective ways to reduce your tax bill while planning for the future.

In the current tax year, most people can contribute up to £60,000 into pensions, subject to earnings and allowances. Contributions may also benefit from tax relief at your marginal rate, meaning the government effectively tops up your savings.

In some cases, unused pension allowances from the previous three tax years may be carried forward, making pensions particularly valuable for people with irregular or higher incomes.

Capital Gains Allowance

If you’ve sold investments, second properties, or other chargeable assets (outside of ISAs and pensions), Capital Gains Tax may apply.

Everyone has an annual Capital Gains Tax allowance, which is currently £3,000. Gains above this level may be taxable depending on your income and the type of asset sold.

Using ISAs and pensions for investing can help shelter future gains from Capital Gains Tax altogether.

Dividend Allowance

If you receive dividend income from shares or funds held outside of tax‑efficient wrappers, this may also be taxable.

The current Dividend Allowance allows up to £500 of dividend income per tax year before tax applies. While this allowance is much smaller than it once was, it’s still worth keeping in mind when structuring investments.

Savings Allowance

Depending on your tax band, you may be entitled to a Personal Savings Allowance, allowing you to earn interest tax‑free on cash savings outside of ISAs.

Basic‑rate taxpayers can typically earn more interest tax‑free than higher‑rate taxpayers, and additional‑rate taxpayers do not receive a savings allowance at all.

This makes choosing the right home for cash savings particularly important.

Junior ISAs and Family Planning

For those planning on behalf of children, Junior ISAs (JISAs) allow up to £9,000 per tax year to be saved or invested in a child’s name.

While the money is locked away until age 18, JISAs can form part of a longer‑term family planning strategy.

The Bigger Picture

Tax allowances are just one part of sensible financial planning. The real value comes from understanding how these accounts work together and how they align with your goals, whether that’s building long‑term wealth, planning for retirement, or creating financial flexibility.

With the end of the tax year approaching, now is the natural time to review what you’ve used, what you might still be able to take advantage of, and whether your current arrangements still make sense.

If you’d like help reviewing your position before the tax year ends, or simply want to sense‑check your options, feel free to get in touch.

Financial Disclaimers: The performance of your investments is subject to risk(s). Its performance may fluctuate based on movements in the market and economic condition(s). Capital at risk. Currency movements may also affect the value of investments. You may get back less than you originally invested. Past performance is not a reliable indicator of the future performance. Tax treatment is based on individual's unique circumstances.