Improving tax efficiency: What you need to do before the tax year ends

Maximise tax-efficient investments

Have you checked your Individual Savings Account (ISA) contributions lately? Make sure you’re making the most of your tax-free investment allowances. ISAs are a fantastic way to save, as any returns you earn are free from income tax and capital gains tax.

Pension contributions and Gift Aid donations

Contributing to your pension is not just a great way to secure your financial future; it can also help reduce your taxable income. Don’t forget about Gift Aid donations to charities, these not only provide you with tax relief but also support causes you care about.

Utilise Capital Gains Tax (CGT) allowances and reliefs

Now is a good time to think about your Capital Gains Tax allowances before they reset. Keep in mind that Business Asset Disposal Relief (BADR) and Investor’s Relief will be reduced after 5 April 2025. If you can, consider crystallising gains before this change by transferring qualifying assets or shares to a trust to make the most of the reliefs.

Salary sacrifice arrangements for 2025/26

If you’re looking for a smart way to cut down on National Insurance Contributions (NICs), think about salary sacrifice arrangements. Increasing your pension contributions through this method is a tax-efficient strategy that benefits both you and your employer.

Changes to Furnished Holiday Lettings (FHL)

Starting 6 April 2025, the Furnished Holiday Lettings regime will be abolished, which means those properties will fall under standard rental tax treatment. If you’re thinking about wrapping up your FHL activities, selling the property within three years might qualify you for BADR and help you enjoy a reduced CGT rate.

By taking these steps before the tax year-end, you can optimise your tax situation and make sure you’re benefiting from the reliefs available to you. Contact our Private Wealth team if you require any further advice or guidance.