5 Things You Need to Do Before the Tax Year Ends
This is a financial promotion and is intended to provide information, not investment advice.
With the April 5th tax year-end deadline fast approaching, investors have only a short window left to maximise their tax-free allowances, reduce liabilities, and position their portfolios for long-term success. Many of the most valuable tax-efficient investment opportunities reset annually, meaning that any unused allowances will be lost if not utilised before the cut-off date.
For those looking to make the most of the final weeks before the tax year closes, this checklist outlines five essential actions to take to ensure that no tax-free benefits go to waste.
1. Check Your ISA Contributions
The £20,000 ISA allowance is one of the most valuable tax breaks available to UK investors, allowing you to earn interest, dividends, and capital gains completely tax-free. However, this allowance is strictly time-limited—any portion of it that remains unused by April 5th will be lost forever.
Why This Matters
• All returns within an ISA are tax-free—unlike savings accounts and taxable investment portfolios.
• The annual £20,000 limit resets on April 6th, meaning you cannot carry over any unused allowance.
• Those with underperforming Cash ISAs should consider whether transferring to an Innovative Finance ISA (IFISA) or Stocks & Shares ISA would deliver better returns.
What You Should Do Before April 5th
• Review your ISA contributions to see how much of your £20,000 allowance remains unused.
• Consider topping up your ISA before the deadline to maximise tax-free returns.
• If you have an IFISA, check for any withdrawals—if you have taken money out, replacing it before April 5th ensures you retain the full benefit of the tax-free allowance.
If you have significant taxable savings or investments outside of an ISA, now is the time to consider whether those funds would be better placed within a tax-free wrapper before the deadline.
2. Review Your Pension Allowances
For those seeking to reduce tax liabilities while securing long-term wealth, pensions remain one of the most powerful investment vehicles available. The annual pension allowance for 2024/25 is £60,000 (or up to 100% of earnings, whichever is lower), but this allowance does not carry over unless you qualify for carry forward rules.
Why This Matters
• Pension contributions qualify for tax relief at your highest marginal rate, meaning a £10,000 contribution effectively costs just £6,000 for a higher-rate taxpayer and £5,500 for an additional-rate taxpayer.
• The annual allowance is subject to tapering for those with an adjusted income exceeding £260,000, meaning it is essential to understand your personal contribution limit before April 5th.
• Pensions offer long-term tax efficiency, as investment growth inside a pension is free from income tax, dividend tax, and capital gains tax.
What You Should Do Before April 5th
• Check how much of your £60,000 annual allowance remains available.
• Ensure you maximise tax relief by making additional contributions where possible.
• If you are a higher earner, assess whether you are affected by the pension taper rules and make contributions accordingly.
For those who have already maximised their pension contributions, alternative tax-efficient investment options such as IFISAs or Venture Capital Trusts (VCTs) may be worth considering before the tax year closes.
3. Consider ISA Transfers
Many investors open an ISA and leave it untouched for years, unaware that they may not be achieving the best possible returns. While Cash ISAs provide security, they often fail to outpace inflation, meaning that long-term savings are effectively eroded over time.
For those looking to optimise their ISA strategy, transferring funds from a Cash ISA into an IFISA or a Stocks & Shares ISA before the deadline could be a way to enhance potential returns while maintaining tax-free benefits.
Why This Matters
• Many high street Cash ISAs are offering sub-inflationary returns, meaning real value is being lost.
• Transferring ISAs does not affect the annual £20,000 limit, meaning investors can move funds freely between different ISA types.
• IFISAs provide exposure to property-backed lending, with target returns typically higher than those offered by Cash ISAs.
What You Should Do Before April 5th
• Review your existing ISA accounts and assess whether they are delivering competitive returns.
• If holding cash savings, consider transferring to an IFISA or Stocks & Shares ISA for better long-term performance.
• Act early—ISA transfers can take time to process, so making arrangements before the last-minute rush ensures funds are moved efficiently.
For those holding large amounts in Cash ISAs, now is the time to consider whether their money could be working harder elsewhere while still benefiting from tax-free ISA protection.
4. Replace Any Withdrawals from a Flexible ISA
For those with a Flexible ISA, there is still time to replace any withdrawn funds before April 5th to retain the full tax-free allowance. Failing to replace these funds before the deadline reduces the total amount that can be sheltered from tax in the long term.
Why This Matters
• Withdrawn funds that are not replaced before April 5th will be lost permanently in terms of tax-free investment space.
• For IFISA holders, failing to replace funds reduces the total amount that can be kept in a tax-free, higher-yielding investment.
• The opportunity to replace withdrawn funds resets on April 6th, meaning any unreturned amounts will count as lost allowance.
What You Should Do Before April 5th
• Check your Flexible ISA withdrawals—have any funds been taken out that need to be replaced?
• Reinvest any withdrawn amounts before the deadline to ensure your full allowance is retained.
• Ensure transactions are completed in advance to avoid missing the cut-off.
By taking this simple step, investors can protect their full tax-free investment allowance for the year while ensuring they continue to earn tax-free interest and returns.
5. Plan for the Next Tax Year
Once April 6th arrives, a new tax year begins, bringing fresh opportunities to structure your portfolio efficiently. Many investors wait until the end of the tax year to make their contributions, but those who plan ahead can take advantage of early compounding and market opportunities.
Why This Matters
• The £20,000 ISA allowance resets on April 6th, providing another chance to maximise tax-free savings.
• Early ISA contributions allow for longer-term compounding, which can significantly enhance returns over time.
• Investors who have already maximised pensions and ISAs in the previous year can immediately start contributing again in the new tax year.
What You Should Do After April 6th
• Start making ISA contributions early rather than waiting until the deadline rush.
• Review tax changes—allowance adjustments may require different strategies in the new tax year.
• Assess your long-term financial goals and adjust contributions accordingly.
By planning early, investors can stay ahead of tax deadlines, take advantage of market opportunities, and ensure their portfolios are working as efficiently as possible.
Final Thoughts: Making the Most of the Tax Year-End
The final weeks before April 5th represent a critical time for investors to review, optimise, and take action to protect their wealth from unnecessary taxation. By maximising ISAs, pensions, and tax allowances, investors can ensure their money is working harder, reducing tax liabilities while securing long-term financial growth.
With so many allowances resetting at the end of the tax year, those who take action now will be in a stronger financial position for the years ahead, ensuring they are making full use of the tax-free opportunities available to them.
Past performance is no guarantee for future results.
Tax treatment depends on the individual circumstances of each investor and may be subject to change in the future.