The End of the Tax Year Checklist for Savvy Investors
This is a financial promotion and is intended to provide information, not investment advice.
With the April 5th tax year-end approaching, now is the time for investors to review their financial position, maximise tax-free allowances, and ensure their investment strategy is working efficiently. The tax system provides several valuable incentives for those who take action before the deadline, but many unused allowances do not roll over—they are lost permanently once the new tax year begins on April 6th.
For savvy investors, taking a structured approach to tax planning can enhance returns, minimise liabilities, and build long-term wealth tax-free. This guide outlines the key actions to take before the deadline and explores how an Innovative Finance ISA (IFISA) can play a crucial role in tax-efficient investing.
Making the Most of Your Tax-Free Allowances
One of the most significant advantages of early tax-year planning is ensuring that every available allowance is used before it expires. Investors who fail to act before April 5th risk missing out on key tax benefits that could significantly enhance their financial position over time.
1. Maximise Your ISA Contributions
The ISA (Individual Savings Account) remains one of the most valuable tax-efficient investment tools available to UK investors. With a £20,000 annual ISA limit, it allows individuals to grow their savings tax-free, protecting interest, dividends, and capital gains from taxation.
Why This Matters:
• ISA contributions are completely tax-free, meaning investors keep 100% of their returns.
• The £20,000 ISA limit resets on April 6th, meaning any unused portion cannot be carried forward.
• For those holding underperforming Cash ISAs, transferring to an Innovative Finance ISA (IFISA) can provide higher target returns while maintaining the tax-free wrapper.
What You Should Do Before April 5th:
• Review your ISA contributions to see how much of the £20,000 annual limit remains available.
• Consider making a final contribution before the deadline to ensure no allowance goes to waste.
• If you’ve withdrawn funds from a Flexible ISA, replace them before April 5th to retain their tax-free status.
2. Maximise Pension Contributions
For high earners, pensions remain one of the most powerful tax-efficient investment vehicles, offering tax relief at your highest marginal rate while allowing for long-term, tax-free growth. The annual pension contribution limit for 2024/25 is £60,000, though higher earners may be subject to tapering rules.
Why This Matters:
• Pension contributions qualify for tax relief at 20%, 40%, or even 45%, depending on the investor’s income level.
• Investments within a pension grow free from income tax, dividend tax, and capital gains tax.
• Those earning above £260,000 per year may be subject to pension tapering, reducing their allowance.
What You Should Do Before April 5th:
• Check your annual pension contributions to determine how much of the £60,000 limit remains available.
• Make additional contributions where possible to maximise tax relief before the deadline.
• If subject to pension tapering, review your income level and ensure contributions remain tax-efficient.
For those who have already maxed out their pension contributions, an IFISA serves as another tax-free investment option, providing an alternative for long-term wealth growth.
3. Use Your Capital Gains Tax (CGT) Allowance
The capital gains tax(CGT) allowance for £3,000 for 2024/25.
Why This Matters:
• Realising gains within the CGT exemption limit now reduces tax exposure in future years.
• Investors holding assets outside of an ISA or pension could be liable for 20% CGT on most investments or 28% on property gains.
• Those looking to move taxable assets into an ISA can use the “Bed and ISA” strategy, selling assets and repurchasing them within an ISA to protect future growth from tax.
What You Should Do Before April 5th:
• Review investments held outside of ISAs and pensions and consider realising gains within the £3,000 exemption limit.
• If holding large taxable investments, plan how to mitigate CGT exposure by transferring assets to tax-free vehicles.
• If moving investments into an ISA, ensure transactions are completed before the cut-off date.
The Importance of Reviewing Your Investment Strategy
Beyond maximising allowances, the end of the tax year is an opportunity to reassess your portfolio and ensure that your investments align with your long-term financial goals. This involves evaluating risk exposure, adjusting asset allocations, and ensuring that tax-free vehicles are being used effectively.
Key Questions to Ask Before April 5th:
• Is my money working efficiently? Am I earning strong returns in a tax-efficient way, or is capital being eroded by inflation and taxation?
• Am I making full use of tax-free investment vehicles? Have I fully used my ISA and pension allowances?
• Does my portfolio align with my risk tolerance? Do I need to rebalance my asset allocations to ensure I’m on track with my goals?
• Am I too exposed to market volatility? Should I diversify into tax-free, asset-backed investments like an IFISA?
For those looking to improve portfolio efficiency, an IFISA can play a valuable role in diversification and wealth growth, while providing tax-free interest on secured lending opportunities.
How easyMoney’s IFISA Can Help You Grow Wealth Tax-Free
For investors looking beyond traditional savings vehicles, an Innovative Finance ISA (IFISA) can be a valuable tool for tax-efficient wealth growth. Unlike Cash ISAs, which typically offer lower returns, or Stocks & Shares ISAs, which are exposed to market volatility, an IFISA allows investors to earn tax-free interest through property-backed lending.
Why Consider an easyMoney IFISA?
• Earn target returns of 5.4% - 7% per annum (as per February 2025), significantly higher than most high-street savings accounts.
• Invest in secured, property-backed loans, offering a balance of stability and potential returns.
• No exposure to stock market volatility, making it an attractive alternative to Stocks & Shares ISAs.
• ISA transfers are permitted, meaning investors with underperforming Cash ISAs can move funds into an IFISA without losing tax-free status.
For those who have already maxed out pensions and traditional ISAs, an IFISA provides an additional way to protect capital from taxation while earning competitive returns.
What You Should Do Before April 5th:
• If you have not yet used your full ISA allowance, consider an IFISA before the deadline.
• If you hold a Cash ISA with low returns, consider transferring to an IFISA for better performance.
• If you have withdrawn from a Flexible IFISA, ensure funds are replaced before April 5th to maintain their tax-free status.
Final Thoughts: Taking Action Before the Deadline
The weeks leading up to April 5th present a critical opportunity for investors to optimise their portfolios. By reviewing tax-free allowances, maximising ISA contributions, and ensuring that investments are positioned for long-term growth, investors can reduce tax liabilities and enhance their financial future.
For those who have not yet used their full ISA allowance, the easyMoney IFISA offers an attractive tax-free investment option, providing the potential for higher target returns, property-backed security, and portfolio diversification.
With the deadline fast approaching, now is the time to act strategically and ensure that no tax-free opportunities are wasted. By taking full advantage of ISAs, pensions, and investment allowances, savvy investors can position themselves for a stronger financial future in the next tax year and beyond.
Capital is at risk. 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.