Your checklist for the tax year ahead

Think of the new tax year as a clean slate for your tax allowances. Many operate on a ‘use it or lose it’ basis within the tax year (which runs from 6 April 2025 to 5 April 2026). Planning early allows you to take full advantage of these opportunities rather than rushing as the next deadline approaches.

As your financial advisers, we're here to help you navigate these complexities. To get you started, below is a checklist of key areas to consider discussing with us in light of the new 2025/26 tax year.

Your new tax year financial checklist

1. Review your ISA allowances:

   Overview: The Individual Savings Account (ISA) allows you to save or invest a certain amount each tax year without paying Income Tax or Capital Gains Tax on the returns.
   Action: You have a fresh ISA allowance for 2025/26 (the overall limit has been £20,000 for several years, covering Cash ISAs, Stocks & Shares ISAs, and Innovative Finance ISAs combined, with specific rules for Lifetime ISAs). Consider making contributions early to maximise potential tax-free growth throughout the year. We can discuss the most suitable type of ISA for your goals.

2. Maximise pension contributions:

   Overview: Pension contributions benefit from tax relief, making them one of the most effective ways to save for retirement. There's an Annual Allowance limiting how much you, or others on your behalf, can contribute tax-efficiently each year. Personal tax-relievable contributions are capped at 100% of earnings irrespective of the amount of annual allowance/carry forward available.
   Action: Review your current pension contributions. Can you afford to increase them to make the most of the tax relief available? Remember unused allowances from the previous three tax years might be carried forward ('Carry Forward'), potentially allowing for larger contributions, subject to eligibility rules. Let's assess your Annual Allowance and any Carry Forward potential.

3. Utilise your Capital Gains Tax (CGT) Annual Exempt Amount (AEA):

   Overview: If you sell assets (like shares, funds outside an ISA, or second properties) that have increased in value, the profit may be subject to CGT. However, you have an annual exempt amount, meaning you only pay tax on gains above this threshold.
   Action: The AEA for 2025/26 is now available. If you're planning to sell assets, structuring sales potentially over multiple tax years can help utilise the AEA effectively. We can review your investment portfolio to see if realising gains within the current year's AEA aligns with your investment strategy. Note: The AEA threshold for 2025/26 is £3,000.

4. Assess the Dividend Allowance:

   Overview: You may receive a certain amount of dividend income each tax year tax-free via the Dividend Allowance. Dividends received above this allowance are taxed at specific rates depending on your income tax band.
   Action: The Dividend Allowance for 2025/26 is £500. Consider how your investments are structured (e.g., holding dividend-paying shares within an ISA or pension wrapper shields them from dividend tax). Let's review your expected dividend income and ensure your portfolio is structured tax-efficiently.

5. Plan your Inheritance Tax (IHT) gifting:

   Overview: Certain gifts you make during your lifetime can be exempt from IHT, provided you survive for seven years after making them (Potentially Exempt Transfers). Additionally, everyone has an 'Annual Exemption' allowing them to give away a certain amount each tax year (£3,000 in this and recent tax years) without IHT implications, regardless of survival. There's also a 'Small Gifts Exemption' (£250 per person), wedding gifts and the very topical regular gifts from surplus income.
   Action: Using your IHT allowances early in the tax year is often a sensible part of estate planning. If you plan to make gifts, doing so now starts the seven-year clock ticking sooner for larger gifts and uses your 2025/26 annual exemption. We can discuss how gifting fits into your overall estate plan.

6. Check eligibility for other allowances:

   Marriage Allowance: Allows a spouse or civil partner who doesn't pay income tax (or pays tax at the basic rate) to transfer a portion of their unused Personal Allowance to their higher-earning partner (provided the recipient doesn't pay tax above the basic rate).
   Personal Savings Allowance: Allows non taxpayers and basic rate taxpayers to earn some savings interest tax-free each year (higher rate taxpayers get a smaller allowance, additional rate taxpayers get none).

Your next step: Talk to us

This checklist provides a general overview of opportunities at the start of the new tax year. Your personal circumstances, goals, and risk tolerance are unique, and the best course of action depends entirely on your individual situation.

The start of the 2025/26 tax year is the perfect time for a financial review. Please get in touch to schedule a meeting. We can help you understand how these allowances apply to you, ensure your financial plan is up-to-date, and make confident decisions for the year ahead.

Let's work together to make the most of the opportunities this new tax year brings.