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 2026 to 5 April 2027). Planning early allows you to take full advantage of these opportunities rather than rushing as the next deadline approaches.

As your financial advisors, 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 2026/27 tax year.

Your new tax year financial checklist

1. Review your ISA allowances:

   Overview: The overall limit remains £20,000, covering Cash ISAs, Stocks & Shares ISAs, and Innovative Finance ISAs combined. Each type carries different risk characteristics. Cash ISAs are deposit-based, whereas Stocks & Shares and Innovative Finance ISAs involve investment or lending risk, meaning the value of your savings could fall. Specific rules and restrictions apply to Lifetime ISAs.
   Action: You have a fresh ISA allowance for 2026/27. The overall limit remains £20,000, covering Cash ISAs, Stocks & Shares ISAs, and Innovative Finance ISAs combined, with specific rules for Lifetime ISAs. Lifetime ISAs allow up to £4,000 per year to be saved and attract a 25% government bonus, but withdrawals for any purpose other than a first home purchase or retirement from age 60 are subject to a 25% withdrawal charge, which can result in receiving back less than you paid in. The Lifetime ISA is not suitable for everyone and whether it is appropriate for your circumstances is something we should discuss. 
   
   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, find out more about our insight How to make the most of your ISA allowance. It is also worth noting that from April 2027, new rules will reduce the annual subscription limit for Cash ISAs to £12,000, within the overall £20,000 annual ISA limit (savers aged 65 and over will continue to be able to subscribe up to £20,000 into a Cash ISA each year). This change affects new contributions only,  existing Cash ISA balances are unaffected. If you rely on Cash ISAs for your annual savings, now is a good time to review how your ISA allowance is structured before that change takes effect.

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? The Annual Allowance for 2026/27 remains £60,000. Unused allowances from the previous three tax years (2025/26, 2024/25, and 2023/24) may also be carried forward, potentially allowing for larger contributions, subject to eligibility rules. Let's assess your Annual Allowance position and any carry forward potential.

Please note that if you have already started drawing flexibly from a pension, for example, from a drawdown fund, the amount you can contribute to money purchase pensions with full tax relief may be significantly lower than the standard Annual Allowance. This is known as the Money Purchase Annual Allowance. Do discuss your position with us before increasing contributions.

1. 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 remains £3,000. 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.

2. 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 remains £500 for 2026/27. However, it is important to note that dividend tax rates have increased from 6 April 2026. The ordinary rate (paid by basic rate taxpayers) has risen from 8.75% to 10.75%, and the upper rate (paid by higher rate taxpayers) has increased from 33.75% to 35.75%. The additional rate remains unchanged at 39.35%. If you hold dividend-paying investments outside an ISA or pension wrapper, this change may affect your tax position. Holding such investments within an ISA or pension shields any income and growth from these higher rates. Let's review your expected dividend income and ensure your portfolio is structured as tax-efficiently as possible..

3. 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 (known as Potentially Exempt Transfers). Additionally, everyone has an 'Annual Exemption' allowing them to give away up to £3,000 each tax year without IHT implications, regardless of survival. There is also a 'Small Gifts Allowance' (£250 per person, to as many individuals as you like), exemptions for wedding and civil partnership gifts, and the important exemption for regular gifts made from surplus income.
   Estate planning considerations have become increasingly significant in recent years. From April 2027, most unused pension funds and pension death benefits will be brought within the scope of IHT for the first time, which may have meaningful implications for those who had planned to pass on their pension wealth to future generations. Separately, changes to Business Property Relief and Agricultural Property Relief took effect from April 2026, introducing a £2.5 million threshold above which the relief is reduced from 100% to 50%. If any of these areas are relevant to your circumstances, now is an important time to review your estate plan.
   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.

4. Check eligibility for other allowances:

   Marriage Allowance: Allows a spouse or civil partner who does not pay Income Tax (or who pays tax only at the basic rate) to transfer £1,260 of their unused Personal Allowance to their partner, provided the recipient does not pay tax above the basic rate. This can reduce the recipient's tax bill by up to £252 in the year.
   
   Personal Savings Allowance: Allows basic rate taxpayers to earn up to £1,000 of savings interest tax-free each year. Higher rate taxpayers receive a reduced allowance of £500. Additional rate taxpayers receive no allowance. Savings held within an ISA do not count towards this allowance.

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 2026/27 tax year and the changes it brings makes this an especially worthwhile 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.

This article provides general information about current tax allowances and planning considerations. It does not constitute personal financial advice and should not be relied upon as such. Tax rules, allowances and reliefs can change and their application depends on individual circumstances. Please contact us before making any financial decisions