Individual Savings Accounts (ISAs)

Up to £20,000 each tax year can be placed in a combination of cash, stocks & shares, or innovative finance ISAs. This allows money to grow tax efficiently without any further liability for income, interest, or capital gains.

For those under 65, the 2026/27 tax year will be the last time they will be able to place their full £20,000 allowance is a cash ISA. From 6 April 2027, the under 65 cash ISA limit will be reduced to £12,000.

Wealthier individuals or those with a large windfall will therefore want to use their ISA allowance by 5 April before it is lost.

For those who can afford it, it can be worth funding a loved one’s ISA. Junior ISAs (JISAs) are available for those under 18, where up to £9,000 each tax year can be saved to build a future nest egg.

For those aged 18 to 39, a Lifetime ISA (LISA) is currently available, where up to £4,000 of each years’ ISA allowance can be placed. LISAs receive a 25% government bonus of up to £1,000 a year, but penalties apply if accessed under age 60, unless used for a first home purchase.

The Government have confirmed that the LISA is to be replaced with a new first time buyers’ product. Consultation on this will take place in early 2026, but no launch date is yet confirmed.

As a LISA must be held for at least a year to get the government bonus, one trick is to open one with a token amount (i.e. £1) as soon as possible. This can ensure the one-year qualifying period is met when ready to purchase a first home - a larger amount can then be added, immediately qualifying for the 25% bonus.

When it comes to pensions, there are several tax year end points to consider:

• State Pension and National Insurance Contributions

The State Pension is based on the number of qualifying years in which National Insurance contributions (NICs) were paid. You need at least 10 qualifying years to receive anything, and up to 35 qualifying years to receive the full amount.

You can pay voluntary contributions to make up NIC gaps in the previous 6 tax years, which must be done by 5 April each year. For those with shortfalls, this can provide a very cost-effective way to increase retirement income.

• Pensions Annual Allowance

The annual allowance for 2025/26 is £60,000. However, unused annual allowance can also be carried forward for a maximum of three tax years. This means that 5 April is the last chance to use any unused allowance of up to £40,000 from 2022/23.

Some higher earners will be subject to the tapered annual allowance, whereas others will have flexibly accessed a pension and triggered the money purchase annual allowance. To understand how much annual allowance is available, HMRC provides a calculator which can be found here - https://www.tax.service.gov.uk/pension-annual-allowance-calculator.

Regardless of the level of annual allowance that is remaining, member contributions will only attract tax relief if the member has sufficient earnings in the tax year that the contribution is made.

Use of Income Tax Bands

Making end of year pension contributions is a useful way to reduce taxable income. This can move an individual out of higher or additional rate tax or mean they no longer pay tax at all. If contributions reduce income below £100,000, this will restore the tax-free personal allowance and avoid the need for a tax return.

Claiming the Marriage Allowance is another way to reduce tax by using a husband or wife’s unused personal allowance. It allows a non-taxpayer to transfer £1,260 of their Personal Allowance to a basic rate tax-paying spouse or civil partner. This saves up to £252 per year and can be backdated up to 4 tax years, so 5 April is the last chance to claim for 2021/22.

Where someone has savings interest outside of a pension or ISA, it can be worth considering if tax can be reduced through the ‘starting rate for savings’ or the ‘personal savings allowance’. Availability of these allowances can also be relevant when deciding when to incur a chargeable event on an onshore or offshore bond.

Some retirees or directors might want to take additional money out of a pension or company to use remaining tax allowances or bands in 2025/26. This can be especially beneficial if making regular gifts under the normal expenditure out of income inheritance tax exemption.

For those taking dividend income, tax will increase on 6 April from 8.75% to 10.75% for basic rate taxpayers and from 33.75% to 35.75% for higher rate taxpayers. If possible, some individuals may want to structure dividend income to allow more to be received in the 2025/26 year.

Capital Gains Tax (CGT)

Over recent years, CGT allowances have greatly reduced and the tax rates on capital gains have increased. The tax-free CGT allowance for 2025/26 is £3,000 (£1,500 for trusts) and 5 April 2026 is the last chance to use this year’s allowance.

For some, it can be worth using available CGT allowances to sell assets held outside an ISA and repurchase them within an ISA each tax year – commonly known as ‘Bed and ISA’.

Gifting Allowances

Those looking to reduce an inheritance tax bill will need to consider annual gift allowances:

• The ‘annual exemption’ - £3,000 each tax year can be gifted without forming part of the estate on death. If unused, this can be carried forward for up to one tax year, so 5 April is the last chance to use any unused annual exemption from 2024/25.

• Small gift allowance - You can also make gifts of up to £250 per person each tax year, but only if you have not already used another gifting allowance for the recipient of the gift.

• Gifts for weddings or civil partnerships - Wedding gifts of up to £5,000 per child, £2,500 per grandchild or great grandchild and £1,000 for anyone else can be made each tax year and are immediately exempt from IHT. These can be combined with the ‘annual exemption’ to make a larger gift.

Other taxes

From 6 April 2026, there are several other tax changes that come into effect. Some business owners and high net worth individuals will want to consider:

• Venture Capital Trusts (VCTs) - Anyone looking to make new investments will see upfront income tax relief reduce from 30% to 20%.

• ‘Business Asset Disposal Relief’ (formerly ‘entrepreneurs’ relief’) - A capital gain on a qualifying business disposal will see the reduced rate of tax payable increase from 14% to 18%.

• Agricultural and Business Property Reliefs threshold -To be introduced at £2.5 million, this will restrict the level of assets that can receive 100% relief from inheritance tax.

Comment

The end of the tax year can be a busy time for financial planning. Individuals should act sooner rather than later so that important deadlines aren’t missed.

Important information

Please note this is for general information only and is based on LV's understanding of the relevant legislation and regulations and may be subject to change.

The tax treatment of benefits depends on individual circumstances and may be subject to change in the future.

The use of this document is at your own risk, and the content should not be used for the provision of professional advice.

LV= accept no liability for any damages, losses or causes of action of any nature arising from your use of this document.