Personal tax planning: What to consider before 5 April

Many of the personal tax changes in the Autumn Budget were rate changes that are hard to work around, but there are still some standard planning opportunities. The capital gains tax and dividend allowances are lower than they used to be, but that just increases the importance of using the allowance in full. 

Given these points, and the freezes to rate bands, a review before 5 April could help to identify any potential tax savings for you and your family. 

The highest rate of tax is 45%, applying to individuals with total income over £125,140. However, personal allowances are also tapered for individuals with income between £100,000 and £125,140 (2025/26), giving an effective tax rate in this band of 60%. 

Reducing taxable income can be particularly tax efficient if you fall into this 60% effective rate band. You can do so by: 

• Making pension contributions or charitable gift aid donations 
• Transferring income-generating assets between spouses or civil partners 
• Using tax-free or tax efficient investments 
• Investing in assets that generate capital growth rather than income  
• Altering the timing of income to maximise use of lower rate bands 

Pension contributions are still a really tax-efficient way of saving for retirement, with tax relief given at your highest marginal rate of income tax. Tax relief is restricted to the lower of your annual allowance and what is known as your net relevant earnings. You may also be able to take advantage of any unused annual allowance from the previous three tax years to make additional pension contributions.  

There is a risk of future changes to this reasonably generous relief, meaning it is worthwhile considering taking full advantage of the current allowances while they last. However,  

this is a complex area as pensions are subject to potential restrictions for higher earners. You should take advice before making contributions, and we can put you in touch with a specialist. 

If you pay tax at the 40% rate or higher, you may benefit from tax relief on gift aid donations you make to charity. 

Spouses should consider making sure that any charitable donations are made by the spouse with the higher marginal tax rate to maximise income tax relief. 

Individuals can also give quoted shares or an interest in land to a charity. This has the advantage that income tax relief is available on the market value of the asset while the disposal is also exempt from capital gains tax. 

Some individuals have a starting rate band of £5,000 for savings income, subject to the level of their total income, and £500 for dividend income in 2025/26. Savings and dividend income falling within these bands is taxed at 0%.  

Separately to the starting rate savings band, a personal savings allowance is also available to basic and higher rate taxpayers, but not to additional rate taxpayers. The allowance is £1,000 per year for basic rate taxpayers and £500 per year for higher rate taxpayers.  

Spouses and civil partners should review who holds savings that generate taxable income to ensure these allowances and rate bands are utilised efficiently. 

There are various tax-free and tax-efficient investments available, and our financial planning specialists can advise you on whether these are suitable for you. 

You can consider making tax-free investments through ISAs or National Savings. The annual ISA subscription limit for 2025/26 is £20,000. It cannot be carried forward if it is not used. From April 2027,  the cash ISA limit is being cut to £12,000, so next tax year is also an important time to make use of this allowance. After April 2027, the overall limit will remain at £20,000, but only £12,000 can be put cash, as the measure is designed to encourage the use of stocks and shares ISAs. 

You can also consider junior ISAs for children under 18 (2025/26 limit £9,000). Normally, income arising on funds given to children by a parent remains taxable on that parent if it is over £100 a year, but ISA income is not taxable. A junior ISA therefore allows you to give cash to your minor children without having to pay tax on the income generated. 

There is some concern that the government may reduce the subscription limits further, so using them this year may be especially wise. 

Enterprise Investment Scheme (EIS), Seed Enterprise Investment Scheme (SEIS) and Venture Capital Trust (VCT) investments may also provide tax relief and the opportunity to defer capital gains. These investments are considered high risk, however, and there is always a risk of further changes to the schemes. 

As capital gains tax is charged when an asset is sold, you have some control over when to pay it. If you have unrealised gains, you may find it beneficial to sell sufficient assets each year to use your CGT annual exemption, which is £3,000 in 2025/26. 

Crystallising unrealised losses to offset gains may also be an option. You can consider selling an asset which stands at a loss, or making a ”negligible value” claim on assets that currently have no value. 

Assets can also be transferred between spouses free of tax, which can help to use up both spouses’ annual exemptions and any capital losses. 

You should take tax and investment advice before making any substantial changes to your asset holdings. 

Gifts you make to other individuals are generally not subject to IHT unless you die within seven years.  

There is also an annual gift allowance of up to £3,000 each tax year. This will not be subject to IHT even if you do die within seven years. If the £3,000 annual allowance is unused, it can be carried forward, but only for one tax year, so if you have assets to spare you may want to consider using up this and last year’s allowance (if not already used) before 5 April. The current year’s allowance is automatically used first.

The annual allowance is per donor, not per recipient, so a married couple can make gifts to the same beneficiaries independently. Rate bands and allowances for IHT are currently frozen.  

Business and agricultural asset owners should also review their arrangements in light of the limit on IHT relief for agricultural and business property coming in from April 2026. Most of those affected will already have taken specialist advice, but any who haven’t should seek professional advice urgently.  

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