With the 31 January tax return deadline now passed, the period leading up to the 5 April tax year end presents a valuable opportunity to review planning decisions and ensure key allowances and reliefs are not lost.
Below are some key areas worth considering ahead of the tax year end, alongside broader financial planning points that may merit a review.
Income tax planning
As the tax year closes, it can be sensible to review income levels and how these interact with marginal tax rates, the personal allowance and, where relevant, the tapering of allowances for higher earners. Timing of income, use of pension contributions, or other reliefs may help manage overall tax exposure.
Capital gains planning
Each individual has an annual capital gains tax exemption, which cannot be carried forward if unused. Reviewing portfolios, property holdings or other investments before 5 April may create opportunities to realise gains, rebalance assets, or crystallise losses in a tax-efficient way.
Pension contributions
Despite the planned inheritance changes, pensions remain one of the most effective long-term planning tools, offering tax relief on contributions and the potential for tax-efficient growth. Reviewing contributions ahead of the year end can help ensure allowances are fully utilised where appropriate, while also aligning retirement planning with wider objectives.
Inheritance tax and estate planning
The end of the tax year is often a natural point to revisit estate planning. Annual gifting allowances, regular gifts out of income, and trust planning can all play a role in managing future inheritance tax exposure, particularly as asset values and family circumstances evolve.
Investment allowances
Tax-advantaged wrappers such as ISAs can provide long-term benefits through tax-free income and gains. Ensuring allowances are used where appropriate can form an important part of a wider investment strategy, and don’t forget Junior ISA’s for the youngsters in the family – a great way for grandparents to set aside a little something for their future.
Planning for business owners
For those with owner-managed businesses, the interaction between personal and corporate planning remains critical. Reviewing remuneration strategies including salary, dividends and pension contributions can help ensure income is extracted efficiently while remaining aligned with longer-term business goals.
Business profits, cash reserves and investment plans may also benefit from review, particularly where pension funding, business asset disposal considerations or succession planning are relevant. As businesses grow or evolve, earlier planning often creates more flexibility later.
Considerations for senior executives
Senior executives may wish to review income levels in light of marginal tax rates, the tapering of allowances and potential exposure to additional tax charges. Pension contributions, annual allowance usage and any carry forward available should be considered carefully, particularly where bonuses or variable remuneration are involved.
Share schemes, incentive arrangements and concentrated equity positions can also benefit from regular review, both from a tax perspective and to ensure personal wealth is not overly dependent on a single source.
Trustees and trust planning
For trustees, the tax year end is a natural point to review trust income, gains and distributions. Careful management of tax rates, exemptions and reporting obligations can make a material difference to outcomes for beneficiaries.
Trustees may also wish to revisit the longer-term objectives of the trust, investment strategy, and how the trust fits within the wider family wealth and estate planning picture, particularly as legislation, family circumstances and asset values change.
Gift aid
Last but most definitely not least remember that you can benefit from personal tax relief on charitable donations and gift aid can boost the impact of your donation by 25% For those considering their broader philanthropy goals do speak to us about how your own family foundation can create a lasting legacy and benefit from gift aid too!
You can also read about the work of the FPC Foundation here
Wider financial planning considerations
Beyond specific tax allowances, the new year is always a good time to step back and review the bigger picture – investment strategy, cash flow planning, protection arrangements, and whether your financial planning continues to reflect your priorities, evolving family circumstances and longer-term goals.
As part of our ongoing review service these are the issues we address so if you know someone who would benefit from an independent review of their circumstances please do share this article with them as we always welcome referrals.
And if you would like to discuss any of these topics in more detail or simply want reassurance that your planning remains on track as we approach the end of the tax year, please do get in touch with your usual adviser.