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As the end of the tax year approaches, it’s crucial to take stock of your financial situation and make strategic decisions to optimise your tax efficiency. Whether you’re considering pensions, retirement provisions, Individual Savings Accounts (ISAs), inheritance tax (IHT) planning – or charitable donations, careful planning can help you make the most of available allowances and benefits.

Here’s a comprehensive guide to what you should consider in the run-up to the tax year end:

  1. Pensions: Utilising carry forward allowances

Pensions are a powerful tool for long-term savings and tax planning. One key consideration is maximising your annual pension contributions and making use of any unused allowances from previous years through carry forward.

What to consider:

  • A review of your pension contributions for the current tax year to assess if you can make additional contributions which maximise the increased annual allowance (£60,000 for the 2023/24 tax year).
  • Utilise carry forward allowances from the previous three tax years if your contributions have not already been maximised in those years.
  • Be mindful of the tapered annual allowance for high earners, as this may affect the amount you can contribute tax-efficiently.
  1. Retirement provisions: Ensuring financial security

Other retirement provisions such as personal or workplace savings plans should be reviewed and optimised before the tax year end.

What to consider:

  • Evaluate your current retirement provisions, including any personal savings or workplace schemes.
  • Determine if additional contributions can be made to these provisions to bolster your retirement savings.
  • Take advantage of any employer matching contributions or tax incentives available for retirement savings plans.
  1. ISAs and Junior ISAs: Saving and investing tax-efficiently

ISAs provide a tax-efficient way to save and invest, with various options available depending on your financial goals and appetite for risk.

What to consider:

  • Assess your ISA contributions for the tax year and consider maximising them before the year-end (£20,000 annual ISA allowance for the 2023/24 tax year).
  • If you have children, consider contributing to Junior ISAs (£9,000 annual allowance for the 2023/24 tax year per child) to provide them with a tax-efficient savings vehicle for their future.
  1. Inheritance Tax (IHT) Planning: Maximising annual allowances

Inheritance tax can significantly impact the wealth you pass on. Planning ahead can help mitigate its effects through various allowances and strategies.

What to consider:

  • Utilise the annual gift allowance (£3,000 per tax year) to make tax-free gifts to your beneficiaries.
  • Consider making use of other exemptions, such as small gifts (£250 per recipient per tax year) and gifts on marriage/civil partnership (£1,000 – £5,000 depending on the relationship to the couple) and the valuable regular gifts out of excess income exemption.
  • Review your estate planning strategy, including trusts and lifetime gifts, to minimise potential IHT liabilities.
  1. Gift Aid: Enhancing charitable contributions

Gift Aid allows charities to reclaim tax on donations made by UK taxpayers, increasing the value of your contributions at no extra cost to you.

What to consider:

  • Ensure you’ve made any eligible charitable donations for the tax year.
  • If you’re a higher or additional rate taxpayer, you can claim additional tax relief on your donations through your self-assessment tax return.

Final thoughts

As the tax year draws to a close, taking proactive steps to optimise your financial affairs can lead to significant tax savings and long-term benefits. By carefully considering your pension contributions, ISA investments, retirement provisions, inheritance tax planning, and charitable donations, you can make the most of available allowances and ensure your finances are structured in the most tax-efficient manner possible. Consulting with a financial advisor can provide tailored advice based on your individual circumstances and goals, helping you navigate the complexities of year-end tax planning with confidence.