The Money Vault – End of Tax Year checklist

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Summary:

We introduce The Money Vault, a new format where we bring back our most valuable evergreen discussions. In this episode, we focus on the essential tasks required ahead of the tax year end on the 5th of April. We review a checklist originally recorded in 2025, explaining why the steps remain highly relevant for the 2025/2026 tax year.

Key Insights:

Pensions and Retirement Planning

• Maximise your allowances - You can contribute up to 100% of your earnings or £60,000 (whichever is lower) into a pension each tax year.
• Contributions for non-earners - Even if you or a family member (like a spouse or child) have no income, you can still pay in up to £2,880, which the government tops up to £3,600 through tax relief.
• Restore lost benefits - High earners can use pension contributions to reclaim their personal income tax allowance (which reduces once earnings hit £100,000) or to avoid the High Income Child Benefit Charge (for those earning over £60,000).
• Claim extra tax relief - Higher and additional rate taxpayers must remember to claim their extra pension tax relief via their self-assessment tax return.
• Carry forward rules - If you have not used your full pension allowance in the past three years, you may be able to carry it forward to make a larger contribution this year.
• Check your State Pension - Check your National Insurance record for any gaps. You can make voluntary contributions now to ensure you receive the full State Pension when you retire.

ISAs and Tax-Free Savings

• Use your £20,000 allowance - You can save or invest up to £20,000 tax-free across different types of ISAs (Cash, Stocks & Shares, Lifetime, or Innovative Finance).
• Lifetime ISAs (LISA) - If you are saving for a first home or retirement, you can put up to £4,000 into a LISA and receive a 25% government bonus (up to £1,000). This counts towards your overall £20,000 limit.
• Junior ISAs (JISA) - You can save up to £9,000 tax-free for each of your children. Like adult ISAs, this is a 'use it or lose it' annual allowance.

Capital Gains and Dividend Taxes

• Capital Gains Tax (CGT) allowance - You can make up to £3,000 in profit on investments before paying CGT. You might consider selling profitable investments to use this allowance before the tax year ends.
• 'Bed and ISA' transfers - You can sell investments and immediately move the money into an ISA to protect future growth from tax. Be aware of platform cut-off deadlines if doing this.
• Utilise capital losses - If you sell investments at a loss, you can use these losses to offset gains made elsewhere, reducing your tax bill.
• Dividend allowance - You can earn up to £500 in dividends tax-free. This is particularly important for company directors managing how they pay themselves.
• Advanced investments - Sophisticated investors might explore Venture Capital Trusts (VCTs) and Enterprise Investment Schemes (EISs) for their specific tax breaks.

Marriage Allowance

• Transfer unused allowances - If you are married or in a civil partnership, and one of you earns below £12,570 while the other is a basic-rate taxpayer, the lower earner can transfer £1,260 of their personal allowance to their partner.
• Backdate your claim - This can save you around £252 this year, but you can also backdate claims for up to five years, which could result in a rebate of over £1,000.

Inheritance Tax (IHT) and Gifting

• Annual gifting exemption - You can give away up to £3,000 each tax year without it being added to the value of your estate for Inheritance Tax purposes. You can carry forward one year's unused allowance.
• Small gifts - You can give up to £250 to as many different people as you like, provided they haven't received part of your £3,000 main exemption.
• Wedding gifts - You can give up to £5,000 to a child or £2,500 to a grandchild or great-grandchild as a tax-free wedding gift.
• Gifts from income - Regular gifts made out of your normal income are entirely free from Inheritance Tax, provided they do not negatively impact your standard of living.

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