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Year-End Tax Planning: How to Maximise Your Savings Before April

-7 min read

Know key year-end tax planning ideas that will exploit your savings before the UK tax year comes to an end in April. Useful tips you can use now.

Year-End Tax Planning: How to Maximise Your Savings Before April

Introduction

With the UK tax year ending on 5th April, now is a good time for year-end tax planning so you can maximise your financial savings. Be you a salaried worker or a freelancer, or a side-image: Whatever side hustle you do, a good understanding of how to work allowances for your benefit can seriously increase your financial position.

This guide presents practical tips that pertain to the UK on how to maximise the use of your personal allowance, optimum pension contributions, using the ISA limits, among other things. Let's get into it and keep things going towards maximising tax credits before the clock runs down on this tax year.

1. Check Your Personal Allowance

Your personal allowance is that earnings amount on which you do not pay tax yearly; this has been set at £12,570 for 2024/25. To get the most out of your allowance, you need to:

  • Make sure your income falls within that allowance, if possible.
  • Unused allowance can be passed onto a spouse or civil partner to save up to £252 a year through the Marriage Allowance.

Double-check your tax code on your payslip or check out GOV.UK's tax checker.

2. Maximise Your ISA Allowance

Your ISA allowance worth £20,000 during 2024/25 tax year. ISAs allow your funds to grow free from tax and thus serve excellent interest for both savings and investment.

  • Deposit as much as £20,000 before 5th April to truly leverage this opportunity.
  • Whether you want guaranteed returns or high potential returns will determine your choice of either a Cash ISA or a Stocks and Shares ISA.

Lifetime ISAs (LISA)

If you are between 18 and 39 years old, opening a Lifetime ISA is worth considering:

  • A maximum annual saving of £4,000.
  • The government will add 25% bonus (up to £1,000) each year.
  • Money can be withdrawn for buying of a first home or after the age of 60 for retirement.

3. Pension Contributions and How to Use Them Best

Increase pension contributions in order to try and lower your tax. People with the basic rate will automatically receive 20% tax relief, higher rate taxpayers have to claim the rest of the tax relief through self-assessment.

  • Contributions up to the annual allowance of £60,000 for 2024/25 are allowed.
  • Contribution to a maximum of 100% of your earnings or whatever is lowest.

For example:

Sarah earns £45,000 per year and contributes £5,000 to her pension. She automatically gets basic-rate relief of £1,250 and, as a higher-rate taxpayer, claims a further £1,250 through self-assessment, so she has effectively invested just £2,500 net.

4. Capital Gains Tax Planning

After selling assets such as shares or property, you are liable to pay Capital Gains Tax on profits above your CGT allowance for the same year (£6,000 for 2024/25):

  • Balance gains with losses made in the same year.
  • Consider transferring some of your assets to your spouse/civil partner so that they can use their allowance.
  • Spread sales over two tax years to double available allowances.

Visit GOV.UK for more information.

5. Claim Allowable Expenses and Reliefs

If you are a self-employed professional or an independent contractor, allowable expenses considerably bring down your taxable profits. Common allowable expenses are:

  • Office expenses (rent, utilities, stationery)
  • Professional subscriptions
  • Mileage or travel expenses for business purposes

Record your transactions clearly and always claim for every expense possible during your self-assessment return.

Marriage and Childcare Benefits

Also, look out for family benefits:

  • Claim Marriage Allowance where relevant.
  • Use Tax-Free Childcare (up to £500 every 3 months per child) if you have children under the age of 12.

Further Reading

Conclusion

The right year-end tax planning ensures you get to keep as much of your hard-earned money as possible. By maximising your allowances, pension contributions, and decisions around capital gains and ISAs, you can significantly lessen your tax liability and improve your financial outlook.

Beware-the key lies in early action before April 5th. This will allow you to avail yourself of the full benefits these opportunities will provide. Today is a great day to make a start for the coming fruitful year!