End of tax year considerations

You can get tax relief on personal pension contributions up to age 75. After that, contributions are allowed but no longer get tax relief. This means that investing £100 costs a maximum of £80 and can cost as little as £55.

HMRC puts a limit on the total amount that can be paid into all your pension arrangements each year before a tax charge is payable. This is the Annual Allowance. Anything paid in above the Annual Allowance may incur a tax charge.

• The standard Annual Allowance is £60,000. Any unused Annual Allowance from the previous three tax years may be used to allow larger contributions.  
• If you have an income of more than £200,000, depending on the level of your employers pension contributions, you could be impacted by the tapered annual allowance which gradually reduces the allowance from £60,000 to a minimum of £10,000.
• If you have taken benefits from a pension scheme other than as a guaranteed regular income or tax-free cash sum, the Money Purchase Annual Allowance of £10,000 applies.
• There is a further limit on your own contributions to a pension. This is 100% of your relevant UK earnings. If you are saving into a personal pension, including a workplace personal pension, you, or someone on your behalf, can pay in a total of up to £2,880 (£3,600 with tax relief added), even if your earnings are less than this.

You can find full details of how much you and others can pay into your pension here.  

If you invest up to £20,000 in an ISA, you may be able to access certain tax advantages, depending on the type of ISA:

Tax-free saving - any growth in an ISA is tax-free, this includes interest, capital gains and dividends.

A government bonus - the Lifetime ISA (LISA) pays a 25% bonus on every £ you pay in (although there is a lower limit on this kind of ISA of £4,000 per year).

• You can only open a LISA if you are aged 18 to 39 and
• You can only pay into a LISA until age 50.
• The money in a LISA can be withdrawn to pay for an eligible first-time home, or from age 60.
• Withdrawals at other times attract a government penalty of 25% of the amount withdrawn, so you can end up with less than you paid in.

ISAs can be Cash ISAs that pay a rate of interest like a bank account, or you can invest your money in a Stocks and Shares or Innovative ISA. While a Cash ISA offers a predictable return there is a risk that the real value of your money could be eroded by inflation, while in a Stocks and Shares ISA the value of investments can go down as well as up, so you could get back less than you paid in.

ISA rules are changing to limit the amount under 65s can save into a cash ISA from the 2027/28 tax year.    

It’s not only you that has the pension and ISA allowances; your partner and children may have them too. You can pay into their accounts to provide them with a future nest egg or help them build up their own pension, which could have taken a hit if they’ve taken time off work to look after children or other family members.

If you pay into a pension for someone else, they will get the tax relief on the pension contribution not you. You can pay £2,880 for someone who isn’t earning, and the government will top that up to the £3,600 limit in their personal pension. If the person is earning, then they can receive tax relief on higher contributions, up to the amount they earn each year.

Contributions to other people's pensions and ISAs are classed as gifts for inheritance tax purposes and you won't be able to take the money back.

The rules on how pension saving is treated when you die are changing. Up until 6^th April 2027 the amount you have in your pension pot won’t usually be considered when working out any liability for inheritance tax, but from that date it will be. 

A large pension pot could increase the value of your estate to a level above the threshold for inheritance tax or mean that more inheritance tax will be due. 

If you’re worried about the effect that inheritance tax might have you should consider seeking regulated advice on how this tax liability can be met or mitigated, ahead of the change.  

The maximum gain you can make on investments held outside of a pension or ISA, before you pay Capital Gains Tax is £3,000 in each tax year. If you have investments outside of an ISA or Pension that you are considering selling, doing so before the tax year end could ensure you use up your capital gains tax-free allowance. If you have enough ISA or pension allowance left you could use the money raised from selling the investments to buy the same investments in a pension or ISA, ensuring that future gains are not subject to capital gains.

You might also be able to reduce a capital gains tax liability by gifting assets to a spouse or civil partner. There will be no tax to pay at the time of the gift, but they will pay capital gains tax on the difference in value from when you first owned the asset to when they sell it.

Gifting might be advantageous when you and your spouse pay different rates of capital gains tax, or to use up an otherwise unused tax-free allowance.

It’s worth checking your tax code to make sure it’s right. If you are married or in a civil partnership, you may also want to review whether the Marriage Allowance applies to you. Under this allowance, a spouse or civil partner is allowed to give 10% of their personal allowance to their spouse so long as the receiving spouse is a basic rate taxpayer. This is useful if one partner is a non-taxpayer. By transferring 10% of the personal allowance to the taxpayer, the taxpayer will pay £252 less tax. If you’ve transferred 10% of your allowance your tax code will have a letter N at the end, and if you’ve received the extra allowance, you will see a letter M. You can find out more here.

Pay rises are often aligned with the end of a tax year, some people might also get bonuses at this time. It’s a good time to think about what you do with your earnings and how you can make the most of your money. Things to think about include: