The 2025/26 tax year concludes on 5th April 2026, making the next few months crucial for reviewing your financial activities and tax position. This is an excellent opportunity to ensure you’ve maximised the available allowances. Key areas to consider include:
Individual Savings Account (ISA) Allowance
Each individual can invest up to £20,000 in an ISA, shielding these savings from tax. Remember, this allowance does not roll over, so any unused portion is lost after the tax year-end. For those under 18, a Junior ISA allowance is also available.
Pension Contributions
Pension contributions can help reduce income tax liabilities while enhancing your retirement savings. Review your contributions to ensure you’ve maximised these allowances before the tax year closes.
Personal Income Tax Allowance
Each individual has a personal allowance of £12,570 (unless you earn over £100,000), which is tax-free for total taxable income up to this threshold. If you have opportunities to generate additional income, it’s worth ensuring you utilise this fully.
Capital Gains Tax (CGT) Allowance
The annual CGT allowance is £3,000. If you hold assets subject to CGT, consider making use of this allowance before the tax year-end.
Dividend Tax Allowance
The annual dividend tax allowance is £500. Review your income sources to determine if you can take advantage of this before the tax year closes.
Inheritance Tax (IHT) Gifting Allowances
Individuals can gift up to £3,000 each tax year without incurring any IHT liability. Other gifting allowances are also available but must be used before the end of the tax year to avoid losing them. With the freeze on the IHT nil rate band extended and proposals to include pension assets under IHT, being tax-efficient in estate planning is more important than ever.
We’re here to help you make the most of these opportunities and navigate the complexities of tax planning. If you have any questions or would like assistance, please don’t hesitate to contact your Cullen Wealth Financial Planner.
