As we approach the end of the 2025/26 tax year, now is a great time to pause and review your finances.
A quick year-end check can often reveal opportunities to reduce your tax bill and make better use of the allowances available to you. The key is to act before 6 April 2026, because once the tax year ends, many opportunities disappear.
Here are five practical tax planning tips we’re discussing with many of our clients right now.
- Don’t Waste Your Personal Allowance
Everyone gets a personal allowance, which is the amount you can earn before paying income tax.
For 2025/26, if you don’t use it, you lose it. It can’t be carried forward into the next tax year.
So what can you do if your allowance isn’t fully used?
You might consider:
- Bringing income forward so it’s received before 6 April 2026
- Adjusting capital allowances if you’re claiming them
- Paying a dividend from a family company to use both your dividend allowance and any unused personal allowance
Another option applies if you’re married or in a civil partnership.
If one partner doesn’t use their full personal allowance and the other is a basic rate taxpayer, you could claim the Marriage Allowance. This allows you to transfer £1,260 of your allowance, reducing your joint tax bill by up to £252.
A simple adjustment like this can make a real difference.
- Protect Your Personal Allowance if Your Income Is Over £100,000
Once your adjusted net income exceeds £100,000, your personal allowance begins to disappear.
For every £2 you earn above £100,000, you lose £1 of your personal allowance.
By the time your income reaches £125,140, the allowance is completely gone.
But there may be ways to reduce your adjusted net income, such as:
- Making pension contributions
- Making Gift Aid donations to charity
Both can help bring your income below key thresholds and potentially restore part or all of your personal allowance.
Have you checked whether this applies to you? Many people miss this planning opportunity.
- Make Full Use of Your ISA Allowance
ISAs remain one of the most tax-efficient ways to save and invest.
For the 2025/26 tax year, you can invest up to £20,000, and any interest or dividends earned inside the ISA are tax-free.
If you haven’t used your full allowance yet, it’s worth considering doing so before 6 April 2026.
There are also some changes on the horizon:
- From 6 April 2027, tax rates on savings income will increase by two percentage points
- At the same time, under-65s will only be able to invest £12,000 of the £20,000 allowance in a cash ISA
This means making full use of your ISA allowance now could be even more valuable.
- Consider Dividends Before the Tax Rise
If you run a limited company, this is an important one to keep on your radar.
From 6 April 2026, dividend tax rates will increase:
- The basic rate rises from 8.75% to 10.75%
- The higher rate rises from 33.75% to 35.75%
- The additional rate remains 39.35%
If your company has retained profits, you may want to consider paying a dividend before the tax year ends to avoid the higher rates.
Of course, dividend planning should always be considered alongside your overall income position and tax bands, so it’s worth taking advice before making a decision.
- Review Your Pension Contributions
Pension contributions are another powerful tax planning tool.
For 2025/26, you can usually contribute up to 100% of your earnings (or £3,600 if lower), subject to the annual allowance of £60,000.
However, for higher earners:
- If threshold income exceeds £200,000 and
- Adjusted income exceeds £260,000
your annual allowance may be reduced gradually to £10,000.
There’s also an important deadline approaching.
You can carry forward unused pension allowances for up to three years, but any unused allowance from 2022/23 will be lost after 5 April 2026.
One more thing to keep in mind: if you’ve flexibly accessed your pension, the annual allowance may be reduced to £10,000.
Final Thoughts
Year-end tax planning doesn’t need to be complicated, but timing is crucial.
A quick review now could help you:
- Reduce your tax bill
- Make better use of available allowances
- Avoid missing opportunities before the tax year ends
The earlier you review things, the more options you’ll usually have.
Need Help With Your Year-End Tax Planning?
If you’d like help reviewing your tax position before the end of the 2025/26 tax year, our team would be happy to help.
At Jon Davies Accountants, we work with business owners and entrepreneurs across the UK to make tax planning simple and practical.
Get in touch with Jon or the team today to discuss your situation and make sure you’re not paying more tax than you need to.
You can contact us to arrange a chat — we’re always happy to help.
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Any questions?
If you’d like a meeting or a video call to discuss this, please get in touch with your favourite Liverpool accountant
- You can ring us on 0151 380 8080
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