Being proactive with your finances can make a meaningful difference to your financial position over the long term. With the end of the tax year approaching, static or shrinking allowances and frozen thresholds mean more people are paying more tax, and potentially more than they need to.

Reviewing pensions, ISAs, capital gains, gifting and household tax planning now helps increase the efficiency of your financial position ensuring you use valuable allowances and reliefs. Most of these allowances are lost if not used before the end of the tax year, so acting early ensures you stay firmly in control of your finances. Although as expected, no major changes to tax allowances or policy were in the Chancellor’s Spring Statement, it remains sensible to take any action well before year end and make full use of existing planning opportunities.

Looking ahead to tax year end

ISAs

With the end of the tax year fast approaching, now is the time to check whether you are making full use of the allowances available to you. ISA allowances remain one of the simplest and most effective ways to shelter savings and investments from income tax and capital gains tax (CGT). Any unused ISA allowance is lost once the tax year ends, so reviewing contributions earlier avoids a last-minute rush. Adults have a £20,000 ISA allowance spread across the different types of ISA available, whilst parents or grandparents can save and invest £9,000 per tax year for children in a Junior ISA (JISA), which automatically turns to an adult ISA on their 18^th birthday.

Pensions

Pension planning is equally important. Annual pension allowances can be used not only for the current tax year but, subject to eligibility, via carry forward from the previous three tax years. This can be particularly valuable for higher and additional rate taxpayers who may have had fluctuating income and bonuses. Pension contributions not only build long-term retirement security but can also reduce your current income tax bill significantly given the tax relief available on contributions. Despite the proposed changes to salary sacrifice on pension contribution, they remain one of the best and most tax-efficient ways to save and invest for the future.

Capital Gains Tax (CGT)

CGT planning has become increasingly relevant as allowances or exemptions have been reduced in recent years. If you hold investments or assets that may be subject to CGT, reviewing potential disposals before the end of the tax year can help ensure you use available exemptions efficiently. This might involve crystallising gains up to the £3,000 annual exemption or spreading disposals across tax years. Another potential planning tool is transferring assets between spouses where appropriate. This can ensure both spousal exemptions are used thereby doubling the combined exemption, but also that less tax is paid, as assets with a capital gain can be transferred to the spouse who pays tax at a lower rate. The rates for CGT are currently 18% for basic rate taxpayers and 24% for higher or additional rate taxpayers.

Inheritance Tax planning

Inheritance tax (IHT) planning is another area often overlooked. Making use of annual gifting exemptions of £3,000 per tax year can shield more assets from IHT. This exemption can be carried forward one tax year, meaning a couple could potentially gift up to £12,000 in the current tax year and it be immediately exempt from IHT. Gifting out of normal expenditure from income, and potentially larger lifetime gifts can reduce the value of your estate over time. Starting early and reviewing this regularly allows for more measured and tax-efficient decisions rather than reactive planning later on.

Charitable giving and tax efficiency

Charitable donations can play a valuable role in tax planning. Gifts made under Gift Aid not only support causes you care about but can extend your basic or higher rate tax band. This can reduce or eliminate higher or additional rate tax on part of your income, as well as help preserve personal allowances that might otherwise be lost.

For those already giving to charity, it’s worth reviewing whether your donations are structured in the most tax-efficient way and ensuring Gift Aid is being claimed correctly.

Budget changes, fiscal drag and tax threshold freezes

The October 2025 Budget brought adjustments to dividend tax rates (from April 2026), and savings income and property tax rates (from April 2027) but one of the most significant, and least visible, changes remains the freezing of income tax thresholds until April 2031. As wages or other income (such as from a pension) rise over time, more people are being pulled into higher tax bands without any real increase in purchasing power. This phenomenon, known as fiscal drag, means that many are paying more tax despite feeling no better off.

In practice, this results in a growing number of higher and additional rate taxpayers. It can also lead to the gradual loss of personal allowances, loss of Child Benefit, and other income-linked reliefs, often catching households by surprise.

What can you do to combat this?

While you can’t control tax policy, there are practical steps you can take to reduce its impact and minimise the amount of tax you pay. Pension contributions remain one of the most powerful tools, particularly for higher and additional rate taxpayers, as they reduce taxable income and can help restore lost allowances. Charitable donations, as mentioned, can also be used strategically to manage tax bands.

For couples, reviewing how assets are held can make a meaningful difference. Ensuring income-producing assets are owned by the lower taxed spouse can reduce the overall household tax burden, as can ensuring that assets with a capital gain are sold by the lower taxed spouse.

Tax advantaged investments

Investors who have used their ISA and pension allowances can consider other tax-efficient options such as Venture Capital Trusts (VCTs) and Enterprise Investment Scheme (EIS) investments. Both offer generous income tax relief of up to 30% (falling to 20% for VCT in April 2026) alongside attractive capital gains tax benefits. Investors can commit up to £200,000 per tax year into VCTs and up to £1 million (or £2 million for knowledge intensive companies) through an EIS. These investments are typically higher risk and should only be considered for experienced investors and only after other allowances have been used first.

Being proactive before 6 April

Now is the perfect moment to step back, assess your position, and put a clear plan in place ahead of tax year end. With falling allowance or exemptions in recent years, tax thresholds frozen, and more people drifting into higher tax bands, proactive financial planning increases the chances of you preserving more of your wealth and achieving your financial goals.

If you are keen to understand more around the various tax allowances available to you, and how you can potentially better your financial position prior to 6 April, please get in touch.

Buzzacott Financial Planning is authorised and regulated by the Financial Conduct Authority. This article has been prepared to keep readers abreast of current developments. Professional advice should be taken in light of your circumstances before any action is taken or refrained from. The value of investments, and the income from them, may go down as well as up and investors may not get back the amount originally invested.