Make the Most of the Tax Year-end: Your 2024/25 Wealth Guide

As the tax year closes on 5th April, it’s a great time to review your finances and take advantage of valuable tax breaks. Whether you’re investing for the future or simply looking to keep more of your income, these steps can help you make the most of the current tax year.

Max out Your ISA allowance

With an annual allowance of £20,000, ISAs (Individual Savings Accounts) are an incredibly tax-efficient way to save. If you’re aiming for long-term growth, a Stocks and Shares ISA lets you invest without facing Capital Gains Tax or Income Tax on any profits. For those who prefer a lower-risk approach, a Cash ISA can help you earn interest tax-free. Remember, your unused ISA allowance doesn’t roll over, so use it before 5th April.

Supercharge your pension contributions

Pensions are one of the most effective ways to maximise tax relief. For 2024/25, the annual allowance is a generous £60,000, and you can carry forward unused allowances from the past three years. But it’s not just about tax savings. Pensions allow your investments to grow and compound over time, significantly building your retirement fund.

Unlock the potential of your Capital Gains Tax allowance

The Capital Gains Tax (CGT) annual exemption has been significantly reduced for the 2024/25 tax year to just £3,000, meaning you can sell assets like stocks, investment properties (not your main home), or other investments and earn up to £3,000 in gains without paying CGT. If you’re married or in a civil partnership, you can potentially double this benefit by transferring assets between partners to use both allowances. By planning your sales strategically, you can take advantage of this tax-free window and keep more of your earnings for yourself.

Plan Inheritance Tax gifts

Take advantage of the Inheritance Tax (IHT) annual gift exemption to share up to £3,000 per year tax-free, with the option to carry over unused amounts for one tax year. You can also make tax-free gifts of up to £250 to as many individuals as you like. For larger gifts, surviving seven years could bring IHT relief, making early planning essential for maximising your legacy.

Optimise your tax code and salary sacrifice

Did you know that an incorrect tax code could mean you’re paying more tax than you should? For the 2024/25 tax year, review your tax code to ensure it reflects your Personal Allowance and any deductions for benefits like company cars or private healthcare. Also, consider salary sacrifice schemes to boost your tax efficiency. These schemes allow you to exchange part of your salary for benefits like pension contributions, childcare vouchers, or cycle-to-work programs to reduce your taxable income.

Seek professional advice

Navigating tax-efficient strategies, allowances, and deadlines can be challenging. A financial adviser or wealth manager can provide guidance, tailoring your finances to your unique needs and ensuring your tax year-end plan is optimised. Contact us for personalised advice.