UK Tax Year-End Planning Guide: Making the Most of Your Allowances Before 5 April

The UK tax year runs from 6 April to 5 April the following year. For high-net-worth individuals — whether UK-resident, non-resident with UK income, or considering a return — the weeks leading up to 5 April offer a concentrated opportunity to use allowances that cannot be carried back, crystallise positions strategically, and shape the income profile that HMRC will assess. Unused allowances are gone permanently at midnight on 5 April. This guide sets out every action worth considering.

ISA and JISA Contributions: Use or Lose

The annual ISA subscription limit is £20,000 per adult. There is no carry-forward — if you do not subscribe in a given tax year, that year's allowance is lost forever. Interest, dividends, and capital gains within an ISA are permanently sheltered from UK tax, making each year's unused allowance a compounding cost.

For children, the Junior ISA (JISA) limit is £9,000 per tax year. The child must be under 18 and UK-resident. Non-resident parents can subscribe to a JISA held by a UK-resident child, though the child themselves must be resident. The JISA converts to an adult ISA at 18 and the funds become accessible.

Practical points:

• Stocks-and-shares ISAs, cash ISAs, and innovative finance ISAs all count towards the same £20,000 limit. You can split across ISA types in the same year.
• If you have a Lifetime ISA (LISA), the £4,000 annual LISA limit counts within your £20,000.
• Non-resident individuals generally cannot open new ISAs, but those already holding ISAs retain their sheltered status even after leaving the UK.

For HNW individuals with investable assets well above ISA thresholds, the annual subscription can feel modest. However, over a decade a couple sheltering £40,000 per year compounds to a substantial tax-free pool — particularly valuable for assets expected to generate significant future gains.

Pension Annual Allowance: Use and Carry Forward

The pension annual allowance for 2025-26 is £60,000 (gross), or 100% of relevant UK earnings if lower. Contributions above this threshold trigger an Annual Allowance charge at your marginal income tax rate — effectively eliminating the tax benefit of excess contributions.

The carry-forward rules allow unused allowance from the three preceding tax years to be brought forward, provided you were a member of a registered pension scheme in each of those years. The current year's allowance must be exhausted before carry-forward can be used.

Carry-forward is particularly valuable for:

• Business owners who took minimal salary in earlier years but have liquidity now.
• Executives with fluctuating bonus income.
• Returning expats who had UK pension membership during overseas postings.

Important: high earners subject to the tapered annual allowance (those with adjusted income above £260,000) may have a significantly reduced allowance — down to a minimum of £10,000. The taper calculation requires care; a marginal error can result in an unexpected charge.

Self-employed individuals and company directors should review whether employer contributions from their own company can be structured before 5 April — these count towards the annual allowance but attract corporation tax relief at the company level, which is usually more efficient than personal contributions receiving income tax relief.

Capital Gains Tax: Managing the Annual Exempt Amount

The capital gains tax annual exempt amount has been significantly eroded in recent years. For 2024-25 and 2025-26 it stands at just £3,000 per individual (reduced from £12,300 in 2022-23). While modest, it is still a permanent annual allowance worth extracting.

Realising gains up to the exempt amount

Investors holding assets with unrealised gains can consider disposal and repurchase to bank up to £3,000 of gain tax-free. The "bed and breakfast" anti-avoidance rule (the 30-day rule) prevents repurchase of the identical asset within 30 days — but disposal followed by repurchase through a spouse's ISA, a different fund covering the same index, or via a pension contribution can achieve economic equivalence while resetting the cost base.

Realising losses to offset gains

Losses crystallised in the same tax year offset gains pound for pound before the exempt amount is applied. Losses in excess of gains in the year are carried forward indefinitely and set against future gains in chronological order.

Year-end portfolio reviews frequently reveal positions showing unrealised losses. Crystallising these losses — particularly on underperforming holdings you intend to exit at some point — can shelter future gains that would otherwise be fully taxable.

CGT rates in 2025-26

Following the October 2024 Autumn Statement, the main CGT rates for most assets are 18% (basic rate) and 24% (higher/additional rate). The residential property rate remains 24% (having been reduced from 28% at the same Autumn Statement). Business Asset Disposal Relief (formerly Entrepreneurs' Relief) rates were also adjusted — if a disposal of qualifying business assets is imminent, confirm the current BADR rate with your adviser.

Charitable Donations and Gift Aid Before 5 April

Cash donations to UK-registered charities under Gift Aid are treated as if made net of basic rate tax. The charity reclaims 25p per £1 donated. Higher-rate and additional-rate taxpayers reclaim the further relief through self-assessment.

Critically, Gift Aid relief is allocated to the tax year in which the donation is made — or, under a carry-back election, to the preceding year (if the return has not yet been filed). This means a donation made before 5 April 2026 can be included in the 2025-26 return, and with a carry-back election could shelter 2024-25 income.

For donors considering significant charitable gifts, donor-advised funds (or Charitable Remainder Trusts for US persons) offer the ability to donate an asset, receive the tax relief immediately, and distribute to specific charities over time — useful if you have not yet identified the final beneficiaries.

Gifts of listed shares or units in authorised investment funds directly to charities attract income tax relief on the full market value, with no CGT on the embedded gain. This is frequently the most tax-efficient form of charitable giving for equity holders.

Salary Sacrifice and Employer Contributions

Where employment continues into the new tax year, reviewing salary sacrifice arrangements before 5 April is worthwhile. Salary sacrifice pension contributions:

• Reduce income for income tax and National Insurance.
• Are not limited by personal pension contribution rules (they are employer contributions).
• Do not attract the personal income threshold taper if structured correctly.

Employers may permit a one-off additional sacrifice arrangement in March, particularly for bonus payments. This requires planning well in advance — payroll systems often require lead time.

High Income Child Benefit Charge

The High Income Child Benefit Charge (HICBC) applies at a tapered rate on income between £60,000 and £80,000, clawing back Child Benefit at 1% per £200 of income above £60,000. At £80,000 or above, the charge equals the full Child Benefit received.

For households where one earner's adjusted net income falls in the £60,000-£80,000 band, reducing income below £60,000 — through pension contributions, salary sacrifice, or charitable donations — eliminates the charge entirely.

Adjusted net income is calculated after deducting gross personal pension contributions and Gift Aid payments. A pension contribution of £10,000 by someone with £70,000 in income reduces adjusted net income to £60,000, removing the HICBC entirely while also providing pension tax relief.

The £100,000 Personal Allowance Taper

UK residents with adjusted net income above £100,000 lose £1 of their personal allowance (currently £12,570) for every £2 of income above the threshold. At £125,140, the personal allowance is eliminated entirely.

This creates an effective marginal tax rate of 60% on income between £100,000 and £125,140 — the highest effective rate in the UK income tax system. The logic: the taxpayer pays 40% income tax on income in this band, but also loses 50p of personal allowance per £1 of additional income, meaning a further 50p that previously attracted no tax is now taxed at 40%, adding 20p per £1.

Strategies to manage this taper:

• Pension contributions reduce adjusted net income pound for pound.
• Gift Aid payments similarly reduce adjusted net income.
• Salary sacrifice reduces gross income before it reaches the threshold.
• Deferring bonuses or dividends into the next tax year shifts the income outside the current assessment window.

For business owners able to control timing of profit extraction, the £100,000-£125,140 band is worth engineering around — the effective return on marginal income in this range is so low that almost any shelter mechanism yields a high after-tax benefit.

Income Tax Band Management

Beyond the personal allowance taper, other income thresholds are worth managing:

• The basic rate limit of £50,270 — income above this is taxed at 40%.
• The additional rate threshold of £125,140 — income above this is taxed at 45%.

For those close to these boundaries, timing of investment income, dividend declarations, and bonus receipts can shift income between years. Company directors with flexibility over dividend payment timing should model the optimal split between 2025-26 and 2026-27.

Salary vs dividend optimisation for owner-managers remains relevant, though the divergence in rates has narrowed in recent years as dividend tax rates have risen. The optimal mix requires a case-by-case calculation incorporating the company's corporation tax position, the director's other income sources, and the impact on pension annual allowance (salary creates relevant UK earnings; dividends do not).

Non-Resident Considerations

Non-UK residents with UK income sources — rental income, employment income for UK duties, UK-source interest — are assessed under the non-resident tax regime. The personal allowance is available to EEA nationals and those from treaty countries; others may not be entitled to it.

Non-residents cannot contribute to UK ISAs. However, those returning to UK residence in the following tax year should consider the timing of their return in relation to allowance use: becoming UK resident on 6 April rather than 5 April means a full year of allowance availability from the point of return.

Non-residents who retain UK rental property should also review whether non-resident CGT planning applies before 5 April — any disposal of UK residential property must be reported within 60 days of completion, but structuring the disposal date either side of the year-end can influence which year the gain falls into for self-assessment purposes.

Checklist: Before 5 April

• Maximise ISA subscription (£20,000 per adult, £9,000 JISA per child).
• Review pension annual allowance remaining — consider carry forward from prior three years.
• Model adjusted net income for HICBC, personal allowance taper, and rate band management.
• Crystallise gains up to the £3,000 CGT exempt amount if not already used.
• Crystallise unrealised losses on unwanted positions to shelter future gains.
• Make charitable donations qualifying for Gift Aid; consider share gifts to charities.
• Review salary sacrifice arrangements with employer payroll team.
• Consider deferring discretionary income, dividends, or bonuses to the next tax year if advantageous.

As with all tax planning, personal circumstances vary significantly. What is optimal for one taxpayer may be unsuitable for another. The interaction between these reliefs and charges is complex, and errors — particularly around pension annual allowance — can be costly. Professional advice tailored to your position is always recommended.

Investments can fall as well as rise in value. Tax legislation is subject to change by HMRC or Parliament. The reliefs and thresholds described in this article reflect the position as at June 2026 but may differ in subsequent tax years.

How Global Investments Can Help

Global Investments works with high-net-worth and internationally mobile individuals on holistic tax and investment planning. Our advisers can model your adjusted net income, identify allowances at risk of lapsing, and coordinate with your UK tax adviser to ensure year-end planning is implemented correctly and within the relevant deadlines. Contact us to discuss your position ahead of the next 5 April deadline.