As the 5 April 2025 tax year deadline looms, savvy investors are moving fast to unlock the full power of their annual tax allowances. From ISAs to pensions and tax-advantaged investments, now is the time to refine your financial position and ensure your wealth is working as hard as possible for you.
With the tax year closing in, it’s essential to assess your financial landscape and take action to minimise liabilities while optimising your investment potential. Utilising your ISA allowance remains a cornerstone strategy, offering up to £20,000 of tax-free gains on interest and dividends, which doubles to £40,000 for couples. Tactics like ‘bed and ISA’ can also be considered to shift assets into this protected wrapper.
Maximising pension contributions is another powerful step. This year, individuals can contribute up to £60,000 or 100% of their earnings—whichever is lower—with generous tax relief available. Even non-earners under 75 can benefit from tax relief on contributions up to £3,600. This not only builds retirement wealth but also provides an immediate tax benefit.
Capital gains tax allowances are also worth reviewing, especially since unused allowances cannot be rolled over. You can realise up to £3,000 in gains tax-free this year. Transferring assets between spouses is a savvy way to utilise both allowances, and structured planning can help manage exposure to future CGT.
Estate planning opportunities are available through gifting. The £3,000 annual gift exemption can be carried forward one year, and further gifts of £250 per person are also exempt if structured correctly. Larger gifts may ultimately fall outside your estate for inheritance tax if made more than seven years before death.
Charitable donations remain a highly efficient way to reduce taxable income. Through Gift Aid, higher-rate taxpayers can reclaim extra tax relief while supporting meaningful causes. At the same time, reviewing your savings income could protect more of your earnings. Basic-rate taxpayers can enjoy up to £1,000 in interest tax-free via the Personal Savings Allowance, and higher-rate taxpayers get £500.
Junior ISAs present another opportunity to plan for the next generation. Up to £9,000 can be invested per child annually with all growth and income shielded from tax. This builds a valuable nest egg while reducing future inheritance tax considerations.
The dividend allowance, now at £500 per year, should also be fully used—particularly for investors with dividend-paying shares. These earnings are taxed at a lower rate than income, making them an important part of a well-structured portfolio.
Finally, tax-incentivised investments such as the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs) offer substantial benefits for those willing to accept higher risk. EIS investors can receive 30% income tax relief and CGT deferral, with further perks like inheritance tax exemption and loss relief. VCTs provide a similar level of income tax relief, alongside tax-free dividends and CGT exemption. Both support the UK’s innovation economy while offering considerable upside for investors with an appetite for growth and volatility.
By seizing these opportunities before 5 April, investors can take control of their financial future, ensuring their strategies are as tax-efficient as possible.
Arbuthnot Banking Group PLC (LON:ARBB), trading as Arbuthnot Latham, provides private and commercial banking products and services in the United Kingdom. Founded in 1833, Arbuthnot Banking is based in London, United Kingdom.
