5 tax-efficient tasks to complete before the end of the 2024/25 tax year

The 2025/26 tax year is fast approaching, and with little time left, you might be wondering how to make the most of tax breaks and prepare for the next financial year.

With the government’s Autumn Budget still on many people’s minds, and the Spring Statement set to be delivered on 26 March, there’s a chance you might be feeling overwhelmed.

However, there’s no need to panic – let’s explore five tax-efficient tasks to tick off your list before 6 April 2025.

1. Make a lump sum pension contribution

You likely pay into your pension monthly, perhaps even passively doing so through your employer.

However, it’s unlikely that these contributions reach your Annual Allowance, which is the amount you can contribute into a pension (including tax relief and employer payments) without receiving a tax charge. It stands at £60,000 or 100% of your earnings, whichever is lower, as of 2024/25. Your Annual Allowance may be tapered down if you’re a very high earner or if you’ve already flexibly accessed your pension.

If you have capital available to save or invest, it could be worth making the most of your Annual Allowance. You can only carry unused Annual Allowance forward one tax year, then it’s gone forever. Plus, paying extra funds into your pension could mean you benefit from tax relief, and if you’re self-employed, may reduce your Income Tax bill for the 2024/25 tax year too.

2. Pay into your ISAs

Individual Savings Accounts (ISAs) are tax-efficient vehicles for saving and investing. Any interest or returns your money receives within an ISA is free from Income Tax, Capital Gains Tax (CGT) and Dividend Tax.

There’s an annual limit to how much a person can pay into all their adult ISAs combined, which stands at £20,000 (Lifetime ISAs have an individual limit of £4,000).

As such, it could be useful to explore the option of saving or investing surplus income or capital into an ISA before the tax year ends. ISAs have a “use it or lose it” allowance, so once the clock strikes midnight on 5 April, you won’t be able to use any remaining allowance from the 2024/25 tax year.

3. Prepare to self-assess for 2024/25

While the majority of self-assessors – additional-rate taxpayers and self-employed individuals, among others – do this at the end of January, remember that you can self-assess as soon as the next tax year begins.

So, if you know you’ll need to complete a tax return for the 2024/25 tax year, you could spend the next few months getting your ducks in a row and aim to complete this in April 2025.

That way, you have time to pay your tax bill before 31 January 2026, especially if it’s higher than you expected. Also, you may feel more confident and gain peace of mind knowing that your tax return is out of the way as early as possible.

4. Gift money to children and grandchildren

You might have read that HMRC’s Inheritance Tax (IHT) receipts are set to be the highest on record for the 2024/25 tax year. The tax-free nil-rate bands are now frozen until 2030, so while the value of UK families’ estates keeps rising, it’s likely that IHT bills will keep rising alongside them.

If you’re searching for ways to mitigate IHT, using your annual gifting exemption could be a great place to start.

As of 2024/25, and set to continue in 2025/26, you can give away up to £3,000 a year without this money forming part of your estate when you pass away. Any gifts above the amount of £3,000 are known as “potentially exempt transfers” (PETs), which could still be included in your estate if you pass away after seven years.

Still, giving away £3,000 a year if you can afford to do so might reduce the portion of your estate that is dragged into the IHT net upon your death. What’s more, your children and grandchildren may benefit hugely from this annual injection of capital, especially during the cost of living crisis.

It’s useful to think about how the gift might be given, too. For instance, we recently published insights into why ISAs often make a great home for financial gifts – but there are other options, too, including child pensions, cash gifts, or giving away shares.

Talk to a financial planner for more guidance on how to gift your wealth tax-efficiently.

5. Check in with your financial planner

With the tax year end approaching, money might be on your mind. If so, we’re here to help you make the most of 2024/25 and prepare for a prosperous 2025/26.

Get in touch with us today if you wish to explore gifting options, maximise tax breaks, or make any other financial decision as the tax year comes to a close.

Email enquiries@prosserknowles.co.uk or request a callback from one of our advisers.

Please note

This article is no substitute for financial advice and should not be treated as such. To determine the best course of action for your individual circumstances, please contact us.

All information is correct at the time of writing and is subject to change in the future.

The Financial Conduct Authority does not regulate tax planning.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

Remember that taper relief only applies to gifts in excess of the nil-rate band. It follows that, if no tax is payable on the transfer because it does not exceed the nil-rate band (after cumulation), there can be no relief.

Taper relief does not reduce the value transferred; it reduces the tax payable as a consequence of that transfer.