With the April 5 tax year end looming, time is running out to maximise tax breaks. Lubbock Fine Wealth Management shares last-minute tips to help individuals boost their tax efficiency before it’s too late.
Give your children and grandchildren a head start on saving
Parents and grandparents can gift up to £3,000 per person each year free from Inheritance Tax (IHT), or up to £6,000 per couple. If they didn’t use their exemption last year, they can carry it forward to gift up to £12,000. These gifts can help fund a Junior ISA, which allows up to £9,000 in tax-free savings per year, with full access at 18.
Andrew Tricker, Director at Lubbock Fine Wealth Management says, “Junior ISAs and gifting are simple, tax-efficient ways to pass on wealth, but you must act now to maximise this year’s benefits.”
Couples can work together to cut their tax bills
Couples can slash tax bills by shifting savings or investments to the lower-earning partner.
Andrew Tricker says, “Maximising both partners’ ISA, pension, and tax-free allowances is a simple way to boost your tax efficiency.”
Take full advantage of tax relief on pension contributions
Pensions offer top-rate tax relief, making them invaluable for high earners. Unused allowances can be carried forward to boost savings, and they’re free from income, dividend, and capital gains taxes.
From 6 April 2027, unused pension funds will be included in your estate’s valuation for Inheritance Tax (IHT) purposes, potentially subjecting them to the 40% IHT rate on amounts over the £325,000 threshold.
Andrew Tricker, Director at Lubbock Fine Wealth Management, says, “Despite the planned changes, pensions remain one of the most tax-efficient ways to save. Maximising contributions now continues to make strong financial sense.
Use it or lose it – your annual ISA allowance
Speculation over Rachel Reeves plans to reduce the £20,000 tax free ISA allowance in the Autumn Budget is rife. Whilst it remains at £20,000, people should exploit this tax savings opportunity.
Andrew Tricker advises, “If you’re eligible for a Lifetime ISA, it’s worth using up to £4,000 of your allowance before the deadline to claim the government bonus. But don’t wait—ISA allowances reset on 6 April, and any unused portion is gone for good.”
Use your Capital Gains Tax (CGT) exemption
The CGT exemption for the 2024/25 tax year is £3,000, down from £6,000 the previous year.
Those planning disposals can maximise their CGT exemption by selling assets in two tranches—before 6 April 2025 and again in the new tax year.
Andrew Tricker says, “With the exemption steadily reducing and unable to be carried forward to the next year, individuals should make use of it to reduce future CGT liabilities on taxable investments.”
