On 5 April 2026, the current tax year will end, and the new one will start the following day. Making a note of the deadline in your calendar could help you make the most of tax breaks as part of your financial plan.
Here’s why the start of a new tax year might matter to you.
1. 5 April 2026 may be your last opportunity to use 2025/26 allowances
When a tax year ends, many allowances reset. Consequently, the coming weeks might be your last chance to use some of them.
For example, you can add up to £20,000 into ISAs in 2025/26. ISAs provide a tax-efficient way to save or invest, which might reduce your overall tax liability. You cannot carry forward your unused ISA allowance, so 5 April 2026 might be your last opportunity to use the 2025/26 allowance.
When placing money into an ISA, it’s important to decide if a Cash ISA or a Stocks & Shares ISA is right for you. While a Stocks and Shares ISA allows you to invest, which has the potential to deliver higher returns than interest from savings, all investments carry some risk, and the value of your investments may fall.
If your estate could be liable for Inheritance Tax, you might be considering gifting some of your assets now. The annual exemption allows you to pass on up to £3,000, which will be considered immediately outside of your estate when calculating IHT.
You can carry forward any unused allowance for one tax year. As a result, this may be your last chance to use your 2024/25 allowance if you haven’t already done so.
Keep in mind that your individual circumstances may affect your allowances and exemptions. Seeking professional, tailored advice could help you assess your tax position.
Arranging a meeting with your financial planner can help you understand how you’ve used allowances and exemptions so far this year. It could also identify other opportunities that may make sense as part of your wider financial plan.
2. You can make a tax-efficient strategy for 2026/27
Planning how you’ll use allowances and exemptions throughout the year, rather than waiting until the deadline approaches, might be useful.
The pension Annual Allowance is the maximum amount you can contribute to your pension during the tax year while still receiving tax relief without incurring an additional charge. It covers contributions made by you, your employer, and any third parties. You can only claim tax relief up to 100% of your annual earnings.
For the 2026/27 tax year, the pension Annual Allowance is £60,000 for most people.
If you’ve already taken an income from your pension, you may be affected by the Money Purchase Annual Allowance, which would reduce the amount you can tax-efficiently contribute to a pension to £10,000. Similarly, if you’re a high earner, the Tapered Annual Allowance could see the amount you can tax-efficiently contribute to your pension fall by £1 for every £2 of adjusted income you have above £260,000.
Deciding how much you want to contribute in 2026/27, and making monthly contributions, could be easier to manage than discovering a shortfall at the end of the tax year and needing to contribute an additional lump sum.
Before contributing to your pension, you should note that you cannot usually access the money until you’re 55, rising to 57 in 2028.
It’s also important to note that some allowances and tax rates will change in the new tax year.
For instance, from 6 April 2026, the basic and higher rates of Dividend Tax will both increase by two percentage points, which may affect business owners and investors. Being aware of these changes could influence the financial decisions you make now.
The Financial Conduct Authority does not regulate tax planning. Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor.
Contact us if you have questions about your tax strategy
It can be difficult to keep up with tax changes and understand what they mean for you. If you have any questions about your tax strategy for the current tax year and beyond, please get in touch. We can help you make the most of allowances and exemptions to improve your tax efficiency.
Please note:
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.