One month to go – five actions taxpayers could take before the tax year end

With only one month until the start of the new tax year, accounting and business advisory firm BDO has released a list of the top five simple tax saving measures that many people can take advantage of before this tax year ends on 5 April.

Elsa Littlewood, tax partner at BDO said: “Fiscal drag is pulling greater numbers of taxpayers into higher tax brackets, so understanding and taking advantage of available allowances and reliefs before the end of the tax year is more important than ever. 

“There are some simple steps that anyone can take which could help them reduce their tax bill. For more complicated arrangements, it’s always a good idea to seek professional advice.”

1. USE ISA ALLOWANCES

UK residents aged 18+ can invest up to £20,000 each and parents can fund a junior ISA or child trust fund with up to £9,000 per child for 2025/26 – making a total of £58,000 for a family of four. However, from April 2027 a cash subscription limit of £12,000 will apply for under-65s.

Children will automatically have access to the funds in their ISA when they reach age 18 but ISAs are a useful vehicle for building up funds to support them through higher education.

Investors who have not used up their full ISA allowance should consider selling shares yielding dividends outside their ISA and buying them back within this tax-exempt wrapper, although care should be taken as this could trigger a capital gains tax charge.

2. MAKE GIFTS TO USE ANNUAL INHERITANCE TAX ALLOWANCES

Reducing the value of the part of an estate that is above the nil rate band (£325,000) will reduce the IHT payable on death.

Consider giving unrequired assets to other family members now. Gifts to a spouse or civil partner to enable them to use up their nil rate band are tax-free and gifts to other family members can also be tax-efficient over time.

Most lifetime gifts to individuals that are not covered by a lifetime exemption do not immediately trigger IHT and become totally exempt if the person gifting survives for seven years. While the gift remains in the estate, the rate of IHT applied to it on death (40%) reduces each year depending on how many years that the donor survives after making the gift.

It’s possible to give away up to £3,000 worth of gifts a year plus £250 to an unlimited number of individuals in a year and £5,000 to children on their marriage.

3. USE ANNUAL GAINS EXEMPTIONS

Everyone can realise capital gains up to the annual exemption tax-free – £3,000 in 2025/26. The exemption is available to each individual, including minor children. Any exemption unused in a year cannot be carried forward. Married couples and civil partners can transfer assets between them on a no gain/no loss basis and such transfers should be considered to ensure that the annual exemption can be fully used.

4. MATCH CAPITAL GAINS AND LOSSES TO REDUCE YOUR TAX BILL

For those who hold stocks and shares outside an ISA, selling them can trigger capital gains: tax will be paid where total gains exceed the annual exemption (see above). For those who also have investments standing at a loss, selling the asset allows them to set that loss against any gains that are taxable – either in 2025/26 or in later years (provided it is claimed through their tax return). So matching gains and losses can cut the overall tax bill.   

If you think the loss-making shares had long term potential, you can’t buy back them back immediately (a 30 day matching rule applies) but you can buy alternative shares in companies in the same sector or buy them through an ISA or a spouse could invest in them.

5. PLAN AHEAD FOR 2026-27

It’s advisable to plan ahead for 2026-27 by checking tax codes now by logging into personal tax accounts either on the gov.uk website or HMRC’s app. Here, it’s easy to inform HMRC about any changes that are likely to affect a tax code during the tax year. Helping HMRC to get it right from April onwards means there should not be any nasty surprises later.