The current tax year comes to an end on 5 April 2025 and when it does, several important tax allowances and exemptions reset.

As such, you might be looking to maximise your tax-efficient savings and investments by contributing to pensions or ISAs before the end of the 2024/25 fiscal year. You might also consider selling certain assets now, to make use of tax-free allowances before you lose them.

Yet, while it’s important to consider tax efficiency at the end of the current fiscal year, you might benefit from looking ahead to the end of 2025/26 too.

Read on to learn three reasons it could make sense to start planning for the end of the next tax year now.

1. It could be easier to plan how you use your allowances and exemptions

There are several useful allowances that could help you reduce the tax you pay. For instance, any interest or investment returns you generate from wealth in an ISA are free from Income Tax, Dividend Tax, or Capital Gains Tax (CGT). You don’t pay tax when accessing the funds either.

You can contribute up to £20,000 across all your ISAs each tax year. Crucially, you lose your ISA allowance if you don’t use it.

Any interest or returns generated on wealth in a pension are free from Income Tax, Dividend Tax and CGT too. Also, you typically receive 20% tax relief on your contributions and may be able to claim another 20% or 25% through self-assessment if you’re a higher- or additional-rate taxpayer.

You benefit from this tax relief on contributions up to your Annual Allowance. In 2024/25, this stands at £60,000 or 100% of your earnings, whichever is lower. However, if you are a high earner or have flexibly accessed a defined contribution (DC) pension, your Annual Allowance may be lower.

You may be able to carry forward unused Annual Allowance from the past three years, provided you have used your full allowance from the current tax year.

Using as much of your Annual Allowance and ISA allowance as possible before the end of the financial year could help you make more tax-efficient contributions to savings and investments for the future. But if you reach the beginning of April and find that you still haven’t used your allowances, you may need to find a lump sum at short notice.

Conversely, if you plan for the end of the following tax year, you can begin making contributions right away, on 6 April 2025. This allows you to spread your payments throughout the year and incorporate them into your budget.

As a result, you might be more likely to take full advantage of all available allowances. You also give yourself more time to plan how you will spread your savings between pensions and ISAs, to ensure you’re being as tax-efficient as possible.

2. You could achieve more growth if you invest as early as possible

Investing your wealth through an ISA or in your pension could help you achieve regular growth and may make it easier to reach your financial goals in the future.

Research suggests that investing earlier in the tax year could increase your returns. Figures published by This is Money show the result if you had invested your full ISA allowance in a global tracker fund – a fund investing in global markets outside the UK – annually in the 10 years to April 2024.

If you invested the full £20,000 on the first day of each tax year, you would have a total pot of £360,500. However, if you waited until the last day of the tax year, your investment would be worth £322,500.

This is because, by contributing earlier in the tax year, you leave your wealth invested for longer and give it more time to grow.

So, while past performance does not necessarily indicate future performance, using your entire ISA allowance early in the tax year may offer a greater opportunity to generate returns.

As discussed earlier, you might prefer to make regular contributions throughout the year instead of investing a single lump sum. This could still improve your returns as the research shows if you spread your ISA allowance evenly throughout the year, your pot would be worth £343,500 after 10 years.

You could see the same effect when investing through your pension too. And, because your pension is usually invested over a long period, it might provide even more time to generate those returns.

So, planning ahead and contributing to your investments throughout the year, rather than waiting until the end of the tax year, could help you generate more growth.

3. You have more time to react to changes in legislation

When the government introduces changes to tax legislation, the new rules often come into force at the start of a new financial year. For example, on 6 April 2025, the rate of National Insurance contributions (NICs) for businesses will increase. Similarly, the CGT rates for Business Asset Disposal Relief (BADR) and Investors’ Relief will increase to 14%.

These are just some examples of tax legislation that could affect you soon. If you’re yet to consider these changes as you’re only now planning for the end of the tax year, you may not have much time to prepare.

However, if you look ahead to the end of the following tax year, you can begin planning for any legislative changes now. In some cases, you may be able to find ways to navigate new rules and potentially mitigate the tax you pay.

Considering IFA Magazine reports that 8 in 10 individuals are concerned about more tax hikes under the current government, being prepared may be more important than ever. We can support you with this by explaining how any legislative changes might affect you. We’ll also explore potential solutions to help you manage your tax liability.

Get in touch

We can help you start planning for the end of the next tax year now.

Email hello@cordinerwealth.co.uk or call 0113 262 1242 to speak to an experienced adviser today.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

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

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate tax planning.

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.

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.

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.

The Financial Conduct Authority does not regulate buy-to-let (pure) and commercial mortgages.