How to Save Tax Before 5 April 2026

Make the most of your money with smart tax planning before the 2025/26 tax year ends

Ouch! A tax bill to pay on 31st  January is never pleasant. Nobody enjoys paying more tax than necessary. Yet every year, thousands of people miss out on valuable tax relief simply because they don’t know what’s available to them. With the tax year ending on 5 April 2026, now is the perfect time to review your finances and keep more of your hard-earned money.

This guide explains the practical steps you can take before the deadline to reduce your tax bill and improve your financial position.

Why tax planning matters to you

The UK tax system offers numerous ways to reduce what you pay, but these opportunities won’t come looking for you. Understanding which tax reliefs and allowances apply to your situation can save you hundreds or even thousands of pounds each year.

Whether you’re saving for retirement, building wealth for your family, or simply want to make your money work harder, taking action before 5 April 2026 could make a significant difference to your finances.

Important dates you need to know

5 April 2026 – The current tax year ends. This is your deadline to use this year’s allowances and claim available tax relief.

6 April 2026 – The new tax year begins. Your unused allowances from 2025/26 will disappear, so it’s important to act now.

Save up to £252 with Marriage Allowance

If you’re married or in a civil partnership, you could reduce your household tax bill by up to £252 this year. Marriage Allowance lets you transfer £1,260 of your Personal Allowance to your partner if you earn less than £12,570 and they’re a basic rate taxpayer.

This simple allowance is often overlooked but is easy to claim. You can also backdate your claim for up to four previous tax years, potentially saving over £1,000.

Boost your pension and cut your tax bill

Contributing to your pension remains one of the most effective ways to reduce your tax. For every £100 you pay into your pension, the government adds tax relief, which means a basic rate taxpayer only pays £80, whilst higher rate taxpayers can claim back even more.

Your pension allowances for 2025/26:

• Most people can contribute up to £60,000 into pensions this tax year
• High earners (with income over £260,000) may have a reduced allowance
• Even if you earn very little, you can still contribute £2,880, which becomes £3,600 with tax relief
• Don’t forget ‘Carry Forward’ – you may be able to use unused allowances from the previous three tax years

Important change coming: If you use salary sacrifice to boost your pension, be aware that from April 2029, the National Insurance exemption on salary sacrificed pension contributions will be capped at £2,000. If this affects you, consider maximising your contributions before this change takes effect.

How salary sacrifice works for you

Many employers offer salary sacrifice schemes where you agree to a slightly lower salary in exchange for higher pension contributions. This reduces both your Income Tax and National Insurance, and some employers even add their National Insurance savings to your pension pot. Over time, this can substantially increase your retirement fund.

Protect your savings and investments with ISAs

Individual Savings Accounts (ISAs) let you save or invest up to £20,000 each year completely tax-free. You won’t pay Income Tax, Capital Gains Tax or tax on dividends from investments held in an ISA.

Types of ISAs available:

• Cash ISAs – Safe, straightforward savings with no tax on interest
• Stocks and Shares ISAs – Invest for potential growth without paying tax on returns
• Lifetime ISAs – For ages 18-40, the government adds a 25% bonus (up to £1,000) on contributions up to £4,000 per year for buying your first home or retirement

Critical changes from April 2027: If you’re under 65, your Cash ISA annual limit will drop to £12,000 (though your total ISA allowance remains £20,000).  These changes are designed to encourage younger savers towards long-term investments. For 65 + Cash ISA limit stays at £20,000.

If you haven’t used this year’s £20,000 ISA allowance, consider doing so before 5 April 2026 you can’t carry unused allowances into the next tax year.

Reduce Inheritance Tax on your estate

Inheritance Tax (IHT) currently affects estates worth over £325,000, with tax charged at 40% on anything above this threshold. With property values rising and the threshold frozen until April 2030, more families are facing substantial tax bills.

Ways to reduce Inheritance Tax:

• Use your annual gift allowance of £3,000 (unused allowances can be carried forward one year)
• Give wedding gifts (up to £5,000 for children, £2,500 for grandchildren, £1,000 for others)
• Make regular gifts from your income that don’t affect your standard of living
• Consider the Residence Nil Rate Band (up to £175,000 extra when leaving your home to children or grandchildren)
• Married couples can combine allowances for up to £1 million in exemptions

Major change coming: From 6 April 2027, unused pension funds will be included in your estate for Inheritance Tax purposes. Previously, pensions could be passed on tax-free, but this is changing. If you’re planning to leave pension savings to your children, they may now face a significant tax bill. Reviewing your estate plan before this change is essential.

Manage Capital Gains Tax smartly

If you’ve sold investments, property (other than your main home), or valuable possessions this tax year, you might owe Capital Gains Tax. However, everyone has a £3,000 annual allowance where gains are tax-free.

Smart strategies before 5 April 2026:

• Use your £3,000 allowance if you have gains this year
• Consider selling investments with losses to offset gains
• Transfer assets to your spouse or civil partner (they have their own £3,000 allowance)
• Move investments into ISAs where future gains will be tax-free
• Time your asset sales carefully – you control when CGT becomes due

Capital Gains Tax rates are 18% and 24%  (depending on your Income Tax band).

What you should do before 5 April 2026

Use this checklist to ensure you’re not missing valuable tax relief:

1. Check you’ve claimed Marriage Allowance if eligible
2. Review your pension contributions against your annual allowance
3. Use any remaining ISA allowance (it won’t carry forward)
4. Consider making gifts to reduce your estate for Inheritance Tax
5. Use your Capital Gains Tax allowance if you have investment gains
6. Review your overall tax position and plan for the 2026/27 tax year
7. Seek professional advice if your situation is complex

How we can help you

Tax planning can feel overwhelming, but you don’t have to navigate it alone. As FCA-regulated financial advisers, we help people across the UK optimise their tax position, protect their wealth, and plan confidently for the future.

Whether you want to reduce your current tax bill, plan for retirement, or ensure your family is provided for, we can create a personalised strategy that works for your circumstances.

The end of the tax year is approaching quickly. Contact us today to discuss how we can help you make the most of your money before the 5 April 2026 deadline.

If you fancy a conversation with us contact us here >>>

 

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BE AWARE

This information is for guidance only and does not constitute regulated financial advice. To ensure you have personalised advice for your particular set of circumstances, you must make an appointment and speak to one of our professional advisers. Please note these services are chargeable. The facts in this article were correct at time of writing, but you may be reading it in the future. Always check rates and allowances before taking action or speak to a qualified financial planner. All investments carry an element of risk, they can fall as well as rise and you may not get back what you pay in. Errors & omissions excepted.

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