Planning for the 2025/26 Tax Year End: Make the Most of Your Allowances
Chrissy Leach • 2 March 2026
A practical guide for UK taxpayers and business owners to use available allowances, reduce tax bills and stay ahead of the 2025/26 year end.
As we head towards 5 April 2026, now is the perfect time to review your finances and ensure you’re making full use of the allowances and reliefs available for the 2025/26 tax year. Smart planning before year end can significantly reduce your tax bill, and for many business owners, it can also improve cash flow and support long‑term financial goals.
Below is a simple, user‑friendly guide to the key areas to review.
1. Maximise Your Allowances
Each tax year, you’re entitled to various tax-free allowances, and if you don’t use them, you lose them. Some key allowances to consider:
- Personal Allowance - the first £12,570 of your income is tax-free. Ensure you’re making full use of it, especially if your income fluctuates.
- Dividend Allowance - if you receive dividend income, the first £500 is tax-free.
- Personal Savings Allowance - up to £1,000 for basic rate taxpayers and £500 for higher rate taxpayers of tax-free interest income.
- Trading Allowance - up to £1,000 of tax-free gross income per year from self-employment.
- Property Allowance - up to £1,000 of tax-free gross income per year from rentals.
- Rent-A-Room Relief - if you let a room in your home, up to £7,500 per year can be received tax-free.
2. Make the Most of Pension Contributions
Pension contributions remain one of the most tax‑efficient ways to reduce your tax bill. Benefits include:
- Income tax relief
- Possible reduction of the high‑income child benefit charge
- Potential restoration of the Personal Allowance
For many business owners, employer pension contributions can also be a deductible business expense - a powerful tool for corporation tax planning.
3. Maximise Your ISA Allowances
Every adult has a £20,000 ISA allowance for 2025/26. Using it means:
- Tax‑free interest
- Tax‑free dividends
- Tax‑free capital gains
If you haven’t used your allowance yet, topping up before 5 April ensures you don’t lose it, ISA allowances cannot be carried forward.
4. Capital Gains Tax Allowance
The annual exempt amount for Capital Gains Tax is still £3,000. If you’re considering selling investments outside of an ISA, property or other assets, check whether making disposals before 5 April would:
- Use your annual CGT allowance
- Take advantage of lower income levels in this tax year
- Allow you to rebalance investment portfolios more tax‑efficiently
Spreading disposals over two tax years (e.g., March and April) can also be beneficial.
5. Married Couples & Civil Partners: Don’t Forget Transfers
Check the following:
- Marriage Allowance (if one person's income is below £12,570 and the other is a basic rate taxpayer)
- Transferring assets to make use of both partners’ CGT allowances and basic rates
- Holding assets in the name of the lower‑rate taxpayer to reduce tax on interest or dividends
Simple planning can often lead to meaningful savings.
6. Company Directors: Review Salaries and Dividends
If you run your own limited company, review your remuneration strategy before 5 April. Consider:
- Have you taken the optimal mix of salary and dividends for tax efficiency?
- Should dividends be brought forward before the dividend tax rate increase?
Getting this right can save hundreds or even thousands in tax.
7. Self‑Employed? Review Expenses Before Year End
If you’re self-employed or in a partnership, check whether:
- Any business expenses can be brought forward
- You need to invest in equipment that qualifies for capital allowances
- You’ve set aside enough for the July payment on account
- You’re affected by Making Tax Digital for Income Tax from April 2026 - see our blog on this here
A year‑end review can help stabilise cash flow and avoid surprises.
8. Consider Gift Aid Donations
Charitable giving doesn’t just support good causes, it can also help with tax planning. Gift Aid donations:
- Extend your basic rate band
- Reduce higher‑rate tax
- Potentially help reclaim your Personal Allowance
If you’re charitable anyway, getting the timing right can save tax.
Final Checks Before 5 April
A quick run‑through of the essentials:
- Have you maximised allowances that can’t be carried forward?
- Are your pensions and ISAs topped up?
- Directors - are your salary and dividends optimised for tax?
- Self-employed - are your records up to date (invoices, receipts, payroll)?
Need help reviewing your tax position?
Tax year end is the ideal time for a quick financial health check. If you’d like tailored advice for your business or personal tax affairs, CJL Accountancy is always happy to help you make the most of your allowances and keep things simple.
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