The UK tax year runs from 6 April to 5 April. When it ends, most tax allowances and exemptions reset to zero — you cannot roll unused amounts into the next year. With the 2025/26 tax year ending on 5 April 2026, now is the time to review your finances and make sure you are using every allowance available to you.
Key Dates
- 2025/26 Tax Year Ends
- 5 April 2026
- Self-Assessment Filing Deadline (online)
- 31 January 2027
- Self-Assessment Filing Deadline (paper)
- 31 October 2026
- Payment on Account (2nd instalment)
- 31 July 2026
ISA Allowance — £20,000
The Individual Savings Account (ISA) allowance for 2025/26 is £20,000. Any returns within an ISA — whether interest, dividends, or capital gains — are completely tax-free. The allowance resets on 6 April and unused allowance cannot be carried forward.
ISA Allowances for 2025/26
| ISA Type | Annual Limit |
|---|---|
| Overall ISA allowance (Cash, Stocks & Shares, Innovative Finance, Lifetime) | £20,000 |
| Lifetime ISA (within the £20,000) | £4,000 |
| Junior ISA | £9,000 |
Source: GOV.UK — Individual Savings Accounts. You can split your £20,000 across multiple ISA types, but the total must not exceed the overall limit.
Even if you are unsure where to invest, you can open a Cash ISA and deposit funds before 5 April to secure the allowance. You can transfer to a Stocks & Shares ISA later without affecting the current year's allowance.
If you have children, the Junior ISA allowance of £9,000 is separate from your own. Anyone can contribute — parents, grandparents, family friends — up to the annual limit.
Pension Contributions
Pensions remain the most tax-efficient way to save for retirement. Contributions receive tax relief at your marginal rate, meaning the government effectively tops up your savings.
Pension Allowances for 2025/26
- Annual Allowance
- £60,000
- Money Purchase Annual Allowance
- £10,000
- Tapered Annual Allowance (minimum)
- £10,000
- Threshold Income for Tapering
- £200,000
Source: GOV.UK — Pension annual allowance. The annual allowance includes both personal and employer contributions.
Carry forward: If you have not used your full annual allowance in the previous three tax years (2022/23, 2023/24, and 2024/25), you can carry forward the unused amounts and contribute more than £60,000 this year. You must have been a member of a registered pension scheme in those years to qualify.
Tax Relief by Rate
| Tax Band | Relief Rate | Cost to You per £1,000 in Pension |
|---|---|---|
| Basic rate (20%) | 20% | £800 |
| Higher rate (40%) | 40% | £600 |
| Additional rate (45%) | 45% | £550 |
Basic rate relief is claimed automatically by your pension provider (relief at source). Higher and additional rate taxpayers must claim the extra relief through their self-assessment tax return.
Salary sacrifice: If your employer offers salary sacrifice for pension contributions, this can be even more efficient. You save both income tax and National Insurance, and your employer saves employer NI too — some employers pass their saving on as additional pension contributions.
Capital Gains Tax
The Capital Gains Tax (CGT) annual exempt amount for 2025/26 is just £3,000 — significantly reduced from £12,300 just two years ago. This makes year-end CGT planning more important than ever.
CGT Rates for 2025/26
| Asset Type | Basic Rate Taxpayer | Higher/Additional Rate |
|---|---|---|
| Shares and other assets | 18% | 24% |
| Residential property (not main home) | 18% | 24% |
Source: GOV.UK — Capital Gains Tax rates. The annual exempt amount of £3,000 cannot be carried forward.
Bed and ISA: If you hold investments outside a tax wrapper with gains approaching the £3,000 threshold, consider selling them and immediately repurchasing within an ISA. This crystallises the gain within the exempt amount and shelters future growth from CGT.
Harvest losses: If you have investments sitting at a loss, you can sell them before 5 April to create a capital loss. Capital losses can be offset against gains in the same tax year, or carried forward indefinitely to use against future gains.
Transfers between spouses: Transfers between married couples and civil partners are CGT-free. If one spouse has used their annual exempt amount but the other has not, consider transferring assets before selling.
Dividend Allowance
The tax-free dividend allowance for 2025/26 is £500. Any dividends above this are taxed at:
Dividend Tax Rates 2025/26
| Tax Band | Rate on Dividends |
|---|---|
| Basic rate | 8.75% |
| Higher rate | 33.75% |
| Additional rate | 39.35% |
Source: GOV.UK — Tax on dividends. Dividends received within an ISA or pension are not subject to dividend tax.
If you hold shares outside a tax wrapper, consider whether it makes sense to move them into an ISA before 5 April. This shelters both the dividends and any future capital growth from tax. Company directors who pay themselves via dividends should also plan the timing carefully — dividends declared before 5 April fall into the 2025/26 tax year.
Gift Allowances & Inheritance Tax Planning
Making gifts is one of the simplest ways to reduce a potential inheritance tax (IHT) liability. Several annual exemptions are available, and they reset each tax year.
Gift Allowances for 2025/26
| Gift Type | Annual Exempt Amount |
|---|---|
| Annual gift exemption | £3,000 per person |
| Small gifts | £250 per recipient |
| Wedding gift — parent | £5,000 |
| Wedding gift — grandparent | £2,500 |
| Wedding gift — anyone else | £1,000 |
Source: GOV.UK — Inheritance Tax and gifts. The £3,000 annual exemption can be carried forward by one year only — so if you did not use last year's exemption, you can gift up to £6,000 this year.
Regular gifts from income: Gifts made from surplus income (not capital) that form part of your normal expenditure are immediately exempt from IHT with no upper limit. To rely on this exemption, you should keep records showing the gifts are regular, made from income, and that your remaining income is sufficient to maintain your usual standard of living.
Marriage Allowance
If you are married or in a civil partnership, and one partner earns less than the Personal Allowance (£12,570), they can transfer £1,260 of their allowance to the higher-earning partner. This saves up to £252 per year in income tax.
Marriage Allowance at a Glance
- Transfer Amount
- £1,260 of Personal Allowance
- Maximum Tax Saving
- £252 per year
- Higher Earner Must Be
- Basic rate taxpayer (income below £50,270)
- Can Backdate
- Up to 4 previous tax years
Source: GOV.UK — Marriage Allowance. You can apply online and backdate claims to 6 April 2021, potentially saving up to £1,260 in total.
Self-Assessment
You may need to file a self-assessment tax return for 2025/26 if you:
- Are self-employed with income over £1,000
- Earned over £150,000 in the tax year
- Had untaxed income, such as rental income, dividends over £500, or savings interest above your Personal Savings Allowance
- Need to claim higher or additional rate pension tax relief
- Had capital gains above the £3,000 exempt amount
- Are a company director (unless of a non-profit)
Payment on account: If your self-assessment bill is over £1,000 and less than 80% of your tax is collected at source, HMRC will require payments on account. These are two advance payments towards next year's bill, each equal to half of the previous year's self-assessment liability, due on 31 January and 31 July.
If you expect your 2025/26 income to be lower than 2024/25, you can apply to reduce your payments on account to avoid overpaying.
Business Owner Checklist
If you run your own limited company, the end of the tax year brings additional planning opportunities.
Review salary and dividends split
The most tax-efficient combination for 2025/26 is often a salary of £12,570 (the Personal Allowance) plus dividends up to the basic rate band. Factor in employer NI costs and the £500 dividend allowance.
Make pension contributions via the company
Employer pension contributions are a deductible business expense and are not subject to National Insurance. This is often more efficient than personal contributions, especially for higher earners.
Repay any director's loan (S455 tax)
If you owe money to your company (an overdrawn director's loan account), the company must pay 33.75% S455 tax on the outstanding balance. Repaying before the company's year-end avoids this charge.
Claim all allowable expenses
Ensure all business expenses have been claimed, including use-of-home allowance, mileage, professional subscriptions, and any equipment purchased. Bring forward any planned purchases to this tax year if appropriate.
Consider timing of dividend declarations
Dividends are taxed in the year they are declared (or paid if an interim dividend), not when received in your bank account. If you are close to a tax band threshold, you may wish to defer a declaration until after 5 April.
Talk to a Professional
Tax year end planning can involve complex interactions between allowances, tax bands, and reliefs. A qualified financial adviser or accountant can review your circumstances and help you make the most of the time remaining before 5 April.
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This guide is for general information only and does not constitute financial advice. Tax rates, allowances, and thresholds are based on published HMRC and government figures for the 2025/26 tax year and are subject to change. approval.co.uk is not authorised by the FCA and does not provide financial advice. Always seek professional advice before making decisions about your tax planning.