It might feel like the new tax year has only just begun — and that’s because it has — but getting ahead on your financial planning now gives you the breathing room to make smart decisions without any last-minute rush. The 2025/26 tax year runs until 5 April, so there’s still loads of time to make the most of your allowances. Whether you’re aiming to lower your tax bill or simply want your savings and investments working harder, a little planning now could make a big difference later.
Maximise Your ISA Allowance
You’ve got up to £20,000 to put into ISAs this year, and any growth or income from those investments will be tax-free. That’s a pretty generous opportunity. Couples can each use their own allowance, effectively sheltering up to £40,000 from tax.
Not sure where to invest just yet? No problem. You can still pay into your ISA and leave it in cash until you’ve made up your mind. One common approach is the so-called ‘bed and ISA’ — where you sell existing investments to use up your Capital Gains Tax allowance, and then buy them back inside your ISA wrapper. Just be cautious; timing and market movements can catch you out, so it’s worth speaking to a professional.
Don’t Forget Junior ISAs
Got kids or grandkids? Junior ISAs let you stash away up to £9,000 per child, tax-free. They’re a great way to set children up for big life events — like education or their first home. And while only a parent or guardian can open a JISA, anyone can pay into it. Grandparents, godparents, aunts, uncles — everyone can get involved. It’s a tax-smart way to pass wealth down the generations.
LISA – Lifetime ISAs
If you’re aged between 18 and 39, a Lifetime ISA could be well worth a look. You can put in up to £4,000 this tax year, and the government will top it up by 25%. That’s an extra £1,000 just for saving. You can use a LISA to buy your first home (as long as it’s under £450,000) or keep it until you’re 60 and use it towards retirement. Just be careful — if you withdraw the money for anything else, you’ll get hit with a penalty.
Review Your Pension Contributions
Pensions remain one of the most tax-efficient ways to save for the future. For most people, the annual allowance is £60,000 — or 100% of your earnings, whichever is lower. And if you didn’t use all of your allowance in previous years, you might be able to ‘carry forward’ some of that unused room.
High earners should watch out for the tapered annual allowance. If your adjusted income is over £260,000, your allowance starts to shrink, potentially down to £10,000. On the flip side, even if you’re not earning, you can still contribute up to £2,880 a year and get a government top-up to £3,600. That’s free money just for saving.
Consider Timing for Capital Gains and Dividends
Your Capital Gains Tax (CGT) allowance is now just £3,000 for the year — so if you’re planning to sell assets like shares, timing matters. Couples can double up, and spouses can transfer assets between each other to make the most of both allowances. Don’t wait until March to start thinking about this.
The dividend allowance has also been cut right back — just £500 this year. If you hold dividend-paying shares in a regular trading account, you could end up with a surprise tax bill. Tucking those investments inside an ISA or pension can help you avoid that.
2025/26 Tax-Free Allowances at a Glance
To help you keep things straight, here’s a quick look at the main tax-free allowances for this year:
| Allowance Type | Amount | Notes |
|---|---|---|
| ISA Allowance | £20,000 | Tax-free savings across Cash, Stocks & Shares, Lifetime, and Innovative Finance ISAs. |
| Junior ISA Allowance | £9,000 | For under-18s. Can be a Cash or Stocks & Shares JISA. |
| Lifetime ISA (LISA) Allowance | £4,000 | Counts towards the £20,000 ISA cap. Government adds 25% bonus. |
| Pension Annual Allowance | £60,000 | Can contribute more with carry forward if eligible. |
| Money Purchase Annual Allowance (MPAA) | £10,000 | Applies if you’ve already accessed your pension flexibly. |
| Tapered Annual Allowance Threshold | £260,000 | High earners see a reduced pension allowance above this level. |
| Capital Gains Tax (CGT) Allowance | £3,000 | Gains above this are taxable. Use it or lose it each tax year. |
| Dividend Allowance | £500 | Tax-free dividend income limit — best kept within ISAs or pensions. |
| Personal Savings Allowance | £1,000 | Basic rate taxpayers only. Higher rate = £500. Additional rate = £0. |
| Personal Allowance | £12,570 | Tax-free income before income tax kicks in. Reduces for incomes above £100,000. |
Note: These figures apply to the 2025/26 tax year and could change in future.
Final Thoughts On Planning Ahead
We get it — tax planning probably isn’t the most exciting item on your to-do list. But doing it early means fewer surprises and better outcomes. There’s still plenty of time to act, and making the most of your allowances now could mean paying less tax and building more wealth over time.
Whether it’s putting more into your ISA, revisiting pension contributions, or exploring how best to pass on wealth to family — it’s worth having the conversation sooner rather than later. And if you want help navigating the options, our team at Ward Goodman is always here to support you with tailored advice.
