As we enter a new tax year, it’s important to review your financial affairs and take advantage of tax-saving opportunities.

We've broken down our top tips into the areas below for consideration to help optimise your tax position each year.

Individuals

Business owners

Property owners

Non-domiciled individuals

Individuals

Maximise your allowances

• ISA Allowances: You can contribute up to £20,000 into an ISA each year (£9,000 for Junior ISAs).
• Pension Contributions: Annual allowance of up to £60,000, with a three-year carry-forward rule. You can also contribute to pensions for those with no earnings, contributing up to  £2,880, which is then topped up by government to £3,600 with tax relief.

Utilise gift aid

• Claim income tax relief on charitable donations, you have up until 31 January 2026 (or the date at which you file your 2024/25 tax return if earlier) to carry back gift aid donations to the previous tax year.
• Consider donating shares to charity with large capital gains to maximise tax benefits as this is Capital Gains Tax free and you bank income tax relief.

Capital Gains Tax (CGT)

• Offset capital losses against gains.
• Consider reshaping investment portfolios to best mitigate gains.
• Use negligible value claims for assets standing at low/no value.
• Gift assets while at low value or assets with potential to rise significantly in value.

Tax-efficient investments

• 30% income tax relief on EIS/VCT investments and 50% on SEIS. These may be used as an alternative investment to pensions if allowances are restricted.

Estate and Inheritance Tax (IHT) planning

• Make cash gifts (£3,000 per year exempt, or larger amounts with a 7-year rule until the gift falls out of your estate).
• Trusts offer potential tax efficiencies, especially before the new IHT changes come into play in April 2026.

Administrative considerations

• Pay tax on time to avoid rising interest rates (8.5% from April 2025).
• Review pension and ISA drawdown strategies in light of IHT rule changes from April 2027.

Review the order of drawdown on your pension savings

IHT changes for pensions are expected to come into effect from 5 April 2027 which may flip your approach to pension savings. With pensions now exposed to IHT, individuals are considering whether instead of passing these funds onto next generation intact, should they now be used in lifetime in priority to other investments.

Business owners

Review remuneration strategy

• Consider a balance between salary, dividends, and pension contributions to optimise tax savings.
• Employer NICs are rising to 15% from 6 April 2025, and Scottish higher tax rates increase the tax differential between drawing salary vs. dividends.
• Salary sacrifice can reduce tax liabilities for both employers and employees.

Corporate Tax and CGT planning

• If considering a business sale, be mindful of Business Asset Disposal Relief (BADR) and upcoming CGT increases.
• Entrepreneurs should weigh up tax efficiency in selling, winding up, or retaining their business.

Loan planning

• Directors may consider interest-free company loans but ensure timely repayment to avoid additional tax charges.
• Where loans remain outstanding 9 months after the end of the Company’s accounting year end, then there is a tax charge on the Company and so a cash flow impact, however when the loan is repaid this unwinds.
• With the beneficial loan interest rate set at 3.75% from April 2025, extracting funds by way of loan can be relatively tax efficient in a high-income tax rate environment, particularly if an exit of the business is envisaged in the short to medium term.

Exit planning

• If planning to sell or restructure your business, consider tax-efficient strategies such as Employee Ownership Trusts (EOTs) for potential 0% tax exits.
• Alternatively, look to best manage your exit such that it is taxed to the lower Capital Gains Tax rates versus Income Tax.

Inheritance planning

• Review the availability of Business Property Relief/Agricultural Property Relief across the family asset base before 6 April 2026. After 6 April 2026 both of these generous Inheritance Reliefs will be restricted with 100% relief given on up to a maximum value of £1m, thereafter only 50% relief will be given on value in excess of £1m, these rules apply on death and also apply to lifetime chargeable transfers.

Property owners

Furnished Holiday Lets (FHLs) changes

• Special tax treatment for FHLs ends on 5 April 2025.
• Business asset reliefs (e.g., Business Asset Disposal Relief, holdover, rollover relief) will no longer apply, although it may be possible to lock out Business Asset Disposal Relief post 5 April, provided the FHL business ceases by that date.
• Consider selling or gifting assets before the deadline.
• Consider capital allowances and pension contributions as these may be impacted by the changes.

Property ownership structures

• Review whether to hold property personally or through a company for optimal tax efficiency.
• Consider gifting or restructuring ownership to mitigate IHT and CGT liabilities.

Mortgage interest relief changes

• Basic rate income tax relief only available for mortgage interest deductions post-2025.

Non-domiciled individuals

Residency and Domicile Rules

• A new 4-year grace period applies for tax on foreign income and gains (FIG) if you have been non-UK resident for 10+ years.
• Long-Term UK Residents (10 out of the last 20 years) will be liable for UK IHT on worldwide assets.
• If you became a UK resident after April 2022, you may still benefit from foreign income exemptions.

Planning for UK tax exposure

• Consider timing of non-UK income and gains to align with tax efficiency strategies.
• Review asset structures to mitigate worldwide IHT liabilities.

Looking ahead

With income tax, CGT, IHT, and corporate tax changes on the horizon, proactive planning is crucial. Engaging with a professional adviser ensures you make the most of available reliefs and avoid unnecessary tax exposure.

If you need expert tax planning advice, contact us to discuss your specific needs and optimise your tax position in this upcoming tax year.