Year-End Tax Planning: Making the Right Decisions Before 5 April 2026

With the end of the 2025/26 tax year fast approaching, now is a crucial time to review your finances and ensure you are making the most tax-efficient decisions available.

The weeks before 5 April present valuable planning opportunities for individuals, business owners and investors alike. Acting early can help reduce liabilities, maximise reliefs and position you strongly for the new tax year.

Here are the key areas to consider.

Use Your Allowances Before They Reset

Many tax allowances operate on a “use it or lose it” basis.

Your ISA allowance, currently £20,000 per person, allows savings and investments to grow free from income tax and capital gains tax. If unused by 5 April, it cannot be carried forward.

Pension contributions are another powerful planning tool. Contributions attract tax relief and may help higher earners reduce their taxable income, potentially preserving personal allowances that would otherwise taper away. Reviewing your annual allowance position before the tax year ends can be highly beneficial.

Review Dividend and Profit Extraction Strategies

For business owners, timing matters.

With dividend tax rates scheduled to increase from April 2026, reviewing whether to accelerate dividend payments before the new rates apply could reduce your overall tax burden.

Ensuring that your profit extraction strategy, including salary, dividends and pension contributions, is structured efficiently before year end can make a significant difference.

Consider Capital Gains Before 5 April

If you are planning to sell assets, reviewing the timing is important.

Each individual has an annual Capital Gains Tax exemption. If unused before the tax year ends, it cannot be carried forward. Bringing forward disposals or crystallising gains strategically may help minimise tax exposure.

For business owners considering exit or restructuring plans, early advice is especially valuable given scheduled increases to certain relief rates in 2026.

Make Strategic Business Investments

If your business is planning capital expenditure, acting before 5 April may accelerate available tax relief.

The Annual Investment Allowance continues to provide up to £1 million of 100% relief on qualifying purchases. Limited companies may also benefit from full expensing and other first-year allowances.

Careful timing of investment can reduce this year’s taxable profits while supporting long-term growth.

Check Your National Insurance Record

If you are approaching retirement, reviewing your National Insurance contributions can help ensure you qualify for the full State Pension.

In some cases, voluntary contributions can be made to fill gaps, but deadlines apply, so reviewing this before the tax year end is advisable.

Prepare for Making Tax Digital

While not a year-end relief in itself, Making Tax Digital for Income Tax will begin in April 2026 for many sole traders and landlords earning over £50,000.

Taking steps now, including selecting compatible software and reviewing bookkeeping processes, will make the transition significantly smoother.

Don’t Overlook Payroll and Compliance

Recent enforcement action around National Minimum Wage compliance serves as a reminder that payroll accuracy is critical.

With increased scrutiny and further regulatory oversight expected, reviewing payroll systems before the new tax year begins can help avoid costly mistakes.

A Proactive Approach Pays Off

Tax planning is most effective when it is proactive rather than reactive. The final weeks of the tax year provide a valuable opportunity to assess your position, identify efficiencies and make informed decisions.

Leaving planning until after 5 April means missed opportunities cannot be recovered.

If you would like to review your personal or business tax position before the year end, our team would be pleased to help you put a clear plan in place, ensuring you move into the 2026/27 tax year with confidence.