As the end of the tax year approaches, investment experts are urging Britons to review their finances to ensure they are maximising their allowances. Doing so can help reduce tax liability, boost savings, and grow wealth more efficiently.

Paul Clifton, director of wealth management at Arbuthnot Latham said: “By making full use of your allowances, you can lower the amount of tax you owe, keeping more of your money in your pocket. Similarly, tax-efficient savings options like ISAs and pensions allow your investments to grow without being eroded by taxes, helping you build a more substantial financial cushion.”

With the end of the current UK tax year landing on April 5, 2025, Mr Clifton has shared nine ways to maximise allowances and boost your investments.

Utilise your ISA allowance

Cash ISAs allow savers to grow their money tax-free on interest up to the £20,000 annual allowance without being subject to the Personal Savings Allowance (PSA).

Mr Clifton said: “Gains within an ISA are free from capital gains tax (CGT), and no income tax is payable on interest or dividends.”

There are even more benefits for married couples. Mr Clifton said: “If you’re married or in a civil partnership, you can double your combined allowance to £40,000.” Additionally, he urged: “Consider the ‘bed and ISA’ process to realise a capital gain and then reinvest within an ISA, but seek financial advice as this involves a short period out of the market.”

Boost your pension contributions

The maximum tax-relievable amount you can save into a pension each tax year is £60,000 or 100% of your earnings, whichever is lower. High earners may have a reduced allowance. However, Mr Clifton noted that even if you’re not working and are under 75, you can still contribute up to £2,880 each tax year, which will be boosted by tax relief to £3,600.

Use your capital gains tax allowance

Capital gains tax (CGT) is a tax levied on the profit people make when selling an asset.

The capital gains tax-free allowance – the amount of money people can make without paying tax – has been reduced significantly over the past few years. In 2022/23, you could realise a gain of £12,300 without incurring CGT. By 2025/26, that allowance is set to be just £3,000, meaning more people are now liable to pay CGT, and some may face it for the first time.

Mr Clifton said: “People can make tax-free gains of up to £3,000 this tax year. This allowance cannot be carried forward, so it’s important to use it to reduce future CGT liabilities. Transferring assets between spouses can help utilise both annual CGT exemptions.”

Use your gift exemption

Consider using your annual gift exemptions and making larger gifts to reduce the value of your estate for inheritance tax (IHT) purposes. Mr Clifton said: “You can give away up to £3,000 each tax year without it being included in your estate for IHT purposes. You can also carry forward unused allowance from the previous tax year. Additionally, you can give as many £250 gifts per person as you want, provided you haven’t used your £3,000 exemption for the same person.”

However, he pointed out: “Larger gifts may be exempt from IHT if you live for at least seven years after making them.”

Plan for charitable donations

Donations to charity can reduce taxable income. Mr Clifton explained: “Gift Aid allows charities to claim an extra 25p for every £1 you donate, and higher-rate taxpayers can claim additional tax relief.”

Review savings income

The Personal Savings Allowance (PSA) allows basic-rate taxpayers to earn up to £1,000 in savings interest tax-free and higher-rate taxpayers up to £500. Additional-rate taxpayers do not receive this allowance.

If your savings are at risk of breaching the personal allowance threshold, people could look to invest their deposits in ISAs instead.

Consider Junior ISAs

Children are entitled to a Junior ISA (JISA) allowance of £9,000 annually. Mr Clifton said: “You could consider funding a JISA to provide your children with a nest egg when they turn 18. Like regular ISAs, gains within a JISA are free from CGT, and no income tax is payable on interest or dividends.”

Dividend allowance

The dividend allowance is £500 per year. Mr Clifton said: “Ensure you make use of this allowance, as it cannot be carried forward. Dividends are subject to lower tax rates compared to salary.”

Look into tax-incentivised investments

Investing in tax-incentivised schemes like the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCT) can offer significant tax benefits while supporting early-stage businesses in the UK.

Mr Clifton said: “By investing in EIS-qualifying companies, you can receive 30% income tax relief on investments up to £1million per year (or £2million if investing in knowledge-intensive companies).

Additionally, you can defer capital gains tax (CGT) if gains are reinvested into EIS-qualifying companies and benefit from inheritance tax exemption after holding the shares for at least two years. Mr Clifton added: “Loss relief is also available, allowing you to offset losses against your income or capital gains.”

Venture Capital Trusts (VCT) allow you to invest in a portfolio of small, growing UK businesses.

With this option, Mr Clifton said: “You can receive 30% income tax relief on investments up to £200,000 per year, provided the shares are held for at least five years. Dividends from VCT shares are tax-free, and you are exempt from CGT on profits when selling your VCT shares.”

However, he noted: “These investments carry higher risks due to the nature of the businesses they support, so it’s essential to seek advice to determine if they align with your financial goals and risk tolerance.”