Pensions: the ticking clock on carry forward
You can contribute up to £60,000 annually, plus use unused allowances from:
- 2022/23
- 2023/24
- 2024/25
But here’s the catch:
Unused allowance from 2022/23 expires after 5 April 2026.
A classic “use it or lose it” moment.
Capital Gains Tax: plan before you sell
Each individual gets a £3,000 CGT exemption.
Rates:
- 18% (basic rate)
- 24% (higher/additional rate)
A few planning angles:
- Crypto counts: swapping coins or cashing out can utilise the allowance
- Spouses are taxed separately: two allowances are better than one
- Transfers between spouses can reduce tax if done correctly
- “Bed & Spouse”: one partner sells an investment, the other buys it back – keeping it in the family while refreshing the base cost.
- “Bed & ISA”: Sell an asset, realise the gain, then rebuy inside an ISA so future growth is tax-free.
Timing and ownership structure can make a meaningful difference.
ISAs: the tax-free fortress
ISAs remain one of the cleanest shelters available:
- £20,000 annual allowance (across ISA types)
- £4,000 Lifetime ISA
- £9,000 Junior ISA
No Income Tax. No CGT. No fuss.
The £100k–£125,140 “60% tax zone”
This is where tax gets… sneaky.
Once your income exceeds £100,000, your personal allowance is gradually stripped away. The result? An effective 60% tax rate in this band.
It can also knock out benefits like tax-free childcare.
What helps:
- Pension contributions
- Gift Aid donations
These can reduce your adjusted net income, potentially restoring your allowance and softening the blow.
Couples in business: share wisely
If spouses run a business together, profit allocation can create tax efficiencies.
But HMRC expects arrangements to reflect commercial reality, not just tax convenience. Translation: get proper advice before reshuffling income.
Dividends: use it or lose it
The dividend allowance sits at just £500.
It doesn’t roll over, so any unused portion disappears at year-end. A small figure, but worth capturing if you can.
Savings: quiet allowances, steady gains
You may earn interest tax-free through the personal savings allowance:
- £1,000 for basic-rate taxpayers
- £500 for higher-rate taxpayers
This sits on top of your personal allowance, shielding some of your interest income.
Marriage Allowance: small claim, tidy reward
If one partner earns below the personal allowance and the other is a basic-rate taxpayer, you could save up to £252 per year, and better yet, you can backdate claims up to four years. That’s a potential windfall for something that often goes unclaimed.
📌 Key detail: the lower earner must make the claim.
Inheritance Tax: steady rules, long shadows
The nil-rate band remains at £325,000 until at least 2031.
Couples can often combine allowances, potentially reaching:
- £650,000 standard
- Up to £1m with the residence nil-rate band
Don’t forget gifting allowances:
- £3,000 annual exemption (with one-year carry forward)
- £250 small gifts
- Wedding gifts up to £5,000 (depending on relationship)
These are simple but powerful tools for reducing future exposure.
EIS, SEIS & VCTs: high risk, high relief
These schemes are the spice rack of tax planning. Powerful, but not for everyone.
- EIS: 30% Income Tax relief, CGT deferral, tax-free gains after 3 years
- SEIS: 50% relief, but focused on early-stage (read: higher risk) companies
- VCTs: 30% relief, tax-free dividends, no CGT on disposal
Each comes with conditions, holding periods, and risk levels that need careful consideration.
High Income Child Benefit Charge: the silent clawback
Once income crosses £60,000, Child Benefit starts to be chipped away. By £80,000, it’s completely gone.
If you’re in this zone and still receiving payments, you’ll need to notify HMRC and declare the charge on your tax return.
Think of it less as a penalty and more as a slow fade-out… but one that HMRC expects you to keep track of.
Tax-Free Childcare: helpful, until it isn’t
This scheme can contribute up to £2,000 per year per child, which is nothing to sniff at.
But there’s a trapdoor:
- If either parent earns over £100,000, eligibility disappears
- Support typically runs until age 11 (or 16 if disabled)
A small shift in income can quietly close the trapdoor.
Selling a business: don’t miss BADR
Business Asset Disposal Relief (BADR) can reduce CGT to:
- 14% in 2025/26
- Rising to 18% from April 2026
Compared to the standard 24%, that’s a substantial saving.
There’s a £1m lifetime limit, and eligibility rules are tight. Planning ahead here is crucial, not optional.
Rent-a-Room Relief: tax-free side income
Renting out a room in your main home can earn you up to £7,500 tax-free per year.
A rare example of HMRC being surprisingly generous.
Final thoughts
Tax planning isn’t about dramatic overhauls. It’s more like tuning an instrument, small adjustments that make everything play better.
If any of these areas feel relevant or slightly foggy, it’s worth a conversation. A well-timed decision now can echo positively into the next tax year and beyond.
