3 important factors to consider as we approach the end of the 2024/25 tax year

There might still be frost on your lawn and the temperature may suggest otherwise, but the first signs of spring are officially here. With the days gradually getting longer and daffodils starting to poke their heads through the soil, there can be no doubt that we’re arriving at this period of renewal and a fresh start to the world’s natural growth cycle.

Crucially, this time of year also marks the beginning of the new tax year. The final day of the current 2024/25 tax year will be 5 April, with 6 April marking the start of 2025/26.

This is one of the key dates in the financial calendar, and one that you may want to pay close attention to as there may be planning opportunities that you could make the most of.

Read on for three important factors to consider as this tax year draws to a close and a new one is on the horizon.

1. Make the most of your various tax allowances and exemptions

The end of the tax year and start of a new one sees many of your key tax allowances and exemptions reset.

By making the most of some of these allowances and exemptions, you may be able to mitigate various taxes, including:

• Income Tax
• Capital Gains Tax (CGT)
• Dividend Tax
• Inheritance Tax (IHT)

The table below details some of the allowances and exemptions you might want to make use of before the start of the new tax year:

As you can see, you won’t be able to make use of some of these allowances and exemptions from this tax year after 6 April, or other unused ones from previous years.

So, if you haven’t already, you may want to review how your wealth is currently organised, and whether you may be able to reduce your tax liability but making use of these various thresholds.

2. Remember that changes have come into place – and more will start on 6 April

A new tax year often marks the start of any announced changes, and you may want to review changes that have already come into place, too.

For example, the main rates of CGT increased immediately in the wake of the Autumn Budget in October, rising from:

• 10% to 18% for basic-rate taxpayers
• 20% to 24% for higher- and additional-rate taxpayers.

These increases could make it all the more important for you to make use of your CGT Annual Exempt Amount described above before it resets for the new tax year.

Then, from 6 April, other changes that may affect you will also come into place. This includes:

• Employer National Insurance (NI) rates will rise by 1.2 percentage points, from 13.8% to 15%.
• The rate of CGT for Business Asset Disposal Relief (BADR) and Investors’ Relief (IR) will increase to 14%, and to 32% for CGT on carried interest (paid by private equity managers).

It’s important to be aware of these changes as they could directly affect your wealth. For example, if you own a business, you may face a higher NI bill. You might also find that you face a higher rate of CGT if you attempt to dispose of business assets.

Being aware of changes that are relevant to you can help you prepare and give you more time to find strategies that reduce their impact on your wealth.

3. Start planning for the end of the 2025/26 tax year now

Although all your focus might currently be on getting everything sorted ahead of the start of the 2025/26 tax year, it can actually make sense to start planning for the end of it now, too.

Early planning can help ensure that you effectively make the most of your allowances and exemptions, mitigating tax as far as possible.

You’ll also be well-positioned to react to any changes that are announced throughout 2025/26. For example, the CGT rate rises that came into effect after the Autumn Budget might not have affected you if you’d already moved as much of your investment portfolio as possible into a tax-efficient ISA.

Even if you don’t necessarily act now and simply sketch out an idea of your plan for 2025/26, you’ll put yourself on the front foot for this tax year. That way, you won’t be playing catch up in March 2026, with the 2026/27 tax year coming round.

This strategy could help you increase your investment returns by giving your invested wealth more time to grow in the market, too.

Indeed, figures published by This is Money show the difference in investment returns if you had invested your full ISA allowance on the first day of each tax year, drip-fed your investments into your ISA throughout the year, or used it all on the last day.

Assuming you used your entire allowance each year throughout the previous 10 years and invested in a global tracker, you would have:

• £360,500 if you had invested on the first day of the tax year
• £343,500 if you had spread your investments throughout each tax year
• £322,500 if you had invested on the final day of the tax year.

While past performance does not necessarily indicate future performance, this does demonstrate how being organised and getting your wealth in the market can offer greater potential for returns – simply by maximising the amount of time your money is invested.

All this to say, early planning can be an effective way to ensure that you’re making the most of your hard-earned wealth.

Get in touch

We can support you in preparing for the end of the tax year, and making your wealth as tax-efficient as possible.

Email contact@caliberfm.co.uk or call 01525 375286 to speak to one of our team today.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate estate planning or tax planning.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.