The end of the UK tax year on 5 April marks the end of the tax year for determining when income, gains and reliefs are treated as arising.
For individuals, business owners and investors, it represents the key deadline for reviewing their position before annual allowances reset and certain planning opportunities are no longer available for that year. While some reliefs can be carried forward, many cannot, meaning that inaction before 5 April can result in higher overall tax exposure.
This year end also comes ahead of the planned introduction of Making Tax Digital for Income Tax from April 2026 for many self-employed individuals and landlords, increasing the importance of accurate record keeping and early preparation.
Prepare for Making Tax Digital
Although the filing deadline for the previous tax year has passed, the period leading up to 5 April is an important point to ensure records for the current year are complete and accurate. This is particularly relevant as the UK moves towards the introduction of Making Tax Digital for Income Tax.
From April 2026, self-employed individuals and landlords with income above £50,000 are scheduled to move to a digital reporting system. Further expansion is planned from April 2027.
For many taxpayers, the 2025 to 2026 tax year will be the final full year before the introduction of quarterly digital reporting under Making Tax Digital, making year-end preparation more significant than usual.
This review should lead to specific actions before the tax year closes:
- Ensure records of income, expenses and capital transactions are complete and up to date
- Review whether current record keeping systems meet expected digital requirements
- Consider transitioning to compatible software ahead of the new reporting obligations
Preparing early will reduce the risk of disruption as digital reporting requirements begin to apply. Waiting until implementation may leave insufficient time to adapt systems and processes.
Use your personal allowance
The personal allowance remains set at £12,570. Before the tax year closes, taxpayers should review whether their income position allows full use of this threshold and whether any adjustments can still be made within the current year.
Where income approaches or exceeds £100,000, the personal allowance begins to taper. In these cases, reducing adjusted net income can restore some or all of the allowance, which can have a material impact on the effective tax rate.
In practice, this review should translate into specific actions before 5 April:
- Assess total income for the year to identify any unused personal allowance
- Consider whether pension contributions or charitable donations could reduce adjusted net income
- Check whether the marriage allowance can be claimed or transferred between spouses
Any unused personal allowance is lost after 5 April and cannot be carried forward. The window to take corrective action therefore closes at the end of the tax year.
Maximise ISA contributions
The annual ISA allowance of £20,000 provides a straightforward route to shelter savings and investments from UK tax. As the allowance resets on 6 April, taxpayers should review whether they have fully used their entitlement for the current tax year.
Unlike some other reliefs, unused ISA allowance cannot be carried forward. This makes the period leading up to 5 April particularly important for those looking to build or maintain tax-efficient investment portfolios.
This review should lead to clear actions before the deadline:
- Confirm how much of the £20,000 ISA allowance has already been used
- Top up contributions to cash or stocks and shares ISAs where capacity remains
- Review Junior ISA funding, with the separate £9,000 allowance also resetting on 6 April
Income and gains generated within an ISA remain free from UK tax. Ensuring the allowance is fully used each year can have a cumulative impact on long term tax efficiency.
Review pension contributions and tax relief
Pension contributions remain one of the most effective ways to reduce taxable income while building long term retirement savings. Before 5 April, taxpayers should review their contribution levels to ensure they are making full use of available reliefs.
The standard annual allowance is £60,000, although this may be reduced for higher earners under the tapered annual allowance rules. In addition, unused allowance from the previous three tax years may be carried forward, provided the individual was a member of a registered pension scheme during those years.
This review should translate into specific actions ahead of the tax year end:
- Calculate total pension contributions made during the current tax year
- Identify any unused annual allowance, including available carry forward
- Consider making additional contributions before 5 April to secure tax relief
For individuals with income near or above £100,000, pension contributions can also reduce adjusted net income and help preserve the personal allowance. Once the tax year ends, the opportunity to secure relief for that year is lost.
Plan for capital gains tax
The capital gains tax annual exemption is now £3,000, which means fewer gains can be realised tax-free each year. As a result, taxpayers should take a more deliberate approach to managing disposals before the end of the tax year.
Reviewing investment portfolios and other chargeable assets ahead of 5 April allows individuals to decide whether gains should be realised within the current year, particularly where the exemption would otherwise go unused.
This review should lead to targeted actions before the deadline:
- Identify assets standing at a gain and assess whether disposal is appropriate
- Consider realising gains before 5 April to use the annual exemption
- Review transfers between spouses or civil partners to utilise two exemptions
If the annual exemption is not used before 5 April, it is lost. Given the reduced threshold, careful timing of disposals has become more important in managing overall tax exposure.
Review dividend and savings income
Dividend and savings allowances are now limited, which means income from investments is more likely to fall within the scope of tax. Before 5 April, taxpayers should review how this income is being generated and whether it can be managed more efficiently within the current tax year.
The dividend allowance is £500. The personal savings allowance depends on the individual’s income tax band, with no allowance available for additional rate taxpayers. These thresholds can be used strategically where income levels vary between years or between spouses.
This review should result in practical actions ahead of the tax year end:
- Assess dividend income received during the year and consider timing of any further payments
- Review savings income and whether it falls within available allowances
- Consider allocating income-producing assets to a spouse or civil partner in a lower tax band
Where no action is taken, dividend and savings income may be taxed at higher marginal rates than necessary. Planning before 5 April allows taxpayers to manage how and when income is recognised.
Use inheritance tax gifting allowances
The end of the tax year provides a natural point to review inheritance tax planning, particularly the use of available gifting exemptions. While inheritance tax is often considered a longer-term issue, the timing of gifts within the tax year can affect whether exemptions are preserved or lost.
The £3,000 annual exemption allows individuals to make tax-free lifetime gifts. If unused, it can be carried forward for one tax year only. In addition, regular gifts made out of surplus income may fall outside the estate where specific conditions are met.
This review should lead to clear actions before 5 April:
- Use the £3,000 annual exemption for the current tax year
- Check whether the previous year’s exemption is available to carry forward
- Consider making or formalising regular gifts out of surplus income
Where exemptions are not used within the permitted timeframe, they are lost. Keeping clear records of gifts and the source of funds will support the position if HMRC reviews the estate in the future.
Check employment income and benefits
Employees should review their income and benefits position before the tax year ends to ensure that earnings and taxable benefits are aligned with expectations. The timing of payments and the structure of remuneration can affect how income is taxed within the current year.
Particular attention should be given to bonuses, benefits in kind and any salary sacrifice arrangements, as these can alter both taxable income and National Insurance liabilities.
This review should result in practical actions ahead of 5 April:
- Confirm whether any bonuses will be paid before or after 5 April and assess the tax impact
- Review salary sacrifice arrangements and their effect on taxable income
- Check that benefits in kind are correctly recorded and reflected in payroll
Employers should also ensure payroll processes and reporting are aligned with year-end requirements. Once the tax year closes, the timing of income cannot be revisited for that period.
Prepare for self-assessment and record-keeping
Although the filing deadline for the previous tax year has passed, the period leading up to 5 April is a practical point to ensure records for the current year are complete and accurate. This is particularly relevant for individuals with multiple income sources, business activity or capital transactions.
Accurate record keeping supports correct reporting to HMRC and reduces the risk of errors, enquiries or penalties. It also places taxpayers in a stronger position when preparing their next self-assessment return. This review should lead to specific actions before the tax year closes:
- Ensure records of income, expenses and capital transactions are up to date
- Capture supporting documentation such as invoices, receipts and bank statements
- Review systems for digital record keeping in line with Making Tax Digital developments
Taking these steps before 5 April helps ensure that the tax position for the year is complete and defensible, reducing the risk of issues arising at the reporting stage.
Review business and property income
Business owners and landlords should review their income and expenditure position before the end of the tax year, as the timing of transactions can affect taxable profits for the current period. Decisions taken before 5 April may influence the level of income brought into charge and the availability of reliefs.
This is particularly relevant for those operating through self-employment or receiving rental income, where there may be flexibility around when income is received and when expenses are incurred.
This review should lead to targeted actions ahead of the deadline:
- Consider the timing of invoices, receipts and rental income
- Ensure allowable expenses are identified and recorded before 5 April
- Review eligibility for capital allowances on qualifying expenditure
Careful management of income and expenditure at this stage can influence the overall tax liability for the year. Once the tax year ends, the opportunity to adjust timing for that period is no longer available.
Take professional advice where needed
As the end of the tax year approaches, the interaction between different tax rules can become more complex, particularly where individuals have multiple income streams, business interests or international connections. In these cases, reviewing the position in isolation may not identify all available options.
Professional advice can help assess how allowances, reliefs and timing decisions work together, and whether any planning steps remain available before 5 April.
This review should prompt consideration of the following:
- Whether income levels trigger tapered allowances or additional tax exposure
- How business, investment and employment income interact for tax purposes
- Whether cross-border income or assets create additional UK tax obligations
Acting before the end of the tax year allows time to implement planning effectively. After 5 April, many options will no longer be available for that tax year.
Author
Gill Laing is a qualified Legal Researcher & Analyst with niche specialisms in Law, Tax, Human Resources, Immigration & Employment Law.
Gill is a Multiple Business Owner and the Managing Director of Prof Services Limited - a Marketing & Content Agency for the Professional Services Sector.
