The end of the financial year is fast approaching. But when is it, and what does that mean for you? In this article, we’ll answer these questions, and discuss some of the tax-efficient opportunities available to you.

What is a financial year?

In the UK, the financial year runs from 6th April to 5th April. This is significant for savers, as many tax-free saving opportunities have annual allowances. This is the amount that can be saved free from tax implications. The annual allowances reset at the start of a new financial year. It is therefore wise, if funds allow, to maximise your savings within these allowances before the end of the financial year. This allows you to get the highest returns on your investment* whilst not being required to pay tax on them.

ISAs and pensions are two of the tax-free savings opportunities available*. Continue reading to find out more about the allowances and how Willday Wealth Management can help you make the best use of them.

Individual Savings Accounts (ISAs)

ISAs are tax-efficient savings and investment accounts. There are different types of ISA: Cash ISAs, Stocks and Shares ISAs, Lifetime ISAs and Junior ISAs. Each has different savings needs and goals, and comes with different annual allowances. No matter which ISA type you choose, there is no tax due on investment growth and interest earned within the ISA, and no Capital Gains Tax (CGT) to pay on gains within the ISA.

Your overall annual allowance for ISAs is £20,000 per financial year, and this can be split across more than one ISA type. It should be noted that the Junior ISA has a separate allowance. It is possible to pay into more than one form of ISA in each financial year, but the total invested should not exceed £20,000. Those who are married or in a civil partnership may use a combined allowance of £40,000 per financial year. It should be noted that the Junior ISA has a separate allowance of £9,000 which can be contributed to in addition to the standard £20,000 for a child under the age of 18. ISAs can be particularly beneficial for higher- and additional-rate tax payers, because of the lack of income tax on growth and interest.

Lifetime ISAs can be opened by those aged between 18 and 39, and invested in until the individual is 50. The money invested may be used to purchase a first home valued at £450,000 or less, or for retirement after the age of 60. Only one Lifetime ISA can be paid into each financial year, and up to £4,000 per financial year can be invested here. This £4,000 forms part of the £20,000 overall annual allowance. The government will add 25% to the invested amount, enabling faster growth of your money. If you maximise your contributions to £4,000, this means you will get £1,000 back from the government.

The annual allowance for a Junior ISA falls outside the overall £20,000 allowance. A parent must open a Junior ISA on behalf of their child, though anyone – including other family members – can pay into it. The total amount that can be paid into a Junior ISA in a financial year is £9,000, no matter who pays it in. Funds invested in a Junior ISA are only accessible once the child turns 18, making it a great way to save for their future.

At the end of the financial year, the funds invested in an ISA remain tax-free whilst they are in the ISA. If you don’t use the allowance within the financial year, the remaining allowance is discarded – it is not carried over. You don’t have to start a new ISA the following financial year, though. Your allowance will renew, and you can continue paying into the same account.

How Willday can help you

Willday Wealth Management will build you a personalised investment portfolio for your Stocks and Shares ISA. Our team of experts will invest your money into a portfolio based on your financial goals. We’ll offer help and guidance to assist you in building this portfolio. You are able to have more than one Stocks and Shares ISA in a financial year – although the £20,000 overall allowance still applies. For example, if you have both short-term and long-term savings goals, you may wish to use two ISAs with different portfolios to help achieve them.

Pensions

Each financial year, you’re able to invest up to £60,000 into your pension, whilst taking advantage of tax relief. For basic rate taxpayers, your contributions will receive 20% tax relief*. This means that the tax that you would have paid on this investment will go into your pension, instead of to HMRC. You don’t need to do anything to claim this tax relief – it is automatically boosted on your behalf. Higher- and additional-rate tax payers are able to claim back up to 45% through your annual tax return.

However, you are only able to contribute £60,000 if your relevant earnings allow it. Your ‘relevant earnings’ include your employed or self-employed income, trading income, and income from furnished holiday lettings. If your combined relevant earnings only comes to £30,000, then this is the maximum that you can contribute in any given financial year. Unlike with ISAs, unused pension allowances may be carried forward from the previous three years. Once these carried over allowances are used, any additional payments are added to your income tax calculation for that financial year and are liable to income tax at your marginal rate (20%/40%/45%).

How Willday can help with your pensions

Choose a Willday managed private pension for a tax-efficient and globally diversified option. We enable you to get higher returns and monitor your progress all in one place. Your personal investment consultant will help you get the most from your pension and overall investment plan*. Simply tell us your retirement goals, and we’ll build the perfect pension portfolio for you. For example, tell us when you aim to retire and we’ll manage your portfolio around your target date, reducing your risk as the date approaches. You can even transfer your existing pensions to a Willday managed portfolio.

Other tax-efficient savings opportunities

Along with ISAs and pensions there are other tax-free savings opportunities available. In regular savings accounts, basic tax-payers are able to save £1,000 per financial year without paying tax on interest earned. Higher-rate tax-payers can save £500 per financial year, and additional-rate tax-payers have no tax-free allowance. After exceeding the tax-free amount, earnings are added to your other income and taxed at your highest marginal rate.

Directors in businesses are able to take tax-free dividends from the business. So long as there is sufficient profit, and funds to cover corporation tax, directors may receive £500 per financial year, tax-free. This allowance is due to be maintained in the 2025-26 financial year.

What to do between now and 5th April

Time is running out to make the most of your tax-free allowances. So as soon as possible, you should check your ISA and pension contributions for this financial year. If you have allowance remaining, and the funds to do so, consider topping up your ISA or pension. If you find you have regular disposable income available, could you contribute to your ISA or pension regularly throughout the year instead i.e. monthly? The longer your money is invested for, the longer the opportunity for it to grow.

Speak to our team to help you make sense of your allowances and how tax-relief and savings apply to your situation. We are on-hand to help you make the moves needed to take advantage of tax-free savings. We’ll guide you through what you need to know, and help you invest your funds in a tax-efficient manner.

* Please note: With investing, your capital is at risk. You may get less than what you invested. Tax treatment depends on our individual circumstances and may change in the future.