Year-End Tax Planning: 8 Ways to Cut Your Tax Bill Before 5 April 2025
The UK tax year ends on 5 April 2025. Any tax planning that requires action before that date cannot be done after it — allowances are use-it-or-lose-it, and timing can make a significant difference to how much of your income ends up in your own pocket versus HMRC's. Here are eight strategies worth considering before the tax year closes.
1. Use your ISA allowance (£20,000)
Each adult can invest up to £20,000 in ISAs in the 2024-25 tax year. Any growth, dividends, or interest inside an ISA is completely sheltered from income tax and CGT — permanently, not just for the current year. Unused ISA allowance cannot be carried forward. With savings interest rates still elevated after the Bank of England rate rises, cash ISAs are offering meaningful returns, and the advantage of holding savings in an ISA (rather than in a bank account subject to the personal savings allowance) grows with balance size.
2. Use your CGT annual exempt amount (£3,000)
If you hold shares, funds, or other chargeable assets outside an ISA, you can realise up to £3,000 of gains in 2024-25 without paying CGT. If your gains are below this, consider selling assets and rebuying them (known as "bed and ISA" if you move them into an ISA simultaneously) to reset the base cost. This uses the exemption for the current year and shelters future gains.
3. Top up your pension before year-end
Pension contributions attract tax relief at your marginal rate — 20%, 40%, or 45%. A £800 contribution costs a basic-rate taxpayer £800 but goes into the pension as £1,000. For a higher-rate taxpayer, a £1,000 net contribution can attract relief of up to £500 more via self-assessment, effectively making a £2,000 contribution cost £1,000 net. The annual pension allowance is £60,000 (or 100% of earnings if lower), and unused allowance can sometimes be carried back three years.
4. Check marriage allowance eligibility
If you are married or in a civil partnership and one of you earns below £12,570 (the personal allowance) while the other pays income tax, the lower earner can transfer £1,260 of their unused personal allowance. This reduces the higher earner's tax bill by £252/year. It can be backdated up to four years. Check our marriage allowance calculator.
5. Consider salary sacrifice
Salary sacrifice — formally reducing your salary in exchange for employer contributions to pensions, cycle-to-work schemes, or childcare vouchers — saves both employee NI (8%) and income tax. For a basic-rate taxpayer sacrificing £1,000, the net saving is approximately £280 (20% IT + 8% NI on the sacrificed amount, minus any taxable benefit value). Your employer also saves 15% employer NI from April 2025, and some employers pass a portion of that saving back.
6. Claim all allowable expenses if self-employed
If you file a Self-Assessment return, ensure you have claimed all allowable business expenses for 2024-25 before the year closes. Common omissions: home working costs (£6/week flat rate or actual calculation), professional subscriptions, equipment, and mileage at 45p/mile for the first 10,000 miles. Estimate your self-employed tax bill with our calculator.
7. Use your dividend allowance (£500)
The dividend allowance is now just £500 (down from £2,000 in 2022-23). Company owners should ensure they have taken at least £500 in dividends before 5 April if their retained profits allow it — this uses the tax-free allowance. Above £500, basic-rate taxpayers pay 8.75% on dividends; higher-rate taxpayers pay 33.75%.
8. Review your tax code
If your tax code is wrong — which is common after a job change, a benefit-in-kind change, or an HMRC administrative error — you may be overpaying or underpaying income tax. Check your P60 from 2023-24 against your actual income and allowances. A wrong tax code can be corrected through HMRC's online account, and overpayments can be reclaimed going back four years.
Conclusion
Tax planning before 5 April is not about complicated schemes — it is about using allowances the government has explicitly created. The savings from ISA contributions, pension top-ups, and marriage allowance claims can easily run into hundreds or thousands of pounds per year. Use our take-home pay calculator to see your current tax position before deciding which actions are most valuable for your situation.