The tax year ends on 5 April. For most people, it’s simply a date in the calendar. In reality, it’s a useful point to review how your money is set up and whether you want to use any remaining tax allowances before they reset.
In this episode of Keep The Change, Tom breaks down what the tax year end actually means, which accounts are worth reviewing, and how to decide whether you should act before the deadline. It is clear, practical and focused on what genuinely matters.
(This article is for general information only and does not constitute personal financial advice. Tax rules can change and depend on your individual circumstances. Investments can fall as well as rise in value and you may get back less than you invest. If you are unsure what is right for you, consider taking regulated financial advice.)
What actually resets?
The tax year ends on 5 April. On 6 April, many of the annual tax limits start again from zero.
These limits set how much you can contribute to certain accounts, or how much income or investment growth you can receive, before tax applies.
A tax-free limit is simply the amount you can earn, invest or contribute each year without paying tax. If you go over it, you pay tax on the excess.
The key limits most people should know are:
- £20,000 into ISAs each tax year
- Pension contributions, usually up to £60,000 or 100% of your earnings if lower
- Annual tax-free allowances on dividends and capital gains
In most cases, if you do not use these limits before 5 April, you lose that year’s allowance. It does not carry forward.
Where your money sits directly affects how much tax you pay over time. Getting the structure right is not about being clever. It is about keeping more of what is yours.
The accounts with limits worth checking
As tax year end approaches, these are the main accounts with annual limits to review.
ISAs
You can contribute up to £20,000 per tax year across all ISAs combined. Any growth or income inside the ISA is free from further tax.
For a contribution to count this tax year, the money must be inside the ISA before your provider’s deadline.
Two points to be clear on:
- The £20,000 limit applies across all your ISAs, not to each one separately.
- If money arrives after the cut-off, it counts towards next tax year instead.
If you are planning a top-up, timing matters. Payments can take a few days to clear, and if the money arrives after 5 April it will count towards next year’s allowance instead.
The value of investments held in a Stocks and Shares ISA can fall as well as rise. You may get back less than you invest.
Pensions
Pensions can be one of the most tax-efficient accounts available.
When you contribute, you receive tax relief. In simple terms, some of the income tax you have paid is added back into your pension. Investments then grow in a tax-efficient environment.
It is worth reviewing your pension before April if you:
- Pay higher-rate or additional-rate tax
- Received a bonus
- Have contributed less than expected this year
A practical starting point is to download your latest payslip and check:
- Your total pension contributions so far this tax year
- Your employer’s contributions
- Your total income tax paid
That income tax figure is often more flexible than people realise.
General Investment Accounts
These are investments held outside ISAs and pensions.
There is no limit on how much you can invest. However, returns such as dividends and capital gains may become taxable once you go over the annual tax-free allowances.
They tend to make sense when:
- You have used your ISA allowance
- You have made strong pension contributions
- You want access to your money before pension age
Think of them as the next layer once your main tax-efficient accounts are in good shape.
The value of investments can fall as well as rise. You may get back less than you invest.
What if I go over my allowances?
If you exceed certain limits, HMRC may contact you and ask you to correct it. In many cases, you may need to withdraw the excess. Tax can apply in some situations.
If you simply do nothing and miss the deadline, you will not be fined. You just lose that year’s unused allowance.
If you only do one thing before 5 April, review your payslip. Know how much you have paid into pensions and how much tax you have paid this year.
(This article is for general information only and does not constitute personal financial advice. If you are unsure what is right for you, consider taking regulated financial advice.)
