Perhaps one of the most important days of the year on the financial calendar, 5 April is fast approaching.
This marks the end of the 2024/25 tax year, with the beginning of 2025/26 on 6 April. With this in mind, it might be prudent to take some time to assess your finances and prepare for the year ahead.
By taking proactive steps at the start of the new tax year, you could make the most of tax allowances and exemptions, review your long-term financial goals, and position yourself for a more secure financial future.
So, continue reading to discover three key financial tasks that could help you start the new tax year on the right foot.
1. Review the previous year, then plan for the coming one
While your financial plan should ideally be a long-term prospect, it’s still essential to carefully review your position at least once a year.
The start of a new tax year may be the ideal moment to do so, as you could reflect on your progress and make the necessary adjustments.
Indeed, you might want to consider setting up a meeting with your planner soon after 6 April to assess your current situation, including any changes to your circumstances and any updates to tax allowances or exemptions.
For instance, you may want to review:
- Any taxes you might be liable to pay in 2025/26
- Opportunities to reduce your tax liability
- Allowances or exemptions that have rolled over into the new tax year.
Additionally, it might be worth considering any tax rate or allowance changes from the previous year that might affect your plans.
The adjustments to the Capital Gains Tax (CGT) rates, for example, might influence how you approach your investments – which our new article covers in more detail.
If you take the time to evaluate these changes, you can start setting financial goals for the year ahead.
Whether you have any short-term goals in mind, such as a luxury purchase, or more medium- or long-term goals, namely paying off your mortgage or retiring, factoring them into your financial decisions now could help you take the necessary steps towards achieving them.
2. Consider boosting your pension contributions
Your retirement fund is a crucial factor in your financial plan, and you may find that making pension contributions early in the year is incredibly beneficial.
One key advantage of doing so is the tax relief you receive on contributions. Basic-rate taxpayers receive 20% relief at source, while higher- and additional-rate taxpayers can claim an extra 20% or 25%, respectively, through their self-assessment tax return.
For instance, in England, if you contribute £80 to your pension, the government will add an extra £20, effectively bringing the total value to £100.
If you’re an additional-rate taxpayer, you could claim an extra £25 through your tax return, reducing the “cost” of the contribution to just £55.
You can claim tax relief on personal contributions up to the value of the Annual Allowance each year. This stands at £60,000 in 2025/26, or 100% of your earnings, whichever is lower. This includes employer contributions, as well as tax relief.
These rules differ somewhat in Scotland. While you can still benefit from the 20% basic rate on your contributions, additional relief functions slightly differently.
Indeed, you could receive:
- 1% up to the amount of any income you’ve paid 21% tax on
- 22% up to the amount of any income you’ve paid 42% tax on
- 25% up to the amount of any income you’ve paid 45% tax on
- 28% up to the amount of any income you’ve paid 48% tax on.
Just note that even if you only pay the 19% rate in Scotland, you would still get 20% relief as standard.
Making the most of this allowance earlier in the tax year, rather than waiting until the end, could allow your pension pot to benefit more from compounding returns over time.
3. Assess your ISAs and consider investing early
An ISA can be a convenient tool to save or invest for the future, helping you generate the growth needed to reach your long-term goals.
This is because ISAs protect any interest or returns you accrue from Income Tax, Dividend Tax, and CGT, allowing you to hold onto more of your hard-earned wealth.
In 2025/26, the ISA allowance – the maximum amount you can contribute across all your ISAs in a single tax year – will remain at £20,000. So, it might be prudent to plan how you will make the most of this at the start of the tax year.
Interestingly, research from Vanguard shows that making ISA contributions at the beginning of the tax year, rather than at the end, could significantly boost the growth of your investments, as the chart below shows.
Source: Vanguard
As you can see, someone who invests £20,000 at the start of each tax year rather than at the end could accumulate a considerably larger fund than if they wait until the end.
This is mostly thanks to the power of compounding, where you earn returns on your returns, as well as on the money you invest throughout the tax year.
As such, by contributing to your Stocks and Shares ISA early in the tax year, you may give your investments more time to grow. Just remember that past performance does not indicate future performance.
Of course, investing piecemeal is still better than not investing at all, so if a lump sum isn’t feasible, you may want to set up regular contributions throughout the year, ensuring you continue making consistent progress towards your goals.
Get in touch
We could help you start 2025/26 off on the right foot, giving you confidence that you’ll continue working towards your long-term goals as much this year as you did last.
To find out how we can support you, please use our search function to find your nearest Verso office, email us at contact@versowm.com, or call 020 7380 3300.
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 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.
Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation, and regulation, which are subject to change in the future.
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.
