Is Your Money Working as Hard as It Could Before the Tax Year Ends?
5 April 2026 is closer than you think. These five tax-year-end moves could put real money back in your pocket, but only if you act before the deadline.
Most people only think about taxes when they get a bill. But the weeks leading up to the end of the tax year on 5 April are exactly the right time to take action, because once that date passes, many valuable allowances and opportunities are gone for good.
Here are five practical steps worth considering before 6 April 2026.
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1. Use Your Personal Allowance, Or Lose It
The personal allowance, currently £12,570, is the amount of income you can earn without paying income tax. If you have not used it all up in 2025/26, you cannot carry the unused portion into the following year. It simply disappears.
If you can arrange to receive income before 6 April, for example, by accelerating a payment you are owed, or by taking a dividend from your company, any amount that falls within your unused allowance will be sheltered from tax. A dividend can also be paid to use up any remaining dividend allowance.
For those who are married or in a civil partnership: if one partner will not use their full personal allowance and is a non-taxpayer or basic-rate taxpayer, a Marriage Allowance election can transfer £1,260 of the allowance to the other partner. This saves up to £252 on the couple’s joint tax bill.
2. Earning Over £100,000? Act Now to Keep Your Allowance
The personal allowance is not guaranteed for everyone. Once your adjusted net income exceeds £100,000, it is clawed back at a rate of £1 for every £2 above the threshold. By the time income reaches £125,140, the allowance is completely lost.
This creates an effective marginal tax rate of 60% on income between £100,000 and £125,140, one of the highest rates in the UK tax system. If your income is in this range, making a personal pension contribution or a Gift Aid donation before 5 April 2026 reduces your adjusted net income and can recover some or all of your personal allowance. The combined effect can be substantial.
3. Max Your ISA Before 5 April
Every adult in the UK has an annual ISA allowance of £20,000. Any unused portion cannot be carried over to the next tax year, and it is lost after 5 April 2026. Interest and dividend income inside an ISA are entirely free of taxes, both now and in the future.
There is an additional reason to act this year. From 6 April 2027, the rules on cash ISAs are changing: under-65s will only be able to place £12,000 of their £20,000 ISA allowance into a cash ISA. Making the most of the current rules while they last is sound financial planning.
4. Company Owner? Pay That Dividend Now
From 6 April 2026, the tax rates on dividends are increasing. The ordinary rate of dividend tax, which applies when dividends fall within the basic rate band, rises from 8.75% to 10.75%. The dividend upper rate, for dividends in the higher rate band, rises from 33.75% to 35.75%. The additional rate stays fixed at 39.35%.
For every £1,000 in dividends taxed at the basic or higher rate, waiting until after 6 April 2026 will cost you an extra £20. If your company has retained profits and your dividends will fall in the basic or higher rate band, paying the dividend now makes financial sense.
5. Check Your Pension Annual Allowance Before It Expires
For 2025/26, most people can contribute up to £60,000 into a registered pension scheme and receive tax relief, subject to their earnings being at least equal to the amount contributed (with a minimum of £3,600 for those with lower earnings).
Crucially, any unused annual allowance can only be carried forward for three years. This means any unused allowance from 2022/23 will be permanently lost if not used by 5 April 2026. Higher earners face a tapered annual allowance: where threshold income exceeds £200,000 and adjusted net income exceeds £260,000, the allowance reduces by £1 for every £2 above £260,000, down to a minimum of £10,000. If you have already flexibly accessed your pension, your annual allowance is also capped at £10,000.
Legislation: Income Tax Act 2007, Pt. 2; Finance Act 2004, ss. 228, 228ZA.
📋 Case Studies
Case Study 1: Michael, Self-Employed IT Contractor
Michael is a self-employed IT contractor with a projected adjusted net income of £108,000 for 2025/26. His personal allowance has been almost entirely clawed back. Before 5 April 2026, he makes an £8,000 pension contribution. This reduces his adjusted net income to £100,000, restoring his full £12,570 personal allowance. Combined with higher-rate relief on the pension contribution itself, his total tax saving is over £4,000. A single decision, taken before the deadline, with a significant financial impact.
Case Study 2: Priya and Rajesh, Family Business Co-Directors
Priya and Rajesh run a small manufacturing company together. Priya has used her personal allowance, but Rajesh has had a lower-income year. We identified that Rajesh has £8,000 of personal allowance remaining and a £500 dividend allowance untouched. A dividend of £8,500 is paid to Rajesh before 6 April 2026, sheltered entirely from income tax by his unused allowances. A further dividend is paid to both shareholders at the current 8.75% rate before the rate rises to 10.75% on 6 April 2026, saving the family several hundred pounds in tax.
✅ Practical Steps: Take These Before 6 April 2026
- Check your ISA balance for 2025/26. If you have not invested the full £20,000, consider topping it up before 5 April.
- Review whether your personal allowance will be fully used this year. If not, look at ways to bring income forward or pay a dividend to use it up.
- If one partner in a marriage or civil partnership is a non-taxpayer or basic rate taxpayer, check whether a Marriage Allowance claim would save tax.
- If your adjusted net income is between £100,000 and £125,140, make a pension contribution or Gift Aid donation before 5 April to recover your personal allowance.
- Check your pension annual allowance, and whether you have unused carry-forward from 2022/23, which will be permanently lost after 5 April 2026.
- If your company has retained profits, ask your accountant whether paying a dividend before 6 April 2026 makes sense given the rate increase.
- This article is for information purposes only. Always take professional advice before acting. Every individual’s personal and financial circumstances are different, and the interaction between these reliefs can be complex.