The current tax year ends on 5 April. For some, that means last-minute tax planning – rushing to make use of allowances and reliefs before they reset – and preparing for the tax implications of the coming financial year.
But when you plan late, it’s easy to miss opportunities or make decisions that can disrupt your long-term financial goals. Here are five common tax-year-end mistakes to avoid.
1. Forgetting to use the full £20,000 ISA allowance
ISAs are a highly effective tax wrapper, as the savings or investments you hold in the accounts aren’t subject to Income Tax, Dividend Tax, or Capital Gains Tax (CGT).
In fact, a report from MoneyAge shows that UK savers will reduce their Income Tax and CGT bills by an estimated £9.65 billion in the 2025/26 financial year by using ISAs.
As of 2025/26, you have an annual £20,000 ISA allowance.
You can either pay into one ISA or split the allowance across several – there are currently four types of adult ISAs:
- Cash ISAs
- Stocks and Shares ISAs
- Lifetime ISAs
- IFISAs
What’s more, the ISA allowance is individual, meaning you and your spouse could save or invest up to £40,000 tax-efficiently between you.
Each child or grandchild can also benefit from a Junior ISA allowance of up to £9,000 for the 2025/26 tax year.
By using your full ISA allowance each year, you can build more wealth tax-efficiently. Additionally, the ISA allowance doesn’t roll over to the next year, so you may want to make the most of it before it refreshes on 6 April 2026.
2. Not taking full advantage of pension tax relief
Your pension remains one of the most tax-efficient means of investing for later life.
When you contribute to your pension, you automatically benefit from 20% tax relief. This means that a £100 contribution effectively “costs” you £80. If you’re a higher- or additional-rate taxpayer, you may also be able to claim another 20% or 25% through Self Assessment.
You can benefit from this tax relief on contributions up to 100% of your salary or the Annual Allowance, whichever is lower. The Annual Allowance is fixed at £60,000 for the 2025/26 tax year.
Furthermore, if you have unused Annual Allowance from the past three years, you can carry this forward, provided you have already used your full allowance for the current tax year.
For example, if you wanted to contribute £70,000 to your pension, you could use your full allowance for the 2025/26 tax year and then carry £10,000 of your unused Annual Allowance from the previous three years.
However, your Annual Allowance may be lower if you are a high earner or have flexibly accessed your pension.
Using as much of your Annual Allowance as possible before the end of the tax year could help you build wealth for retirement tax-efficiently.
As pension tax relief rules can be confusing, it might be helpful to contact a financial planner to help you calculate how much pension tax relief you can claim before the 2025/26 tax year ends.
3. Not considering tax efficiency when selling assets
When you sell a qualifying asset, such as a non-ISA investment or second home, that has increased in value, you may be liable to pay CGT on the profits.
It’s easy to assume that paying CGT is unavoidable. However, there are several tax-efficient strategies to help you reduce your liability.
For example, you can make use of the CGT Annual Exempt Amount, which is £3,000 in the 2025/26 tax year. Any profits you make up to this amount are free from CGT.
You could also mitigate CGT by spreading the sale of assets over multiple years. This allows you to take advantage of several years’ worth of Annual Exempt Amounts and reduce your overall CGT liability.
You also might be able to circumvent CGT by passing assets to your spouse or civil partner. If, however, they then sell the asset, some CGT may be payable – this is calculated based on the value of the asset at the time you purchased it, compared with the value your spouse or civil partner sells it for.
Your spouse or civil partner also has their own Annual Exempt Amount, meaning you can potentially make up to £6,000 in tax-free gains between you.
Additionally, as CGT rates are based on your Income Tax bracket, if your spouse or civil partner is in a lower tax bracket, transferring the asset to them might lower the CGT you need to pay.
This kind of CGT planning can be complex. It’s important to start early and prepare for the end of the fiscal year so you don’t miss key opportunities to reduce your tax liability.
4. Making panicked decisions
It’s easy to feel overwhelmed by the prospect of a new tax year, especially when you haven’t taken advantage of the current year’s reliefs and allowances.
However, panicked financial decision-making can sometimes be more harmful than doing nothing at all.
For instance, you might worry about not using your full allowance and make some last-minute investments in your Stocks and Shares ISA, only to realise those investments don’t suit your wider financial goals.
Alternatively, you could make a large deposit to your pension without considering if you need access to those funds in the short term.
That’s why, instead of leaving everything to the last minute and rushing decisions, it might help to take a more long-term view of your financial planning.
5. Failing to plan for the next tax year
The end of the current tax year is the best time to start planning for 2026/27.
You can use this opportunity to prepare your finances ahead of time, taking into account the various allowances and reliefs you are eligible for, to ensure you use them effectively.
We can help you by discussing your goals and making sure you take advantage of all available tax planning opportunities throughout the year, preventing any last-minute panic.
Get in touch
If you need immediate help organising your finances before the 2026/27 tax year takes effect or want to start taking a more long-term approach to your financial future, reach out to a Milsted Langdon financial planner today.
Please get in touch or email us at advice@mlifa.co.uk for more information.
Please note
This article is for general information only and does not constitute advice. The information is aimed at individuals 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.
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.
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.