Year-end tax planning: 5 strategies to consider before the Budget
The Autumn Budget often brings uncertainty for people planning their finances. Headlines around pensions, capital gains tax, and inheritance tax can create concern, but the most effective tax planning usually happens well before any announcements are made.
Waiting until the final weeks of the tax year can leave fewer options available and create unnecessary pressure. With the Autumn Budget expected in November, reviewing your position early gives you more time to make informed decisions and use the allowances available to you.
In this blog, we look at five year-end tax planning strategies to consider, along with the key allowances and rules that could affect your financial plans.
Why plan early rather than waiting for April?
The UK tax year runs from 6 April to 5 April, so 5 April 2027 is your real deadline for this year’s planning. Allowances that reset annually don’t roll over, including your ISA allowance, capital gains exemption, and annual gifting exemption. Use them or lose them for good.
Planning in summer, rather than the last week of March, means you’re not rushing decisions under time pressure, and you can act before a Budget announcement changes next year’s rules.
1. Use your ISA allowance in full
The ISA allowance for 2026/27 is £20,000 per adult, split however you like across cash, stocks and shares, innovative finance, and lifetime ISAs. Growth, income, and gains within an ISA are free of income tax and capital gains tax, and don’t need to be declared to HMRC.
A few points worth knowing:
- Couples effectively have £40,000 of tax-free allowance between them each year
- Unused allowance disappears on 5 April, it can’t be carried forward
- From April 2027, under-65s will have a £12,000 limit for Cash ISA contributions, while the overall ISA allowance remains at £20,000.
That last point is a genuine reason to act early. This tax year is the final in which under 65s can put the full £20,000 into cash, if that suits their circumstances.
Once the £12,000 cap kicks in, anything above that will need to go into a Stocks and Shares ISA, an Innovative Finance ISA, or a Lifetime ISA instead. The changes only apply to new contributions, so there’s still time to make the most of the current rules before they come into effect. The £20,000 cash allowance will still remain for those over 65.
Source: https://www.gov.uk/individual-savings-accounts
2. Capital gains harvesting: use it or lose it
This is one of the most overlooked strategies, and one where early planning makes a real difference.
Every individual has an annual exempt amount for capital gains tax, currently just £3,000 for 2026/27, down from £12,300 a few years ago. Far more people now have a CGT liability without realising it.
Source: https://www.gov.uk/capital-gains-tax/allowances
What is capital gains harvesting?
It means deliberately realising gains, by selling and potentially rebuying assets, up to your annual exemption each year, rather than letting a large gain build up. The exemption doesn’t carry forward, so a couple who plan together can shelter £6,000 a year between them, and splitting a larger disposal either side of 5 April uses two years’ exemption.
How gains are taxed
Where gains exceed the exemption, the rate depends on income: 18% within your basic rate band, 24% above it. These rates apply to shares, funds, and residential property alike.
A pension contribution that lowers your taxable income can sometimes pull gains back into the lower band, so the two strategies work well together.
3. Make the most of your pension allowances
Pension contributions remain one of the most tax-efficient ways to reduce your bill, particularly for higher and additional rate taxpayers. The standard annual allowance for 2026/27 is £60,000, covering your own, your employer’s, and any third party contributions.
Source: https://www.gov.uk/tax-on-your-private-pension/annual-allowance
Carry forward
If you haven’t used your full allowance in the past three tax years, you may be able to carry forward the unused amount, provided you were a member of a registered pension scheme in those years. This can allow some people to contribute far more than £60,000 in a single year and still get tax relief.
Watch out for these limits
- The tapered annual allowance reduces your £60,000 limit if adjusted income is above £260,000, potentially reducing the limit all the way down to £10,000.
- The money purchase annual allowance of £10,000 may apply once you’ve started drawing flexibly from a defined contribution pension.
These rules interact in ways that aren’t always obvious, so check your position before making a large contribution.
4. Tax-efficient gifts and gift tax rules UK
A common question we hear is “what are my allowances for gifting?” The answer involves several exemptions from Inheritance Tax when used together.
- Annual exemption: gift up to £3,000 each tax year free of inheritance tax, carried forward one year only if unused
- Small gifts: up to £250 per person, provided no other exemption has been used on them
- Wedding gifts: up to £5,000 to a child, £2,500 to a grandchild, or £1,000 to anyone else
- Gifts from surplus income: regular gifts from genuinely spare income can be exempt with no upper limit, if the pattern is evidenced
Larger gifts and the seven year rule
Larger gifts beyond these exemptions are treated as potentially exempt transfers. Survive seven years, and the gift falls outside your estate entirely. Die within that period, and it may still count towards your nil rate band, currently £325,000, with taper relief reducing the tax due on gifts over £325,000 once you’ve survived at least three years.
From April 2027, most unused pension funds and pension death benefits are expected to come within the scope of Inheritance Tax, subject to final rules and implementation.
5. Review your income tax position and lesser-used allowances
Finally, check whether you’re using everything available to you:
- The personal savings allowance gives basic rate taxpayers £1,000 of tax-free interest, and higher rate taxpayers £500
- The dividend allowance now stands at just £500, making ISA and pension wrappers more valuable for anyone holding shares outside of them
- Marriage allowance lets one spouse transfer £1,260 of unused personal allowance to the other, worth up to £252 a year
- Pension contributions can restore your personal allowance if income sits just above £100,000, since it tapers away entirely once income reaches £125,140
None of these are new. They’re regularly missed simply because nobody checks.
Source: https://www.gov.uk/apply-tax-free-interest-on-savings
Source: https://www.gov.uk/marriage-allowance
Getting ahead of the Budget
Tax rules have shifted substantially over the past two Budgets, and there’s no guarantee current allowances will look the same after the next one. Acting before an Autumn Budget, rather than scrambling in March, gives you certainty over today’s rules and more time to make considered decisions.
If you’d like to talk through how these strategies might apply to your circumstances, the team at Fairview would be happy to help you put a plan together well ahead of the year end.
Contact us today!
Taxation, including inheritance tax planning is not regulated by the Financial Conduct Authority.
The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.
An ISA is a medium to long term investment, which aims to increase the value of the money you invest for growth or income or both. The value of your investments and any income from them can fall as well as rise. You may not get back the amount you invested.
The content of this article is intended for general information purposes only. The content should not be relied upon in its entirety and shall not be deemed to be or constitute advice.
A pension is a long term investment the fund value may fluctuate and can go down. Your eventual income may depend upon the size of the fund at retirement, future interest rates and tax legislation.