We’re almost halfway through the tax year – are you making the most of your allowances?

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Yes, you read that right – we’ve almost reached the halfway point for the 2024/25 tax year. So now could be the perfect time to check in with your yearly allowances to make sure you’re making the most of the tax benefits at your fingertips.

Remember, most allowances only last for the year, meaning anything you don’t use over the next six months could be lost once the new tax year starts. So here’s a quick reminder of some of your allowances to help you check on your progress.

Pension annual allowance

The pension annual allowance is the total amount that can be paid into your pension plan(s) in a tax year while still getting tax benefits on the payments. This includes payments made by you, your employer and any third party.

Right now, it’s £60,000 or your full salary – whichever is lower. And if more than this is paid in, you might have to pay a tax charge. 

If you’re close to or have already reached your annual allowance this year but you want to pay in some more, you might still have options. You may be able to carry over some allowances from previous tax years if you haven’t used them. To find out more about how this works read our annual allowance guide.

Keep in mind, once you start accessing the money in your pension plan (anything over your 25% tax-free amount), your allowance may reduce to £10,000. This is called the money purchase annual allowance; you can find out more about it and how it’s triggered in our article.

Individual Savings Account (ISA) allowances

ISAs come with a big tax benefit: you don’t have to pay any tax when you withdraw money from them – and that includes any growth you achieve from interest or investments. So it’s a good idea to make the most of your ISA allowances where you can.

The allowance for Cash and Stocks & Shares ISAs for 2024/25 is £20,000. That means you can save up to £20,000 into one or the other, or a combination of both. 

The Junior ISA allowance is £9,000; and for Lifetime ISAs, the allowance is £4,000. You get a 25% government bonus on top of anything you save into a Lifetime ISA, which means each tax year you could get up to £1,000 on top of your savings. So now could be a good time to think about getting as much of that extra boost as you can before the tax year is up.

How to make the most of your allowances

To get the most out of your allowances, you want to think about paying in as much as you’re able to in the tax year. That way you can take advantage of as many of the tax benefits as possible. That doesn’t necessarily mean paying in the full allowance; it just means paying in as much as is realistic for you at the time. 

Just taking the time to consider how much you’re paying in now and if there’s any way you could pay in more could go a long way. Even paying in as little as an extra £10 a month, or just keeping your payments the same instead of reducing them, could help in the long term. Particularly if you’re paying into an investment like a pension plan or a Stocks & Shares ISA where there’s opportunity for your money to grow over time.

Remember the value of investments can go down as well as up and you may get back less than was paid in.

If you have a Standard Life pension plan and want to change your pension payments or make a new one, you can do this online or through our app. If your employer set up your plan and you want to change your monthly payments, get in touch with them to find out how this works for you.

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The information here is based on our understanding in September 2024 and shouldn’t be taken as financial advice.

A pension plan and some types of ISAs are investments. Their value can go down as well as up and may be worth less than was paid in.

Your own personal circumstances, including where you live in the UK, will have an impact on the tax you pay. Laws and tax rules may change in the future.

Standard Life accepts no responsibility for information on external websites. These are provided for general information.