How to make the most of tax and ISA allowances before the tax year ends

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The end of the current tax year is right around the corner, and the new one starts on 6 April. So we’re looking at a few different allowances you might still be able to use before then. 

Consider your ISA allowances

Individual Savings Accounts, known as ISAs, are accounts you can use for saving or investing your money. Currently, you can pay in a maximum of £20,000 across your ISAs in a tax year. The money you withdraw – including any interest or investment growth you’ve earned – isn’t subject to tax.

There’s also something called a Lifetime ISA (LISA), which you can pay £4,000 into each tax year as long as you meet the criteria. That £4,000 counts towards your £20,000 allowance. You can use a LISA to buy your first home or save for later life. The government adds a 25% bonus, up to a maximum of £1,000 each tax year.

If you have an ISA but haven’t reached your ISA allowance in the 2024/25 tax year, you could consider paying more in, if that’s right for you.

If you’re a parent or guardian of a child, you might have a Junior ISA (JISA) for them. This is a way of saving for their future. A child can have two JISAs: a cash one and a stocks & shares one. In the 2024/25 tax year, you can pay in up to £9,000 into a child’s JISA or split that across two JISAs if they have two. This doesn’t count towards your £20,000 ISA allowance.

Understand your Capital Gains Tax allowance

Capital Gains Tax (‘CGT’) is the tax you pay on the profit when you ‘dispose’ of something that has gone up in value. ‘Disposing’ can mean selling, gifting, and more. Find out more about what counts on GOV.UK. 

CGT can apply to profits on various different things, including (but not limited to) personal possessions, some types of shares, cryptoassets, and second homes.

But you do get a Capital Gains Tax-free allowance – an amount of profit you can earn in a tax year without needing to pay CGT tax on it. The allowance is currently £3,000. So keep this in mind, especially if you have something you want to ‘dispose’ of before the end of the tax year. To find out more about CGT, when you might need to pay it, and how you could even use losses to reduce a gain and pay less tax, visit GOV.UK.

Get to know the tax-free dividends allowance

When a company makes a profit and gives shareholders some money back, this is money is known as ‘dividends’.

You don’t usually pay tax on dividends that fall within your ‘personal allowance’, which is £12,570 for most people but could be different depending on your circumstances. In other words, if your total income – including your dividends – in a tax year is under your personal allowance, you normally won’t need to pay tax. 

But you also have a ‘dividend allowance’, £500 for the 2024/25 tax year. So if your total income is above your personal allowance, you can still earn £500 in dividends and not pay tax. You’d only pay tax on dividends above the dividend allowance. Find out more on GOV.UK.

Remember your gift allowance

Inheritance Tax (IHT) is a tax that may need to be paid if the value of your ‘estate’ is more than £325,000 (or £500,000 in some cases) when you die. Your estate includes things like property, possessions and savings.

But if it’s right for your circumstances, you might be able to lower the value of your estate – and potentially the resulting IHT bill – by giving gifts.

In the current tax year, you have a ‘gift allowance’ (or ‘annual exemption’) of £3,000. This means you can gift up to £3,000 worth of cash or assets in the current tax year and not have that added to the value of your estate. If you didn’t use up your gift allowance in previous tax year, you can also carry that forward to this year. 

There are also other kinds of gifts that are exempt from IHT that could help lower your estate’s value. For example, you can give an unlimited number of small gifts (under £250) as long as they’re not to the person you used up your gift allowance on. There are lots of rules around gifting, so it’s worth reading up on it first – MoneyHelper is useful. And you could also consider getting financial advice. 

Where can you get more information?

It’s important to think carefully before making decisions about your finances. If you’re feeling unsure, you could get financial advice from a financial adviser. MoneyHelper has information about how getting financial advice works. 

This was just a reminder of some of your allowances. On 6 April, your allowances will renew. But remember, they can change. This is because laws and tax rules can change in the future. Your own personal circumstances, including where you live in the UK, will have an impact on the tax you pay. 

If you’re thinking about using your allowances before the tax year ends, do check that any payments or sales you make will go through before the tax year ends.

Last month, we also gave some pension tips you could consider before 5 April. If you have a pension plan and want to make a new payment before the tax year ends, it’s worth checking that your provider will be able to accept it in time.  

If you want to find out more about pension allowances and how you could make the most of your pension plan before the end of the tax year, you can read our article. 

 

The information here is based on our understanding in March 2025 and shouldn’t be taken as financial advice.

Pensions and some types of ISAs are investments. Their value can go down as well as up and could be worth less than was paid in.