Introduction
The end of the tax year on April 5th often creeps up unexpectedly. Many people only start thinking about tax planning in March, by which point some opportunities have already been missed. Starting in late autumn – as this article is being written in October – gives you a comfortable five-month window to take deliberate, unhurried action. This guide covers legitimate, HMRC-compliant ways to reduce your tax bill for the current tax year. It focuses on actions you can take before the April 5th deadline, from using allowances to making charitable donations.
Based on rules as of October 2025. Always verify current rates with official sources.
Why Tax Planning Is Not Tax Evasion
Some people feel uncomfortable with tax planning, assuming it sits in a moral grey area. In fact, using tax reliefs and allowances that Parliament has explicitly created is entirely legal and proper. The distinction is clear:
- Tax avoidance (legal but sometimes aggressive) involves bending the rules to gain an advantage Parliament did not intend.
- Tax evasion (illegal) involves hiding income or lying to HMRC.
- Tax planning (legal and sensible) involves using straightforward reliefs – ISAs, pension contributions, charitable giving, marriage allowance – exactly as intended.
HMRC publishes its “Spotlight” series on arrangements it considers abusive. None of the strategies in this article appear there. These are everyday allowances available to most UK residents.
Use Your ISA Allowance Before April 5th
The ISA allowance (for illustration, £20,000 for the 2025/26 tax year) is a use-it-or-lose-it benefit. Any unused allowance disappears on April 5th. You cannot carry it forward to the next year.
Priority order for ISA funding:
- Lifetime ISA (if you are a first-time buyer or saving for retirement) – the 25% government bonus makes this the most valuable ISA for eligible savers.
- Stocks and Shares ISA – for long-term investing (5+ years).
- Cash ISA – for savings you might need sooner.
If you cannot fill the full £20,000, any amount helps. Even £1,000 in an ISA saves tax compared to an ordinary savings account (if you exceed your Personal Savings Allowance).
Action point: Log into your ISA provider(s) before March 2026 (for the 2025/26 tax year) and check how much allowance remains. Set up a monthly transfer to use the remaining allowance evenly across the remaining months.
Maximise Pension Contributions
Pension contributions receive tax relief at your marginal Income Tax rate. For a basic-rate taxpayer (20%), a £100 pension contribution costs you £80 – HMRC adds £20. For a higher-rate taxpayer (40%), the same £100 contribution costs you £60 (you claim the extra £20 back through Self Assessment or by updating your tax code).
Key deadlines: You can make pension contributions for the 2025/26 tax year up until April 5th, 2026. However, if you pay by cheque or bank transfer, allow several days for processing.
Annual allowance: The pension annual allowance (for illustration, £60,000 for 2025/26) includes your contributions plus your employer’s. Most people do not approach this limit. If you earn over £200,000, your allowance may be tapered (reduced).
Carry forward unused allowance: If you have not used your full annual allowance in the previous three tax years, you might be able to carry it forward. This is useful if you receive a large bonus or sell an asset.
Salary sacrifice: If your employer offers salary sacrifice, you can increase pension contributions directly from your gross salary, saving both Income Tax and National Insurance. The deadline for salary sacrifice arrangements is typically your last payroll run before April 5th – often mid-March.
Use the Marriage Allowance
The Marriage Allowance is often overlooked. It allows a lower-earning spouse or civil partner to transfer £1,260 of their Personal Allowance to their higher-earning partner (figures for illustration; check current rate).
Eligibility:
- You are married or in a civil partnership.
- One partner earns below the Personal Allowance threshold (for illustration, £12,570).
- The other partner earns between £12,571 and £50,270 (basic rate).
Benefit: The higher earner pays up to £252 less tax per year (20% of £1,260). You can backdate claims for up to four tax years. A couple who has never claimed might receive a refund of over £1,000.
Action point: Apply via GOV.UK. The application takes five minutes. Even if your circumstances change (e.g., the lower earner starts earning more), you can cancel the arrangement at any time.
Make Charitable Donations Under Gift Aid
When you donate to a registered charity and make a Gift Aid declaration, the charity claims basic-rate tax (20%) on your donation. If you are a higher or additional-rate taxpayer, you can claim the difference between the basic rate and your marginal rate through Self Assessment.
Example: You donate £100 to charity. With Gift Aid, the charity receives £125 (the charity claims £25 from HMRC). If you are a 40% taxpayer, you can claim an additional £25 relief (40% of £125 minus the 20% already claimed). Net cost to you: £75.
Deadline: Gift Aid donations made before April 6th count for the current tax year. Donations can be single or regular.
Keep records: HMRC may ask for proof of donations if you claim higher-rate relief. Save charity receipts or bank statements.
Check Your Tax Code
An incorrect tax code means you could be overpaying tax every month. By October, any error has likely persisted for six months. Fixing it before April ensures you do not overpay for the entire year.
Common errors:
- Your employer has an outdated code from a previous job.
- HMRC assumes you receive benefits in kind (company car, health insurance) that you no longer receive.
- Your estimated income for the year is wrong, leading to an incorrect code.
Action point: Log into your Personal Tax Account on GOV.UK. Compare your tax code to the expected code based on your Personal Allowance. If you find an error, report it to HMRC online or by phone. They will issue a corrected code to your employer, and any overpayment will be refunded through your payslip.
Use Capital Gains Tax Allowances
The Capital Gains Tax (CGT) annual exempt amount (for illustration, £6,000 for 2025/26 – but this figure changes frequently) allows you to realise gains on investments, property (not your main home), or other assets without paying tax.
Bed and breakfasting rules: You cannot sell an asset and buy it back within 30 days to use your allowance. However, you can sell shares in one fund and buy a similar (but not identical) fund – or wait 30 days.
Action point: If you have investments held outside an ISA or pension with unrealised gains approaching the exempt amount, consider selling enough to use the allowance before April 5th. You can then reinvest the proceeds (after 30 days if buying the same asset).
Accelerate or Defer Income
If you are self-employed or a company director, you have some control over when you receive income. Accelerating income into the current tax year makes sense if you expect to be in a lower tax band next year. Deferring income to the next tax year makes sense if you expect to be in a lower band this year.
Example: You are a sole trader and know your income this year will be £48,000 (basic rate) but next year you will earn £60,000 (higher rate). Delaying an invoice from March to April keeps more income in the basic rate band.
Warning: HMRC has anti-avoidance rules that prevent artificial deferral without commercial justification. Genuine timing differences (e.g., a client paying late) are fine.
Claim Employment-Related Expenses
Employees can claim tax relief on certain work expenses that their employer does not reimburse. Common examples:
- Professional membership fees (if required for your job)
- Uniform or work clothing (with a logo or specific safety requirements)
- Travel and subsistence (if you travel for work)
- Working from home (if your employer requires it, not by choice)
You can claim up to four tax years back. Even small amounts add up. A £100 professional subscription claimed at 20% saves £20.
Action point: Use HMRC’s online portal to check eligible expenses and make a claim.
Key Takeaways
- Use ISA allowance by April 5th – it cannot be carried forward.
- Maximise pension contributions – tax relief at your marginal rate.
- Claim Marriage Allowance – up to £252 tax saving per year, backdated.
- Use Gift Aid for charity – higher-rate taxpayers can claim extra relief.
- Check your tax code now – do not wait until after the year ends.
This article is for general information and educational purposes only. It does not constitute financial advice. Tax rules, allowances, and product terms may change. Always check with HMRC or an FCA-authorised adviser for your personal circumstances.