Most people tend to think about tax planning as the financial year draws to a close. The weeks before 5 April are often when allowances, contributions, and investment decisions suddenly come into focus.
But waiting until year-end can mean missed opportunities. By taking action at the start of the tax year, you give yourself more time to make considered decisions, spread contributions, and potentially benefit from a longer period of tax-efficient growth.
With the new tax year now underway, here are some areas worth reviewing.
1. Make early use of your ISA allowance
The ISA allowance for the 2026/27 tax year is £20,000. Money held within an ISA can grow free from UK Income Tax and Capital Gains Tax, which makes it one of the most useful tax-efficient savings and investment vehicles available to UK investors.
Many people wait until the end of the tax year to use their ISA allowance, but investing earlier can give your money more time to benefit from potential tax-free growth. If you are in a position to use some or all of your ISA allowance sooner, it may be worth discussing whether this fits your wider financial plan.
2. Review your pension contributions
Pensions remain one of the most powerful tools for long-term financial planning. As well as helping you build retirement wealth, pension contributions can offer valuable tax relief.
For most people, the pension annual allowance is £60,000 (subject to having sufficient relevant UK earnings), although this can be reduced for high earners or those who have flexibly accessed certain pensions. You may also be able to carry forward unused pension annual allowance from the previous three tax years, provided you meet the relevant conditions.
The beginning of the tax year is a good time to review whether your current contribution levels are still appropriate, whether carry-forward relief may be available, and how pension planning fits alongside your income, investments, and retirement goals.
3. Check whether your income is approaching £100,000
If your income is approaching £100,000, it is particularly important to review your tax position. The Personal Allowance begins to reduce once adjusted net income exceeds £100,000 and is fully withdrawn once income reaches £125,140.
This can create a higher effective rate of tax on income within that band and could also cause the loss of valuable Child Benefit and free childcare. Careful planning around pension contributions, charitable giving, and other allowances may help reduce unnecessary tax exposure, depending on your circumstances.
4. Plan around dividend income
The dividend allowance is now just £500, meaning more investors and business owners may find that dividend income falls within taxable territory. Dividend tax rates for 2026/27 are 10.75% for basic-rate taxpayers, 35.75% for higher-rate taxpayers, and 39.35% for additional-rate taxpayers.
If you receive dividend income from investments or from your own company, it is sensible to review how this income is structured. This might include making better use of ISAs, reviewing investment ownership between spouses or civil partners, or considering whether pension contributions could play a role in your wider planning.
5. Review savings interest and tax-efficient cash holdings
With interest rates having been higher in recent years, more people are finding that savings interest can create a tax liability.
The Personal Savings Allowance can allow some taxpayers to earn a certain amount of savings interest tax-free, but the allowance depends on your Income Tax band. Basic-rate taxpayers may receive up to £1,000 of savings interest tax-free, higher-rate taxpayers up to £500, and additional-rate taxpayers do not receive a Personal Savings Allowance.
This makes it worth reviewing where cash is held, how much interest it is generating, and whether tax-efficient savings options, such as Cash ISAs, remain appropriate within your wider plan.
6. Consider Capital Gains Tax planning early
The Capital Gains Tax annual exempt amount for individuals is £3,000 for 2026/27. You only pay Capital Gains Tax if your overall gains for the tax year, after deducting allowable losses and reliefs, are above the annual exempt amount.
If you are planning to sell investments, second properties, or other assets, it is worth considering the timing of disposals early in the year. Leaving decisions until March can limit your options.
Transfers between spouses or civil partners may also help make use of both individuals’ CGT exemptions and tax bands, where appropriate. This should be considered carefully as part of a broader financial plan.
7. Business owners and directors: review pension contributions through the company
For business owners and company directors, pension contributions can be a tax-efficient way of extracting value from a business while building long-term retirement wealth.
Employer pension contributions are often treated as a deductible business expense, provided they meet the relevant rules, and can reduce taxable company profits.
This can make company pension contributions an attractive alternative to taking profits entirely through salary or dividends. However, the right approach will depend on your company, income needs, retirement objectives, and overall tax position.
8. Start inheritance tax and succession planning early
Family and succession planning is another area where early action can be valuable.
Each tax year, you may be able to make use of gifting exemptions as part of your inheritance tax planning. Regular, well-documented gifting can play an important role in passing wealth to the next generation, while still ensuring you retain enough to support your own lifestyle.
For some families, trusts or family investment companies may also be worth exploring, although these are more complex planning tools and will not be suitable for everyone.
It is also important to review your will and estate planning arrangements regularly. Changes in family circumstances, asset values, legislation, or personal wishes can all affect whether your existing plans remain appropriate.
To conclude: a good financial plan starts before the deadline
The start of the tax year is an ideal time to take stock. Rather than waiting until next March or April, reviewing your allowances, pensions, investments, savings, and estate planning now can give you more choice and more time to make informed decisions.
It is also worth considering how upcoming changes may affect your estate planning. From 6 April 2027, most unused pension funds and death benefits will be brought into scope for Inheritance Tax calculations, meaning some pensions may form part of the estate for IHT purposes. This could affect how pensions fit into your wider legacy planning, so it may be sensible to review the potential impact and consider any planning opportunities in advance.
If you would like to discuss whether you are making the most of your money, please get in touch with Investing For Tomorrow and we would be happy to have an initial conversation.
This article is for general information only and does not constitute personal financial advice. Tax treatment depends on individual circumstances and may be subject to change. Rates and allowances quoted are correct as of May 2026 but may have changed since publication. You should seek professional advice before making any financial planning decisions.