Small changes now can help you feel more in control for the months ahead.
With many tax allowances currently frozen until April 2031 and the cost of living remaining high, it's worth taking a fresh look at how you're managing your finances. A few simple adjustments could help you keep more of what you earn and make your money work harder for you.
Make the most of your tax allowances
Everyone has allowances that let you earn, save and invest without paying tax. The key is making sure you're using them fully. If you're married or in a civil partnership, it might make sense to balance savings and investments between you both, especially if one of you pays a higher rate of tax than the other.
Taking money from ISAs or certain investments such as investment bonds can sometimes be more tax-efficient than other sources of income. It's also worth checking whether contributing more to your pension could reduce your tax bill or help you keep benefits like child benefit that reduce at higher income levels.
Review your pension contributions
Pensions remain one of the most tax-efficient ways to save for your future. Most people can contribute up to £60,000 a year and receive tax relief, which means the government effectively tops up your contributions.
If you're a higher or additional-rate taxpayer, you could claim extra tax relief and potentially reduce your overall tax bill. While your money is invested in your pension, it grows free from income tax, capital gains tax and until April 2027, inheritance tax (IHT) free. You can even make contributions for family members, which can be particularly helpful for those on maternity or paternity leave, or to help children and grandchildren get a head start.
Top up your ISAs
ISAs let you save and invest up to £20,000 a year without paying any tax on the growth or income. Junior ISAs offer the same benefit for children, with a £9,000 annual limit. These investments will be subject to IHT unless invested in exempt assets. The amount under 65's can contribute to a cash ISA is changing from April 2027 and this may affect your savings plans. It would be prudent to ensure you understand these new rules if you are affected by this change.
The beauty of ISAs is their flexibility. You can access your money when you need it, and any withdrawals won't affect your tax position or benefits. If you've taken money out of a flexible ISA during the year, you can usually replace it before the tax year ends in April.
Consider other tax-efficient options
Onshore and offshore bonds are also tax-efficient wrappers. They allow you to change the underlying investment, gift and withdraw up to 5% of your original investment each policy year tax efficiently, which can be useful for managing your wealth and retirement planning.
The value of a review
Tax rules are becoming increasingly complex, and what worked for you a few years ago might not be the best approach now. Changes to allowances, thresholds and reliefs mean there could be opportunities to save tax or structure your finances more efficiently.
A regular review with your financial adviser ensures you're not missing out on allowances, helps you plan for any major life changes ahead, and gives you confidence that your money is working as hard as possible for you and your family.
Taking time now to review your financial plan could make a real difference to your finances over the coming year and beyond.
The resources within these pages can help you find a financial adviser in your local area.
This article reflects our understanding of current legislation, which may change. While we can provide information, we can’t give you advice and therefore we recommend you seek professional advice before making any financial decisions. Investments can go down as well as up, and you may not get back the amount invested. Tax treatment depends on individual circumstances and available reliefs may vary.