New tax year: Key financial planning tips for 2025/26
What should I be thinking about in a new tax year?
The start of the new tax year is an ideal time to get your finances in order and take advantage of tax-efficient strategies. Here we take a look at the key areas to review, and the options available in the 2025/26 tax year.
1. Make full use of your ISA allowance
You can invest up to £20,000 in an Individual Savings Account (ISA) in the 2025/26 tax year. This can be split between a Cash ISA and a Stocks & Shares ISA. ISAs offer tax-free growth and income, making them a valuable savings vehicle. Keep in mind that the value of investments can fluctuate, and you may not get back what you put in.
2. Review your pension contributions
You can contribute up to £60,000 per year into your pension, or 100% of your earnings—whichever is lower. If eligible, you may also carry forward unused allowances from the previous three tax years. Pension contributions attract tax relief, which can significantly boost your retirement savings.
3. Check your State Pension forecast
Your State Pension entitlement depends on your National Insurance (NI) record. It is worth reviewing your NI contributions to identify any gaps. If you find missing years, you may be able to make voluntary contributions to maximise your future State Pension. You can check your State Pension forecast on the Government’s website, here.
4. Open or top up a Junior ISA
If you are saving for a child or grandchild, the Junior ISA (JISA) allowance for 2025/26 is £9,000. Like adult ISAs, JISAs can be in cash or stocks and shares and offer tax-free growth until the child turns 18.
5. Open or top up a Lifetime ISA
The Lifetime ISA is a savings account designed to help people who are either buying their first home, or saving for retirement. It is available for people aged 18-39 and has an allowance of £4,000 per year. The government adds a 25% bonus to any contributions, meaning that if the full allowance is used there is a £1,000 bonus added. Bear in mind that money can only be withdrawn for the purchase of a first home (worth up to £450,000) or from age 60 for retirement, otherwise a penalty charge of 25% is imposed.
6. Review Inheritance Tax (IHT) planning
You can gift up to £3,000 each year tax-free—this is your annual exemption. If unused, the previous year’s exemption can be carried forward, allowing up to £6,000 in tax-free gifts. IHT planning can reduce the tax burden on your estate and ensure more of your wealth goes to your loved ones.
7. Think about gifting
You are entitled to give away £3,000 per year, which can be carried forward a maximum of one year if unused. But that’s not all, there are further gift exemptions in the tax year including small gifts of up to £250 per person per year, wedding or civil partnership gifts, regular gifts from income, or gifts to a spouse or a charity. The new tax year is a great time to review where you are with your gifting allowances.
8. Update legal documents
Ensure your will and any lasting powers of attorney (LPA) are current and reflect your wishes. While these are not regulated by the Financial Conduct Authority, they are essential for ensuring your affairs are managed according to your intentions.
9. Check your Capital Gains Tax (CGT) annual exemption
The CGT annual exemption is the amount of profit you can make from selling assets before CGT applies. For the 2025/26 tax year, the annual exempt amount for individuals is £3,000. If your total gains in the tax year are below the exemption then there is no CGT to pay.
10. Review borrowing
Take stock of any existing loans, mortgages, or credit arrangements. Consider whether interest rates or repayment terms are still favourable and assess your options for refinancing or repayment.
There are other considerations that may be appropriate as you enter a new tax year, including dividend allowance, personal savings allowance and the starting rate band allowance. Plus considerations for individuals who are on track to earn over £100,000 in the tax year and how that impacts them tax-wise. We would be happy to discuss personal circumstances in more detail should you require any further information.
Remember, all decisions should be considered in the context of your own personal circumstances.
If you wish to discuss your financial position and the options available to you in this new tax year, please contact one of our advisers.
You can reach us at info@thepennygroup.co.uk or on 0207 061 2345.
An ISA is a medium to long term investment, which aims to increase the value of the money you invest for growth or income or both.
The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.
HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.
Will Writing and Lasting Power of Attorney are not regulated by the Financial Conduct Authority.
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