Year-end tax-planning landscape: Keep your sights set on your financial goals

It’s understandable that many people might be suffering from the emotional strain of ‘Covid fatigue’, which in turn has perhaps only intensified any financial worries for both the short and long term.

Yet there’s value in stepping back and scanning the financial landscape and knowing you’re not alone – as the tax year-end approaches it’s a great opportunity to consider all your financial goals in order to strike a balance across the different areas of your life and know that, step by step, you can get where you want to be.


  • Having an understanding of your financial goals, and what action you can take to meet these goals, is really important. Before the end of this tax year, take advantage of your tax allowances, reliefs and exemptions to bring you one step closer.
  • No matter which financial direction you’re heading in, tax-efficient Individual Savings Accounts (ISA) and pensions are profitable options to take into account, as they add another element to your investment in a more stable financial future.
  • If you wish to pass on your wealth to loved ones, consider how you might minimise your estate’s liability to Inheritance Tax – for example, gifting money to younger family members.

Financial roadmap

The pandemic has overhauled life as we know it, and for many people it’s been a highly emotive time. On a ‘good’ day, you may feel gratitude for the simple things in life – on a ‘bad’ day you may find yourself craving those ‘guilty pleasures’ that used to be the norm.

Melloney Underhill, Marketing Insights Manager at St. James’s Place Wealth Management, notes that, similarly, we’re often caught in two minds between saving hard in order to meet our long-term financial goals, and yet also yearning to fulfil our shorter-term wishes. “But there’s no need to punish yourself for feeling torn,” she says. “The best thing is to look for a balance, then put what you can into all the different areas of your life.”

She goes on to suggest that it can be helpful to have a clear understanding of your goals and the direction you can take to make them financially viable. “Take a step back and look for some impartiality. If you’ve thought about your goals, the bit you’re probably stuck on is whether they’re achievable, and what financial plan needs to be in place to enable them. Then you’ll be able to create your roadmap.”

There’s no time like the present to make this happen, she says, and seeking professional financial advice can really help. While extended lockdown restrictions may hamper our ability to do many things, they also mean we’ve got more free time on our hands to carefully consider the shape of our finances.

Taking action before the current tax year is out and maximising on all the many allowances and reliefs at your disposal could really set you up to bring you that much closer to your short- and long-term goals. Underhill suggests that a good place to start is by weighing up which of the following scenarios best fits your circumstances and financial goals, before planning out the steps you can then take to set you off in the right direction.

Starting to build a financial foundation

If this best describes where you are in your financial journey, you have plenty of time to take on a little more risk, as opposed to leaving your money in cash. In short – invest your money for longer and reap greater rewards.

“Tax-efficient wrappers, such as ISAs and pensions, are ideal ways to begin your investment journey,” suggests Underhill. “You can put your money into a wide range of investments, which reduces your risk and broadens the opportunities for longer-term growth.”

However, what’s really valuable, Underhill adds, is the likelihood of extra returns provided by the tax advantages of these wrappers. “Unlike assets held outside of these wrappers, you don’t pay Capital Gains Tax (CGT) on the growth, and that can make a huge difference over time.”

Thinking about securing a financial future for you and your family

Does this sound like you? If so, don’t worry, as you won’t be the only one to have potentially not got very far with your plan. It’s only natural to want to be able to do the best for yourself and those closest to you, but likewise it’s natural that we can often delay investing for the future as today’s cashflow needs come first, says Underhill. This rings true in the wake of the pandemic, in particular.

“But it’s never too late to begin,” she reassures, highlighting ISAs as a great starting point, being that they’re very simple and you don’t pay Income Tax or CGT on the interest or profits.

“ISAs have proved incredibly popular. Over 11 million UK adults paid into an ISA in 2018/19, yet only one in four chose the Stocks & Shares ISA option1,” Underhill says. “If ISAs are part of your plan for five to 10 years’ time or longer, there is potential to see your money grow faster in a Stocks & Shares ISA than if you held it in cash.”

Dreaming of retiring in style

If this scenario sounds familiar, it would pay to make the best and most appropriate use of the available tax-efficient savings options, and all the more so when it comes to your pension and ISAs.

For instance, looking at the current tax year, the ISA allowance is £20,000. The annual ISA limit is per person, though, so if you have a spouse or partner, you can each have an ISA and pay in anything up to that limit – in other words, doubling the amount. You can also invest up to £9,000 in a Junior ISA on behalf of someone under the age of 18 if you’re their parent or guardian – this can really boost their financial future, even at this early stage.

As for pensions, on the whole, you can pay in up to £40,000 or 100% of your earnings (whichever is lower) this tax year and claim Income Tax relief. What’s more, you’re able to carry forward unused allowances from the past three tax years, which is definitely worthwhile.

“ISAs are pretty straightforward, but what’s important if they’re part of your longer-term plan is that you invest your allowances wisely to make the most of the tax benefits,” proposes Underhill. “When it comes to pensions, there is a lot more to consider, and financial advice is even more critical to ensure you maximise the opportunities.”

Considering how to pass on your wealth

Is this where you’re at in your financial journey? How about weighing up all your tax-efficient options, therefore, in order to support other family members, now and in the future?

“Again, you need to think about the full spectrum of options available,” Underhill says, “because some have better tax implications than others.”

She warns that it’s crucial to be aware of Inheritance Tax too, as it’s a complex area, so it’s always worth seeking informed advice. But essentially, anything over the tax-free threshold (which starts at estates valued at £325,000, excluding the residence nil rate band where this applies) is taxed at a flat rate of 40%.

There are steps you can already take now to reduce how much will be taxed, however. Many people choose to start giving money to their children and grandchildren – by gifting a total of up to £3,000 per year, you can reduce the value of your estate. Contributions to a Junior ISA may, again, be worthy of consideration for these gifts, although only a parent or guardian can set one up. One thing is certain – if you begin to save early, you can allow the power of compounding returns to build a child’s fund considerably over the long term.

You could also set up an Asset Preservation Trust – here, the death benefits of your personal pension are paid into a trust as opposed to a beneficiary. This removes the benefits from IHT, with the beneficiary receiving payments from the trust.

A sure footing

The end of the tax year is imminent, and it may feel as though there’s a lot to contemplate before 5th April. Don’t panic, though – as with anything, breaking down your financial plans into smaller steps is a good place to start.

However the year-end tax-planning landscape looks for you, our team of Wellesley financial advisers are here to help you keep your sights firmly set on your financial goals. Don’t forget to download your tax year-end checklist, and please feel free to get in touch with us on 01444 244551 before 5th April – we’ll be able to support you in making the most of this year’s tax-saving allowances and reliefs.


1 HMRC, Individual Savings Account (ISA) Statistics, June 2020

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested. An investment in equities does not provide the security of capital associated with a deposit account with a bank.

The levels and bases of taxation and reliefs from taxation can change at any time. Tax relief is dependent on individual circumstances.

Trusts are not regulated by the Financial Conduct Authority.

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