Tax year-end: Getting your finances in shape

With the end of the tax year on the horizon, it’s time to seize the moment and ensure your investment strategy is in the best shape possible. But how can you stay on top of your finances this spring?

A new year marks a new beginning and a clean slate. And although we’re well into February now, while the nights are long and the days are short, it’s the ideal time to firm up those goals for the year ahead and get into good habits that will make a real difference to your life.

Financial goals are the perfect place to start – and, with the end of the tax year approaching on 5th April, why not get ahead in making the most of the allowances we can use that help our money go further?

Here are some areas to consider – we’ll be covering each of the following in more detail over the coming weeks!


A pension is a tax-efficient way of saving for your retirement and, thanks to greater choice and flexibility, it’s a more attractive option for retirement savers than ever before. This tax year, you can pay in up to a maximum of £40,000 or 100% of your salary – whichever is lower.

The key numbers:

  • Contribution limit: Most people get tax relief on pension contributions worth up to 100% of their earnings, capped at £40,000 each tax year. This is called the ‘annual allowance’.
  • Carry it forward: If you don’t use all your allowance in one year, you can ‘carry it forward’ for up to three years.
  • Lifetime allowance: The limit on the total amount you can build up in pension benefits over your lifetime while still enjoying the full tax benefits has been frozen at £1,073,100 until April 2026.


ISAs are a great way of making your money work harder for you. Everything you earn from it is free of Income Tax, Capital Gains Tax and Dividend Tax – so you won’t pay tax on interest, withdrawals or profits. Win, win!

The two most common kinds of ISA are Stocks & Shares ISAs, and Cash ISAs. If you’re prepared to keep your money in your ISA for at least five years (or longer), Stocks & Shares can be a great way to go. That’s because, over the long term, stock markets tend to rise – so as long as you won’t need to access the money any time soon, Stocks & Shares ISAs have the potential to give you a greater return in the long run, particularly as interest rates are currently so low.

The key numbers:

  • Contribution limit: Individuals who are 18 or over can invest up to £20,000 in an ISA this tax year.
  • Spouses and partners: Check they’ve maximised their ISA allowance to fully utilise the combined allowance of £40,000.
  • Tax boost: Returns from an ISA are free of Income Tax, Capital Gains Tax and Dividend Tax.
  • Use it or lose it: You can’t carry forward your allowance, so this year’s will be lost if it is not used.

 Junior ISAs

Taking care of your own finances is just the start, as those of younger family members might need some attention too. You can contribute up to £9,000 per child into a Junior ISA with no further liability to Income Tax or Capital Gains Tax. Another benefit is that by gifting money to your children, you’re removing money from your own estate, which could help reduce the amount of Inheritance Tax payable on your estate when you die.

The key numbers:

  • Contribution limit: A Junior ISA allowance of £9,000 per child this tax year is available for those who are under 18.

Inheritance Tax and estate planning

The end of the tax year is a timely reminder to get your house in order and make the best use of other tax breaks and allowances – helping you prevent your family from paying unnecessary Inheritance Tax (IHT).

Although the minimum tax-free threshold of £325,000 per person may seem generous, the 40% rate at which IHT is paid on the rest of your estate is not. Fortunately, there are several steps you can take to reduce your beneficiaries’ Inheritance Tax liabilities – so act before 5th April to take advantage of these.

The key numbers:

  • Your gifting allowance: You can give away up to £3,000 each tax year, IHT-free.
  • Carry it forward: You can make use of any unused gifting allowance from the previous tax year.
  • Double up: Using this and last year’s allowance, a couple could potentially remove £12,000 from their joint estate before 5th

Capital Gains Tax

Capital Gains Tax (or CGT) is one of the most complex taxes to understand, so it’s no wonder that people fall into the trap of paying unnecessarily or end up being fined for not paying when they should.

Essentially, you’re liable for CGT when you sell an asset at a profit. This could be anything from a second home to stocks and shares or valuable items such as jewellery. There’s a tax-free allowance of £12,300 for this year, then after that the rate is dependent on the level of income tax you pay – 10% for basic-rate taxpayers and 20% for higher-rate payers (and 18% and 28% respectively if you’re selling a property).


If you own a business, and take dividend income instead of a salary, it’s important to remember that a tax rise is coming! From the next tax year (starting on 6th April 2022), Dividend Tax is set to increase by 1.25% across the board – which makes it worth your while to hold your stocks and shares in an ISA if you can. If you’re a limited company director and pay yourself in dividends from the business, it could make sense to take a bigger dividend before 5th April 2022 – the end of the tax year – before the tax rate increases.

Seize the day

The tax year may not end until 5th April, but there’s no need to leave everything until the last minute. Whether you need to top up your ISA, make extra pension contributions or put other changes in place, it’s worth carving out time well before April.

What’s more, a regular check-in with your adviser will give you the impetus and momentum to keep on top of everything. Here at Wellesley, it’s our job to give you dedicated and informed financial advice, tailored to you and your specific needs, so please don’t hesitate to give us a call on 01444 244551.

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.

The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.

Back to news