“Use it or lose it” by 5 April – Private Client considerations for the end of tax year 2025/26 planning

Tax considerations:

Annual gifting allowance – Everyone has an annual allowance of £3,000, which must be used by the end of the tax year. It is also possible to carry forward unused allowance from the previous tax year. Anything gifted within these limits will not trigger the ‘seven-year rule’ and will immediately leave your estate. A married couple that hasn’t previously used their allowances could therefore gift £12,000 in this tax year which would immediately leave their estate. After 6 April, they could gift another £6,000 between them, and therefore over the coming months you could get £18,000 out of your joint estate, without any future tax worries. This could be useful for anyone who is thinking about helping a child or grandchild with a house deposit, or buying a first car. It could also be useful for anyone concerned that they may not survive seven years. Detailed record keeping is essential to ensure that the reliefs and allowances are fully available after death.

Wedding gift allowance – For any clients with children who are soon to be married, you can gift £5,000 on a one-off basis. The only requirement is that the gift is made before the wedding day, and the wedding actually takes place. The wedding allowance could be used in conjunction with the annual allowance to help pay for a child’s wedding. Grandparents can also gift £2,500 under the same rule.

Pension allowance – Each tax year it is possible to get relief on up to £60,000 (or your earnings, if lower). It may also be possible to carry forward unused allowances from previous years. It is also possible to contribute to a spouse or civil partner’s pension if they are not working. For a detailed analysis of your circumstances, speak to a Pension specialist as soon as possible.

ISA allowance – Speak to a financial advisor about utilising your £20,000 ISA allowance before it is lost. You can also consider junior ISAs.

Capital Gains Tax (CGT) allowance – Consider utilising your CGT allowance of £3,000 for this tax year if you are thinking of selling any assets in the near future. This will re-set on 6 April and you will get another £3,000 allowance.

Legal and financial planning needs to be carried out with care and precision. The points made in this article are generalised and may not be suited to your circumstances. Please consult our Private Client solicitors or a financial advisor as soon as possible for assistance.