Checklist: 10 easy moves to save you money before the end of the 2024/25 tax year

Investors and savers do not have much time left to make the most of valuable tax perks before the end of the 2024/25 tax year.

At midnight on 5 April 2025, the current tax year will finish - and some allowances will be lost forever - and the new 2025/26 tax year will begin.

Alex Johnston, wealth planner at Succession Wealth, comments: "As the tax year-end approaches it is important to ensure that your financial affairs are in order so that you can take advantage of any remaining reliefs, allowances and exemptions before they are lost."

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He adds: "Many providers will have specific deadlines for accepting applications to top up plans such as ISAs or pensions, so time is of the essence."

It's also vital to make the most of tax breaks and do whatever you can to save money before "awful April" arrives, which will usher in a range of price hikes from council tax to water and energy bills.

This year there is the added uncertainty of the Spring Statement, on 26 March, which could be used by Labour to announce tax changes. There are also rumours we could see a lower cash Isa limit unveiled later this year, possibly bringing it down from £20,000 to £4,000.

With this in mind, we've put together a handy checklist to help you maximise tax allowances and allow your money to grow further.

1. Use your ISA allowance

The £20,000 ISA limit is often referred to as a “use it or lose it” allowance. This means you can pay in a maximum of £20,000 across all your ISAs (bar the junior ISA, which has a separate £9,000 limit) each tax year, but you can’t roll over any unused allowances into the next tax year.

The £20,000 allowance applies to cash ISAs, stocks and shares ISAs, lifetime ISAs and innovative finance ISAs.

Putting your money into an ISA means you won’t pay a penny in income tax, dividend tax or capital gains tax (CGT) on any interest, income or profits that you receive. So, it may be worth moving any investments into a stocks and shares ISA, and savings into a cash ISA to shelter it from the taxman.

If you want to open a stocks and shares ISA but aren’t sure where to invest the money, you can always “park” it in a cash fund and decide later.

2. Do a “bed and ISA”

You may not have had to worry about paying tax on investments held outside an ISA in the past, as the capital gains tax and dividend tax-free allowances have more than covered any income or profits.

However, both of these allowances have shrunk recently, so you could be faced with an unexpected tax bill.

The tax-free dividend allowance dropped from £1,000 to £500 this tax year. HMRC estimates more than 1.1 million more people will be brought into paying dividend tax as a result.

Meanwhile, the CGT tax-free allowance is £3,000 (down from £12,300 a couple of years ago).

Shifting investments into an ISA via a process known as a bed and ISA transfer protects future gains and dividends from the clutches of tax.

It involves selling and buying back shares, which could trigger a capital gains tax liability. The CGT rates were hiked on 30 October last year, in the Autumn Budget, meaning basic-rate taxpayers now pay 18% on gains, while higher and additional-rate taxpayers pay 24%.

So, if you're doing a bed and ISA, beware of realising a gain and paying these higher rates. You could sell some investments now and some in the 2025-26 tax year to take advantage of both tax-free allowances and avoid paying CGT (or reduce a potential bill).

3. Transfer money to your spouse

Any investments transferred to your spouse or civil partner are exempt from capital gains tax. As long as your spouse hasn’t used up their tax-free allowance this year and has some ISA allowance remaining, you can make the most of those tax breaks.

Keep a note of the original cost of the asset, as that’s what will be used when your partner comes to sell it.

The same goes for income-producing investments: your spouse also benefits from a £500 tax-free dividend allowance this tax year, so you can move investments to them to maximise that tax break.

There’s a possible double benefit, too. If your spouse is in a lower income tax bracket, they will pay either dividend or capital gains tax at a lower rate.

4. Get free cash with a Lifetime ISA

Making the most of a Lifetime ISA can be one of the most efficient ways of maximising allowances and bonuses. They can be opened by those aged under 40, and by contributing up to £4,000 each tax year, savers receive a 25% bonus from the government - worth up to £1,000 per year.

This money can either be put towards a first home, as long as the property costs £450,000 or less, or accessed without a penalty charge when you turn 60.

5. Claim the marriage allowance

The marriage allowance applies to couples where one partner does not pay income tax — or their income is below the £12,570 personal allowance — and the other partner pays basic-rate income tax. It could save you up to £252 a year in tax savings.

More than 2.1 million couples currently benefit from the tax break, which allows husbands, wives and civil partners to transfer part of their tax-free personal allowance to their higher-earning partner.

However, HMRC estimates that more than 2 million couples could be missing out on the savings.

In addition to this year’s allowance, couples can backdate their claim by up to four tax years, meaning they could receive an extra lump sum worth up to £1,004 for those years. But you'll need to be quick and apply for the allowance by 5 April.

The non-taxpayer should apply on the HMRC website to access the allowance. If there's a problem doing the online application, you can apply via self-assessment or by writing to HMRC. You can also call 0300 200 3300 for help.

6. Maximise your pensions

You can pay up to £60,000 into your pensions this tax year and receive tax relief. Your annual allowance depends on how much you earn. Paul Clifton, director of wealth management at Arbuthnot Latham, points out that if you're not working and are under 75, "you can still contribute up to £2,880 each tax year, boosted by tax relief to £3,600".

Pension savers can also use carry-forward rules to make large contributions. This allows you to utilise unused allowances from the three previous tax years.

This may be particularly lucrative for small business owners with large cash profits.

If you're a higher-rate or additional-rate taxpayer, don't forget to claim the full amount of pensions tax relief, as you could get an extra 20% or 25% in relief respectively.

The taxman has kept hold of £1.3 billion in unclaimed pension tax relief over the past five years, so it could pay handsomely to check if you can benefit.

As well as being a tax-efficient way to save for retirement, you can also use your pension contributions to reduce your income tax band.

When you contribute to your pension pot, the gross value of the contribution has the effect of extending your basic-rate tax band. This means the rates of CGT and dividend tax you pay could be lower if it means you are no longer a higher-rate taxpayer.

If you’ve only just tipped over into the next tax band, a small pension contribution could bring you under the threshold, leading to a significant saving.

7. Reduce your inheritance tax liability

Several inheritance tax breaks can help you reduce your overall tax liability.

The most well-known is the "annual exemption", allowing you to make a £3,000 gift. Crucially, this allowance can be carried forward – so, you can make a £6,000 gift should you have the allowance remaining from last year.

As a couple, each person gets the same £3,000 allowance, potentially doubling the IHT reduction you can make.

You are allowed to make gifts of up to £250 to as many people as you like, so long as you haven’t made any larger gift to that person.

Clifton comments: "Using allowances like junior ISAs and making financial gifts can provide financial security for your loved ones and reduce future inheritance tax liabilities.”

8. Help your kids with an ISA or pension

On top of your pension contribution allowances, money can be put aside into someone else’s savings, including your children's. The benefit of this is children are still entitled to tax relief on the contribution, even if they are non-taxpayers.

Investing £3,600 a year, the maximum allowed, on behalf of a child will cost you only £2,880. That's because a top-up of £720 from the taxman is added to your contribution.

While starting a pension for a child may seem odd, it's a useful way to maximise tax savings and help ensure they have a retirement fund for later life. In 2019, 60,000 families opened pension plans for kids, according to HMRC.

Likewise, a junior ISA can act in much the same way, although the youngster will be able to access the pot of money much earlier, from age 18. Parents, relatives and friends can contribute a total of £9,000 into the account each tax year, and any investment gains are tax-free. Like the adult ISA limit, this is a "use it or lose it" allowance: it does not roll over into the next tax year.

Like adult ISAs, there are two types of junior ISA: cash ISAs, and stocks and shares ISAs. If you're considering a stocks and shares junior account but are overwhelmed by the choice, take a look at our guide to selecting which junior ISA is best suited to you.

9. Check your tax code

If your tax code is wrong, you could be paying thousands of pounds of extra tax to the taxman. So, it's important to check your tax code.

The code is normally a mix of letters and numbers; the most common tax code is 1257L.

If you notice you're on the wrong tax code, you can claim back any overpaid tax for the last four tax years. But it's your responsibility to check and let HMRC know if it's wrong.

Sometimes people are on the wrong tax code if they change their job or their salary goes up or down.

If you think you have overpaid tax through PAYE in the current tax year, you should tell HMRC before the end of the tax year. There's more information on gov.uk about how to claim a tax refund.

10. Check your child benefit

Child benefit is paid to parents to help with the costs of childcare. The rate for an eldest or only child is £26.05 a week - while the rate for other children is £17.25 a week.

But parents must watch out for the high income child benefit charge, as they currently lose the payments when they earn over £60,000.

Anyone earning between £60,000 and £80,000 has to pay back a portion of the money in the form of extra income tax.

If you earn slightly above £80,000 you may be able to reduce your taxable income and keep more of your child benefit.

For instance, putting money into a workplace pension or using employer salary sacrifice schemes can lower your taxable income without losing money.

Salary sacrifice is an agreement to reduce an employee's cash pay for non-cash benefits, like pension contributions, childcare vouchers or a cycle-to-work scheme.