The Clock’s Ticking: Use Your ISA Allowance Before 5 April
The end of the tax year is fast approaching, and if you don’t take action before 5 April, you could miss out on valuable tax-free savings and allowances. Unlike some financial deadlines that roll over, many allowances reset completely—meaning if you don’t use them, you lose them.
From maximising your ISA allowance to boosting your pension and checking for overpaid tax, here’s what you need to do before the 2024/25 tax year deadline.
1) Maximise Your ISA Allowance
One of the most important tax-free benefits in the UK is your ISA (Individual Savings Account) allowance. For the 2024/25 tax year, the annual limit is £20,000—and any unused portion cannot be carried forward after 5 April.
Types of ISAs to Consider Before the Deadline:
Cash ISA: Ideal for savings with tax-free interest.
Stocks & Shares ISA: Invest for long-term growth without paying capital gains tax.
Lifetime ISA (LISA): Save up to £4,000 per year with a 25% government bonus, perfect for first-time homebuyers or retirement savings.
If you haven’t topped up your ISA, now is the time!
2) Make the Most of Tax-Free Gains
The UK government has been reducing tax-free allowances in recent years, meaning capital gains and dividends could soon be taxed at higher rates.
Here’s what you need to know before 5 April:
Capital Gains Tax (CGT) Allowance: Currently £3,000 (2024/25).
Dividend Allowance: The tax-free threshold for dividends is £500. If you earn dividends from stocks or business ownership, it’s worth planning ahead.
3) Shop Around for Better ISA Rates
Banks don’t always reward loyalty. If you have a Cash ISA with a low interest rate, it’s worth checking if you can transfer it to a higher-paying provider—all while keeping your tax-free benefits intact.
How to find a better Cash ISA rate:
Compare interest rates on comparison websites.
Check if your current provider has introduced better-paying ISAs.
Look for fixed-rate ISAs if you can lock in your money for a set time.
Even small improvements in interest rates can make a big difference over time.
4) Check for Overpaid Tax
Many people overpay tax without realising it—especially if they’ve been on the wrong tax code, changed jobs, or had fluctuating income. You can claim overpaid tax for up to 4 years, so now is the perfect time to check!
How to check if you’ve overpaid tax:
Log into your HMRC account and review your tax code.
Use HMRC’s tax refund tool to check eligibility.
If you’re self-employed, review business expense deductions to reduce taxable income.
5) Boost Your Pension Before the Deadline
Making extra pension contributions before 5 April can help you grow your retirement savings and reduce taxable income.
Basic-rate taxpayers (20%) get a 25% boost automatically—£100 contribution = £125 in your pension.
Higher-rate (40%) and additional-rate (45%) taxpayers can claim extra relief via self-assessment.
Company directors can make pension contributions through their business, reducing corporation tax liability.
6) Fill Gaps in Your State Pension Before the Deadline
If you have gaps in your National Insurance (NI) record between 2006 and 2018, you have a limited window to buy back missing years and increase your State Pension income for life.
Deadline: 5 April 2025 (for gaps from 2006-2018). After that, you can only buy back the last 6 tax years.
Why it matters: Buying one missing NI year costs £907 but could increase your State Pension by £342 per year—forever.
How to check your National Insurance record:
Visit gov.uk/check-state-pension.
Use the Future Pension Centre to see if it’s worth paying voluntary NI contributions.
7) Use Your Gift Allowance
If you’re thinking about passing on wealth, don’t forget the Inheritance Tax (IHT) gift allowance.
You can gift up to £3,000 per year tax-free—and any unused allowance from 2023/24 must be used by 5 April 2025.
8) Check the Latest Rules & Deadlines
Tax rules change regularly, and allowances reset every April. To make sure you’re following the most up-to-date advice:
Where to check official tax rules:
Visit gov.uk for government tax guidance.
Consult a financial advisor if you have complex tax or pension questions.
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