Before the end of another tax year (5 April 2026), it is sensible to look at how you can make the most of any unused allowances and exemptions. There are a range of options from maximising personal allowances, Capital Gains Tax and Inheritance Tax exemptions, through to transferring allowances between spouses and making tax-efficient pension contributions.
Personal Allowances
It is important to consider using your tax-free personal allowance, which is £12,570 for the 2025-26 tax year. If you have your own limited company and have not already drawn anything, then you could consider a salary of up to £12,570 – but be warned that this could trigger an Employers National Insurance liability, although you would receive a credit towards your personal state pension.
If you are earning more than £100,000, then your personal allowance will be reduced by £1 for every £2 of income over this figure and to nil if your income exceeds £125,140.
If you and your spouse are basic rate taxpayers, it is possible to transfer up to 10% of unused personal allowances to a spouse or civil partner (£1,257 for the 2025-26 tax year).
Capital Gains Tax (CGT)
Transfers between a spouse or civil partner can be made at no gain/no loss. This means that a transfer ahead of a disposal can mean that both annual allowances could be used.
Inheritance Tax
You can gift up to £3,000 a year without any Inheritance Tax (IHT) implications and this allowance can be carried forward to the next year (but only for one year). There’s no IHT to pay on gifts between spouses or civil partners.
Pensions
Pensions have traditionally been an area where tax savings can be made, with tax relief for pension premiums continuing to be tax efficient. If you’re a UK taxpayer, in the tax year 2025-26, the standard rule is that you’ll get tax relief on pension contributions of up to 100% of your earnings or a £40,000 annual allowance, whichever is lower.
Any contributions you make over the limit won’t attract tax relief and will be added to your other income and be subject to Income Tax at the rate which applies to you.
Always remember to speak to your financial adviser first.
This time of year is also the ideal time to have a catch up and review your affairs, whether business or personal. Do call our team on: 01892 513515.