Personal tax: Quick wins to save tax before the end of the tax year

On the run up to 5 April, there are always ways to make the best use of the various allowances to save tax and therefore enhance the return that you can achieve with your money.  

The turn of this tax year in particular brings with it many changes that could impact upon the tax savings that can be made.  With this in mind, the following are some quick thoughts that many of our clients are finding useful to help them avoid paying unnecessary amounts of tax.

Pension Contributions 

The much publicised pension flexibilities were introduced this tax year, and for many, this has been a key reason for them to take pensions seriously as a part of their planning – not just for retirement, but also as a part of their legacy planning for future generations.  

The Budget announcements this year have been less exciting, and looked at the tax relief given to pensions, in an attempt to try to limit the amount the Government gives back to us.  It would be true to say that this will likely be the last year that everyone in the UK will be able to pay up to £40,000 gross to pensions and receive tax relief at their highest marginal rate.   

From 6 April 2016, the contribution limit (called the annual allowance) will reduce on a sliding scale for those with total earnings over £150,000 per annum.  This will be until they have earnings in excess of £210,000 per annum, at which point the annual allowance will be £10,000.  The rules regarding this, and being able to regain some of the higher tax relievable allowance, are complex, but the point to remember is that everyone should seeking advice regarding maximising pensions before the end of the tax year.

The maximum that can be paid to a pension is £40,000 in the current tax year, and you can also pay additional amounts to use unused pension contributions from the previous 3 tax years. The previous years all had contribution limits of either £50,000 or £40,000, meaning that if you have income in the current year to support it, up to £180,000 can be paid into pensions using simple planning. Depending upon your rate of tax, this could attract total tax savings of up to £81,000 in the current tax year.  In some cases, the contribution and associate tax relief could be higher.

Stop the Personal Allowance disappearing

As you may know, the personal allowance is reduced by one-half for earnings between £100,000 and £120,000, with an effective marginal rate in this earnings band of 60%.

If you fall within this earnings band, or just over, you should give serious thought to paying into a pension, as the effective rate of tax relief is 60%. The flexibilities also mean that the likelihood is that when the amount is drawn from a pension at some point in the future, this will be subject to far less tax, and 25% of it can be drawn without tax. 

Gift Aid is another way to assist. 

Enterprise Investment Scheme (EIS)/Venture Capital Trust (VCT)

These attract very beneficial tax reliefs, but unlike pensions, these are more specialist investments and are unlikely to be suitable for all due to the higher risk nature of the investment. 

Due to the higher risk nature of the investments, EIS and VCT investment both attract tax relief of up to 30% providing the investments are held for a minimum period.  With EIS, the tax relief can be “carried back” as if the contribution were made last year – this could be extremely useful for those facing larger tax bills now that they have submitted their returns and had received their calculations.

Where gains are made on EIS and VCT they are not subject to income or capital gains tax. 

In addition, if you make a gain elsewhere that is taxable, the capital gains tax can be deferred through an EIS investment in qualifying EIS companies.

Over and above this, an EIS investment also confers an Inheritance Tax benefit in that once the investment has been held for 2 years it will attract Business Property Relief (BPR) and not form a part of your estate for Inheritance Tax (as long as it remains invested within BPR qualifying investments).

As mentioned, the tax reliefs are very attractive, but these should be viewed as specialist investments as a result of the higher risk nature. 


A lot has changed with ISAs in the last few years. Whilst not strictly a tax reducer in terms of the current return, the more you hold in ISAs, the less tax your savings and investments will attract in the future (there are several “ISA millionaires” out there with the associated level of tax efficiency on this portion of their portfolio). Up to £15,240 can be contributed to an ISA in the current tax year per individual, and don’t forget that Junior ISAs are also available for children under 18.

Now that ISAs can be inherited “in specie” by spouses, these are even more attractive for a family’s financial planning, and don’t forget that if inheritance tax is a concern, ISAs can now hold AIM shares, bringing them out of the IHT equation after 2 years (although AIM investments do carry more risk than many are comfortable with). 

Capital Gains Tax (CGT)

If this allowance is not used, it is lost, and you should plan carefully to maximise this where possible. Furthermore, if you are considering realising gains within your investments, you should plan carefully to make sure you make best use of this year’s and next year’s CGT allowances thus potentially further reducing the tax on gains.


Many of our clients have found that just by discussing their financial planning with us, we have used the above points (among many others) to help save them retain more of their own money rather than pay unnecessary amounts of tax. We would be delighted to relate any of the above to your specific circumstances in greater detail. Please contact one of the Private Client team.


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