As the 2024/25 tax year draws to a close on 5 April 2025, now is the time to review your financial position and take advantage of available reliefs and allowances. Here are some key areas where you can take action to reduce your tax liabilities and plan ahead:
1. Pension Contributions
Pension contributions remain one of the most tax-efficient ways to reduce your taxable income. For the 2024/25 tax year, the annual pension contribution limit is £60,000. If you haven’t used up your full allowance in the past three years, you may be able to carry forward unused relief, provided you were a member of a pension scheme during those years.
👉 Tip: Contributions made before 5 April can bring down your current tax bill and boost your retirement savings.
2. Director Salary & Dividends
If you’re a company director, reassessing your salary and dividend mix can help ensure you’re extracting profits in the most tax-efficient way. A common approach is to take a small salary—within the personal allowance or just above the National Insurance threshold—topped up with dividends, which are taxed at lower rates.
👉 Tip: Ensure your dividend payments stay within your dividend allowance to avoid higher tax charges.
3. Charitable Donations (Gift Aid)
Donating to charity under Gift Aid allows you to claim additional income tax relief if you’re a higher or additional rate taxpayer. Donations made by 5 April can be included on your 2024/25 tax return or, if applicable, carried back to reduce your 2023/24 tax bill.
👉 Tip: Keep records of your donations and ensure Gift Aid is ticked when donating.
4. Inheritance Tax (IHT) Planning
It’s wise to think long-term about Inheritance Tax. Each tax year, you can gift up to £3,000 free of IHT under the annual gifting exemption. You can also carry forward the previous year’s unused allowance. For larger estates, consider using trusts or making regular gifts out of surplus income as part of a structured IHT strategy.
👉 Tip: Keep documentation for all gifts made, especially if planning to rely on exemptions.
Final Thought
Taking action before the end of the tax year can help you save money and plan better for the future. Whether you’re an individual taxpayer, a business owner, or managing a family estate, reviewing your tax position now can make a big difference.
📅 Don’t wait—review your options before 5 April 2025.
✅ For official guidance, visit:
HMRC: Tax Year Planning
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