Four Tax Year End Tips for Investors Aged 55-64
The end of the tax year is on the 5th of April so time to get your skates on to make sure you’re using every trick in the book to keep tax low and spring clean your finances.
Average balances for people getting closer to semi or full retirement are typically larger so managing tax and making the right decisions with our pensions are more important than ever. Boring Money research shows that If we look at every male investor between the ages of 55 and 64, the most commonly held sum of money is £150,000- this doesn’t include workplace pensions, just private investments and pensions set up yourself or with an adviser. Confidence levels also tend to be typically higher for older people when it comes to investing.
Expert Sam Secomb says that at this time of year, planning ahead is key. This way, you won't have to rush to use your allowances in the last days before they expire.
I think the biggest difference between how the savvy investors manage the end of the tax year compared to others is that they actually focus on using the available tax allowances on the first day of the new tax year. Rather than the stress of scrabbling around trying to use the allowances before they expire at the end of a tax year, they’ve been invested for a year already and are just waiting for 6th April to arrive so they can go again! It can add up to a lot of extra loot in ISA and pension pots too because more of your money stays in your investment rather than gets lost to tax.
If you're a saver or investor aged between 55-64, I've whittled down some top end-of-tax-year tips for people like you. Here are four things to consider this year:
1. Start to shape your plan for retirement
Do you have any chunks of money you can put into a pension now and get tax relief? This is especially important for anyone who earns a high income now but may be a basic rate taxpayer when retired.
Why? You receive tax relief based on higher rates today. This means you only need to pay in 80p to get a full £1 added to your pot (this applies to basic rate taxpayers too) AND you can reduce your tax bill by a further 20p when you put in your tax return. So £1 effectively only costs you 60p to get. BUT when you draw down your pension - if you’re a basic rate payer at that time- you get your 25% tax free lump sum and then only pay basic rate tax on the £1 you take.
With the lifetime allowance now abolished and the maximum annual contribution set at £60,000, there is ample opportunity for those with any spare lump sums to explore this option. Plus, with the government’s finances stretched, there is always the chance that it could change the tax rules around pensions, so there is a case for getting on with it.
If you want to make a payment into a personal pension, you can check out our 2025 Best Buy Pension winners – we have something for everyone, across all different levels of confidence and expertise (or not).
2. Consider getting financial advice
Retirement is complicated. You’ll have to familiarise yourself with a range of new jargon - “drawdown this” and “annuity that”. It is possible to find an adviser who will do a one-off piece of advice for you and charge an hourly fee for this – usually about £150 - £200. Or some firms offer retirement advice packages starting from circa £1,000 – Charles Stanley is an example.
If you’re in the run-up to retirement but have a relatively modest pot today, then maybe some digital advice is the right choice for you. Have a look at what Destination Retirement offers – it’s an interesting, low-cost alternative for more straightforward accounts.
If you’re looking for a good adviser, I suggest you Google them and read their LinkedIn or X accounts – what are they like? Read customer reviews. Ask what they charge – an ongoing advice fee between 0.5% - 1% is the norm, and then there will be administration and investment charges too.
As a rule of thumb expect to pay around 2% a year all-in for ongoing advice, plus investments plus administration, but it does depend on what you are getting. There are varying qualifications – ‘Level 4’ is generally the minimum you’d expect, and ‘CFP’ (Chartered Financial Planner) indicates they’ve sat some pretty hefty exams.
3. Talk to your partner about money
The majority of financial decision-makers in their 50s and 60s are still men. But with women living for a longer average time, they may well have to take responsibility for the household finances at some point. Think about any financial admin which you take responsibility for. Is it worth a session to review accounts, and passwords and maybe even to sit with your financial adviser so that both parties feel comfortable with the joint assets?
4. Pay into an ISA
We all have a £20,000 allowance to put in our tax-free ISAs every year. It’s a brilliant way to build some investments without incurring tax on your gains. If you’re under the cosh and don’t quite know what to invest in, it doesn’t matter. You can always transfer whatever you can afford into the ISA account. Leave it as cash and work out what funds or shares to buy later. As long as it’s in the ISA account before 5th April, that’s all that matters! You can have a Cash ISA too and split any savings between a Cash ISA and a Stocks & Shares one – just remember the total of both mustn’t be more than your £20,000 allowance in a single year.
If it’s getting close to 5th April but you’re feeling paralysed with indecision on the number of options for your ISA allowance, then you can park the money in an instant access Cash ISA. ISAs can be transferred between Stocks & Shares and Cash varieties, and back the other way. Using an instant access account means you’ve bagged the allowance without committing to anything longer-term. You aren’t stuck with your choice once it’s done. Just make sure that you don’t forget about it & leave the money languishing!
