Save tax - one week to go!

One week left this tax year, and what a year it has been. Lower growth, sticky inflation, and higher taxes. Oof. Here are some last-minute ideas to consider, to protect your money from the increasingly hungry jaws of the taxman.

ISA time

Every adult has up to £20,000 a year to put into a largely tax-free Individual Savings Account, or ISA. You can have a Stocks and Shares one, and/or a Cash one, as long as the combined total paid in during any one tax year is not more than £20,000.

Don’t be put off by these sums if you have less – the following let you open an ISA with just £1. Lightyear and Trading 212 are good apps for buying shares; Tillit has interesting fund research, and Monzo, True Potential and Wealthify are easy ways to get a simple diversified investment ISA started. Barclays and Bestinvest are good for both funds and shares and let you open a ISA with just £50, as does IWeb whose low fee offer is featured in this week’s sponsor box.

The world is quite a bonkers place right now, and stock markets are volatile. This morning, gold hit a new high, a sure-fire sign of collective nerves. As a physical asset you can touch and stash under the bed, people like the solidity of gold when the people in charge of the asylum start to look mad themselves, or when geopolitics get wobbly.

Amidst this turbulence, if you have some long-term savings to shield from tax, but don’t quite know where to invest it, you can always pay into a Stocks and Shares ISA and leave it in cash for now, before making the move.

Check out our 2025 ISA Best Buys to make your pick, see who we rate, or read what 20,000 customers reviews have to say.

Pensions - hotter than most think!

A reminder on the basics of Why Bother? Basic rate taxpayers who set up a pension (can be done online - you can see our Pension Best Buys for 2025) and put in £80 will see this miraculously turn into £100. Just like that.

This is what people mean by tax relief. It’s basically a refund of the tax you paid on your income, to give you a pat on the head for saving for your retirement. Higher rate taxpayers can then also reduce their taxable income by yet another £20 (using the £80 example above) when they do their annual tax return. So you pay less tax in the annual wash up.

Anyone who earns between £100,000 and £125,140 (where you effectively pay Income Tax at a blistering 60% because your tax-free allowance of £12,570 progressively falls away with every £ earned above £100k) HAS to understand the power of pensions to reduce your taxable income below this threshold.

And the same concept applies for any parent earning between £60,000 and £80,000 – at which levels child benefit payments are reduced. For example, if you earn £63,000 and pay £4,000 into a pension, your taxable income would fall to £59,000 so you get full child benefit payments AND tax relief on the £4,000. Lovely jubbly. SEE. Pensions really are hot!

Anyone with a bonus or inheritance or lump sum, make sure you understand the carry forward rules. Most of us could pay up to £60,000 into a pension in any one tax year and get lovely extra money from tax relief. And if we haven’t used this allowance in the three previous years, we could add it all up and invest one massive sum into a pension and get a ton of tax relief. For someone that hasn’t paid into a pension in the last three years, the maximum you could pay in is a whopping £200,000 this year.

If you own a business, could you make a company contribution into your pension, potentially also make use of this carry forward, and also save on National Insurance for the business, as well as income tax for yourself?

There are lots of levers to pull with pensions, so do your homework, check out our guide to personal pensions or consider financial advice, particularly if you have more than £100,000 or a large pension decision to make.

One for the kids

Every child under 18 has an annual allowance of £9,000 which can be paid into a Junior ISA. Hello, grandparents?! Also worth considering for richer families who use their own individual ISA allowances up. Or for those without megabucks, consider setting up a monthly direct debit of something that can fit into the monthly budget if this is possible (could be £10 a month for example), to build up some savings for the children.

Warning – they do get access to this when they are 18. Something which I felt fine about when they were sweet and 5, but I now feel somewhat more anxious about now they're teens! Gulp…

Once your child turns 18, you could consider swapping this money into a Lifetime ISA. If, for example, you have saved £4,000 into a Junior ISA, and then move this into a LISA when they hit 18, there would be an additional freebie top-up of another £1,000, boosting their savings for a first flat deposit to £5,000.

Inheritance Tax

This tax is making more of an impact on more and more families, not just those who eat kedgeree for breakfast and go beagling. Older readers should consider their options. You can gift £3,000 a year, and carry forward last year’s allowance. Regular gifts from ‘surplus income’ are also exempt. Could grandparents pay into Junior ISAs? Or of course you could just blow it all on a lovely holiday and stuff the ungrateful little beggars :0) But I didn’t say that!

Higher rate taxpayers can find other tips and ideas in this article.

Have a great weekend everyone and enjoy the sunshine! (Hopefully…)

Holly