Five ways to hit the 2026-27 tax year running

If you spent March frantically moving money around to make the most of your tax-free allowances, or you’re now kicking yourself for not realising capital gains before the deadline, you’re far from alone.

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Tax planning always seems to be a last-minute rush, but it doesn’t have to be.

By getting a head start at the beginning of the tax year, you’ll have time on your side to make the most of the available opportunities and, more than likely, end the year both better off and less stressed.

So if you want to spare yourself the ticking clock next year, here’s what you can do to ease the pressure now.

1. Get your tax return done

If you really want to make your finances as tax-efficient as possible, completing your tax return is the perfect way to focus your mind.

Although your tax return is a chore most of us associate with January, given the deadline for online returns is the end of that month, there’s nothing to stop you getting it ticked off as soon as the new tax year starts on 6 April. Last year, nearly 300,000 tax payers filed theirs in the first week of the new year.

But completing your tax return early doesn’t just get you tuned into your tax affairs.

If you’re owed a refund, you’ll get it sooner. Or, if you’ve got a bill, you’ve got time to plan how you’ll pay it. You’ll also have more than enough time to make the most of tax-saving opportunities in your return, which may be missed when you’re in a hurry. That might include claiming tax relief on pension contributions (if you pay the higher or additional rate of tax) and tax-deductible expenses if you run a business.

Changes for the self-employed and landlords: From April, if you’re a sole trader or a landlord with income over £50,000 a year, filing accounts is set to become more complicated, with the introduction of Making Tax Digital (MTD). You’ll need to start keeping digital records, report your accounts to HMRC every quarter and file your annual tax return using HMRC approved software. Rollout of MTD is being phased in gradually. If you earn £30,000 upwards you’ve got another year before you need to comply, while those earning £20,000 or more don’t need to comply until April 2028.

2. Pay more into your pension

Completing your tax return early and claiming any additional pension tax relief, can also give you a helpful nudge to pay more into your pot.

Each year you can pay 100% of your earnings, up to £60,000, into pensions.

But you might be able to pay in more. If you didn’t use your full allowance in any of the last three tax years, you can carry them forward to the current year. This can be particularly helpful if you’re self-employed and have a fluctuating income, or you’ve received a windfall.

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If you’re employed and are using salary sacrifice to pay into a workplace pension, it’s also worth making the most of its benefits before they’re reined in.

Using salary sacrifice to pay into pensions saves tax and national insurance (NI). But from April 2029, NI savings will be capped at £2,000 a year.

Increasing contributions is a great start if you can afford it, but you can also save thousands in tax by asking your employer to pay any bonuses straight into your pension.

That’s because you’ll get the full value of you bonus going into your retirement pot without the deductions that will be made if it’s paid through payroll. You just need to be aware that you won’t be able to access that money before you turn 55 (rising to 57 in 2028).

3. Use your ISA allowance

ISA season starts in the final months of the tax year, encouraging us all to use our annual individual savings account allowance, or lose it.

But the sooner you can use your allowance the better. By investing at the start of the year, you’ll get a year’s more potential growth than you would if you left it until the end.

If you don’t have a lump sum, or you’re worried about market volatility, you can set up a monthly direct debit instead and drip-feed money into a stocks and shares ISA over the course of the year.

You can invest up to £20,000 each year into ISAs – but the allowance for cash will drop to £12,000 from next April, unless you’re over 65.

There will be no tax to pay as your money grows, or when you make withdrawals.

4. Look at assets outside tax wrappers

If you’ve got any investments that aren’t sheltered by an ISA or pension, they’ll be exposed to an increasingly punishing tax regime.

From April this year, the tax on dividends will increase for most taxpayers by 2%. That will take the rate to 10.75% for basic rate taxpayers, while the rate for those that pay the higher rate will jump to 35.75% (the additional taxpayer rate will remain at 39.35%). The tax-free allowance for dividends has also fallen in recent years, from £2,000 in 2023 to £500 today.

The hike means that basic and higher rate taxpayers with £20,000 in dividends will have to stump up £390 more this year.

Capital gains tax (CGT) rates meanwhile increased on the back of the 2024 Budget (to 18% and 24% for basic and higher rate taxpayers respectively) and the tax-free allowance has fallen from £12,300 in 2022/23 to just £3,000 today.

That means it’s never been more important to look at ways to protect this wealth.

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If you’ve got ISA allowance remaining, a sensible option is to use a ‘Bed & ISA’, a process that allows you to sell investments and immediately rebuy them within a stocks and shares ISA, where they will be sheltered from tax in the future.

So long as you don’t exceed your allowance for capital gains there will be no tax to pay.

If you don’t have enough allowance remaining, or you don’t want to tie funds up in your pension, there are other ways to save tax on these investments.

For example, you can reduce an eventual CGT bill by realising gains each year, not just the year you cash them in. Although you can’t sell investments and buy them right back for tax reasons, you can buy similar investments or use the opportunity to diversify or rebalance your portfolio.

If you’re married (or in a civil partnership), you can also transfer investments to them to ensure you use both sets of allowances. Or, if tax is unavoidable, there may still be savings to make if they pay tax at a lower rate to you.

5. Get ahead on inheritance tax

This April saw the introduction of new restrictions to agricultural property relief and business property relief, with 100% inheritance tax (IHT) relief now capped at £2.5 million. Relief will also be halved for shares in AIM-listed and Enterprise Investment Scheme (EIS) companies.

But changes that will affect more retirees are in the pipeline.

From 6 April 2027, unspent pension funds will become subject to inheritance tax (if the total value of your estate exceeds your tax-free threshold).

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With retirees previously being encouraged to hold on to pensions and spend other investments (like ISAs) first, the shift will turn retirement planning on its head.

And reports from advisers are suggesting that retirees are increasingly exploring ways to take cash out of their retirement pots and either gift or spend the cash, to avoid the charge.

But with pension income also subject to income tax (unless you gift a tax-free lump sum) and increased longevity putting more pressure on retirement finances, it’s important to get advice from an independent financial planner on the most appropriate way for you to mitigate your bill.