With the end of the tax year fast approaching on 5 April 2025, now is the time to take action (if you haven’t already) and get your finances in order.

At TWP, we know how effective planning can be in helping businesses and individuals reduce their tax bills and maximise available allowances.

Here’s how you can make the most of this opportunity.

Making the most of allowances and reliefs

The UK tax system resets allowances annually. If you don’t use them, you lose them.

To maximise your savings, you’ll need to understand which reliefs you qualify for and take full advantage of them before the deadline.

Some key areas you should focus on include:

• Personal Allowance – If your income exceeds £100,000, your Personal Allowance is reduced. Structuring income effectively can help retain more of it. Consider making pension contributions or charitable donations to keep your income below this threshold.
• Dividend Allowance – Dividend Allowance has become much less generous over the years and is now just £500. This means business owners need to carefully plan dividend withdrawals, especially if they are in higher tax bands. If you have the flexibility, it may be worth delaying or staggering dividends over multiple tax years to mitigate the tax impact.
• Capital Gains Tax (CGT) exemption – With a £3,000 tax-free threshold, consider selling assets before 5 April 2025 to maximise exemptions. Spouses and civil partners can transfer assets between themselves tax-free, effectively doubling the CGT exemption.
• Pension contributions – Tax relief is available on contributions up to £60,000 per year, making this an efficient way to reduce taxable income while saving for the future. If you have unused annual allowance from the previous three tax years, you may be able to make additional contributions.
• ISAs and tax-free savings – You can save up to £20,000 in an ISA each year. Putting in the full amount helps your money grow tax-free, and you won’t pay tax when you withdraw it, making ISAs a smart way to save.

Key tax considerations for businesses

Businesses should ensure they are operating as tax-efficiently as possible before the year-end. Key steps include:

• Review Corporation Tax liabilities – With rates as high as 25 per cent, identifying deductions and allowances can reduce your liability.
• Maximise Capital Allowances – The Annual Investment Allowance (AIA) provides relief on up to £1 million in qualifying expenses. Purchasing equipment or making business improvements before year-end could provide significant tax savings.
• Claim Research & Development (R&D) tax relief – Companies investing in innovation should check if they qualify for enhanced tax reliefs. Changes in 2024 impact how claims are made, so working with someone who specialises in R&D relief (like us) can ensure compliance and maximised benefits.
• Review profit extraction – Directors should balance salary, dividends, and pension contributions for maximum tax efficiency. With increasing tax rates on dividends, considering alternative methods of extracting profits may be beneficial.
• Manage directors’ loan accounts – Any outstanding balances should be repaid within nine months of the company’s year-end to avoid a 33.75 per cent tax charge.

Planning for families and individuals

Effective tax planning is important for individuals and families, helping to reduce personal tax liabilities and maximise savings.

Here are some strategies to consider:

• Inheritance Tax (IHT) planning – Using the £325,000 nil-rate band and the £175,000 residence nil-rate band can help minimise future liabilities. Gifting assets early can help reduce the taxable estate, with many gifts becoming IHT-free after seven years.
• Gift aid donations – Donating to charity can reduce taxable income, with higher-rate taxpayers able to claim extra relief. If you plan to donate, ensure that you keep track of all Gift Aid declarations for tax reporting purposes.
• Child benefit and tax-free childcare – Households earning between £60,000 and £80,000 should review their income structure to minimise the impact of the High-Income Child Benefit Charge. Making pension contributions or other adjustments can help keep earnings within the optimal range.
• Tax-efficient investments – Consider options such as Venture Capital Trusts (VCTs) or Enterprise Investment Schemes (EIS), which offer attractive tax reliefs in exchange for investment in high-growth companies.

Get personalised expert tax planning from TWP Accounting

Many people make costly errors by leaving tax planning too late or missing key opportunities.

Tax rules change frequently, and what was tax-efficient last year may not be the best approach this year.

Contact TWP if you are unsure of the best approach to minimise your tax liabilities and maximise your take-home pay.

Our advisors will provide you with advice tailored to your specific circumstances.

Download our free Tax Planning Guide today for expert insights and tips.

Want to make the most of your year-end tax planning? Contact us today!