When the clock struck midnight on 5 April 2026, the 2026/27 tax year began.
You might not have stayed up until 12 am or poured a glass of champagne to celebrate this “new year” – or even noticed it had happened at all. However, the start of a new tax year brings fresh opportunities for saving, investing, and gifting.
It is understandable to let this time of year pass by without making plans for the months ahead, but if you do, you could lose out on valuable opportunities to grow your wealth.
Here are three ways you could make the most of the 2026/27 tax year with the help of your financial planner.
1. Consider paying into your ISAs at the start of the tax year, not at the end
If you have Individual Savings Accounts (ISAs) into which you wish to pay a lump sum, consider the timing of your contribution.
Across all your adult ISAs, you can pay in £20,000 per tax year, with some accounts having individual limitations (such as the Lifetime ISA, which limits contributions to £4,000 a year).
Research by Bestinvest reveals that ISA holders who pay in the full £20,000 at the start of the tax year, rather than the end, could be £66,439 better off after 30 years (assuming a 5% investment return).
Simply put, the more time your money gets to grow within an ISA, the more likely you are to see higher returns.
Of course, you may not have a lump sum ready and waiting to be paid into your ISAs in April of each year. In this instance, consider creating a monthly contribution schedule, giving your money more time to compound than if you saved it up and paid everything in at the end of the tax year.
Remember that interest, dividends, and investment gains within an ISA are free from Income Tax, Dividend Tax, and Capital Gains Tax – so you really could be putting your wealth to work by paying in early.
2. Increase your pension contributions up to the limit of your Annual Allowance
Your pension will form the bedrock of your income when you retire. But are your current contributions in line with your retirement expectations?
This time of year is a great opportunity to review your pension – especially when MoneyWeek reveals that 1 in 3 Brits aged 50 and above face a potential retirement income shortfall lasting 10 years or more.
Remember, you receive tax relief on your pension contributions up to the limit of the Annual Allowance. For most earners, the Annual Allowance is £60,000, unless:
- Your threshold income is over £200,000 a year
- Your adjusted net income is over £260,000 a year
- You have already flexibly accessed your pension.
In these instances, your Annual Allowance could be tapered down to a minimum of £10,000 a year.
Contributions up to the Annual Allowance get 20% tax relief at source. If you’re a higher- or additional-rate taxpayer, you could claim your marginal rate through Self Assessment each year, providing a further boost to your pension pot.
Paying in more than your Annual Allowance could lead to a tax charge that effectively negates the positive impact of tax relief, so it’s important to keep tabs on your contributions.
Once you know what your Annual Allowance is – which we can help you with, as this may change year-on-year – you could consider increasing your contributions. You can carry forward unused Annual Allowance for three previous tax years too.
Boosting your pension contributions, even by a seemingly small amount, could reap serious rewards later in life.
Indeed, Vanguard research indicates that topping up your pension contributions by just £100 a month could leave you around £7,000 a year better off in retirement, depending on your age and other factors.
So, now could be a good time to:
- Review how much you are paying into your pension already
- Ensure you are claiming tax relief at your marginal rate
- Increase your monthly contributions if appropriate for you.
Your financial planner can help you make sure you’re on track to have a comfortable retirement.
3. Use your full annual exemption for financial gifts
Finally, you may be thinking about the Inheritance Tax (IHT) due on your estate after you pass away. You might even have read our recent article on the rise in IHT investigations.
Indeed, existing IHT rules are making it harder for families to pass on wealth without falling into the tax trap.
To set the scene:
- The IHT nil-rate bands are frozen at £325,000 (main nil-rate band) and £175,000 (residence nil-rate band) until 2031. So, individuals who are leaving their main home to their children or grandchildren could bestow up to £500,000 as an inheritance, tax-free.
- Spouses and civil partners are entirely exempt from paying IHT.
- If you are married or in a civil partnership, you can combine your allowances, effectively doubling your nil-rate bands to £1 million. If one of you passes away first and leaves the estate to the other, the remaining spouse can claim their unused nil-rate bands.
While £1 million (for couples who meet the criteria) is a generous sum to be able to leave behind tax-free, the frozen thresholds mean that as your estate grows in value, more of it could be dragged over the threshold.
Plus, we’re now just one year away from a significant reform to IHT rules. From April 2027, unused pension benefits will be included in IHT calculations (they are currently exempt). This means even more of your wealth could be subject to IHT – so lifetime gifting could be a crucial part of your long-term estate plan.
Every tax year, each individual has an annual exemption of £3,000 (this is subject to change). You can give away this amount (or £6,000 as a couple) each year, spread across as many people as you like.
Doing so could reduce the value of your estate gradually, meaning less may be subject to IHT when you die, while giving your loved ones the opportunity to use the money in the here and now.
If you go above the annual exemption, your gift could be subject to IHT if you pass away within seven years; this is known as a potentially exempt transfer (PET).
Your financial planner can help you work out a gifting strategy that is affordable, sustainable, and suitable for your family.
Get in touch
Don’t let the beginning of the tax year pass you by. To learn more about maximising your wealth in this financial year and for the years to come, email admin@stonegatewealth.co.uk or call us on 01785 876222.
Please note
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The Financial Conduct Authority does not regulate estate planning or tax planning.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
Remember that taper relief only applies to gifts in excess of the nil-rate band. It follows that, if no tax is payable on the transfer because it does not exceed the nil-rate band (after cumulation), there can be no relief.
Taper relief does not reduce the value transferred; it reduces the tax payable as a consequence of that transfer.
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