The new tax year begins on 6 April, and while it may not bring the same fanfare as your New Year’s Eve blowout, it deserves a note in the diary nonetheless. The start of the new tax year is an excellent time to take on some financial goals, but don’t worry: they are much more easily achieved than the gym goals you took on in January.
These tips could add more to your wallet, save you paperwork down the line and prepare you for future gains.
Get the most out of your pension contributions
Contributing to your pension is one of the most straightforward and effective ways to save on your tax bill. The money in your pension is sheltered from savings or capital gains tax but, what you contribute to your pension will benefit from income tax relief.
Put simply, your own pension contributions are tax-free. When a basic-rate income taxpayer pays in, the 20% of that contribution which they would have seen deducted as income tax is instead paid into the pension. Those with earnings in the higher rate tax band of 40% can receive 40% tax relief on the value of their pension contributions which were in that higher rate band.
However, those earning over £50,270 a year will need to check that they are getting complete tax relief which matches their tax band, rather than just the basic 20% rate. This can be missed with employers who use the ‘relief at source’ system to calculate tax and pension contributions.
In relief at source, when a salary is paid, tax is deducted from the salary before the contribution to the pension is paid. Then, the pension scheme automatically claims 20% tax relief from the government to boost the contribution. For example, a £200 contribution from salary after tax is boosted to £250. Those in a higher tax band are also repaid at the base level of 20%, when they could be due up to 40% or 45% in income tax relief.
Instead, higher or additional rate taxpayers must contact HMRC to get this additional relief on their pension contributions. Note that this extra relief will not go directly into your pension but instead be paid back to you over time, usually through reduced PAYE payments. If you want this extra money in your pension, you’ll have to put it in yourself. You can speak to your employer to understand what system they use, and if you participate in salary sacrifice or if your employer uses a net pay system instead, this will be taken care of automatically.
The online service works for the current tax year for people who don’t complete a tax return. If you’ve missed this for previous years, there’s no need to worry. You can make claims for the last four tax years using the self-assessment service.
Take advantage of tax-free childcare
Another area where the government offers boosts is childcare. The tax-free childcare scheme allows parents to pay into a government account specified for childcare costs like nursery. The government will pay in £2 for every £8 the parents pay in, maxing out at a £2,000 contribution from the government each year per child, or £4,000 if a child is disabled.
While this can be a great boost for families, it’s important to be aware of the rules because if they are breached, the money will be due back, creating a financial burden. This benefit is only available until the September after a child’s 11th birthday, or until 16 years old for children who are disabled. To access the benefit, both parents must be working at least 16 hours per week at minimum wage, and neither parent can be earning over £100,000 individually.
If a parent does earn over this £100,000 cap, they will have to repay the money that was contributed by the government. This is a ‘cliff edge’, meaning that leading up to the £100,000 cap all the tax-free childcare is available, and once it is breached, none is available. This can be an unpleasant surprise for those who receive a bonus or other payment that tips them over this threshold, so it’s important that both parents stay aware of their earnings.
The boost of combining allowances with your partner
There are a few financial perks that come along with walking down the aisle, especially for couples where one earns significantly more than the other, such as a stay-at home parent or a part-time worker.
The most financially significant boost from this is through using both partners’ ISA allowances. Each person has an ISA allowance of £20,000 per year, offering an umbrella that keeps investments and cash safe from tax. If you share finances with your partner, you can essentially double that allowance by using up both your own and your partners’ allowance.
If one partner is earning under the personal allowance of £12,570, they will also enjoy the benefit of having a savings allowance of £5,000. This is on top of the £1,000 ranging all the way down to zero allowance that other taxpayers receive depending on their tax band. This means that for cash held outside an ISA or other tax-protected wrapper, no interest will be taxed until it breaches that savings allowance amount as well as the personal allowance.
Even when that allowance is breached, the spouse in the lower tax bracket would be taxed significantly less on the interest. As the Cash ISA allowance is set to be reduced to £12,000 in April 2027, this could be a useful rule for those holding large amounts in cash, or those who use up their ISA allowances for investments.
Couples also can transfer assets between them to make full use of their allowances. For example, a basic-rate taxpayer would pay a lower rate of tax for capital gains, income and dividend taxes, so if one partner is in this bracket, it can mean less money lost to tax if those investments are held in their name. Partners will also each have a £3,000 yearly allowance for capital gains tax, so when it comes time to sell investments, splitting those sales between two can mean tax breaks.
However, it’s important to acknowledge that once you transfer the money to your partner, it is legally theirs. So, even in the case of divorce, you would not have an automatic claim to those funds. While it can be a great way to save, it is essential to be aware and comfortable with your partner having ownership of these funds.
Hannah Williford: Content Writer
Hannah joined AJ Bell in 2025 as an investment writer. She was previously a journalist at Portfolio Adviser Magazine, reporting on multi-asset, fixed income and equity funds, as well as macroeconomic impacts and regulatory changes...
