Mastering Year-End Tax Planning for 2024/25: Strategic Moves to Maximize Reliefs and Minimize Liabilities Before 5 April
- Nitin Punera
- Apr 2
- 10 min read
The tax year ends on 5 April 2025. If you haven’t reviewed your finances yet, now is the time.
Why? Because unused allowances don’t carry over. And frozen thresholds are quietly increasing your tax burden.
For example:
The personal allowance has stayed at £12,570 since 2021.
The higher rate threshold remains at £50,270.
More people are paying 40% or 45% tax simply because of inflation.
Some individuals earning between £100,000 and £125,140 now face an effective income tax rate of 60% due to the tapered loss of their personal allowance.
Year-end planning helps you:
Use reliefs and allowances before you lose them
Avoid unexpected tax charges
Prepare for upcoming rule changes
Make informed decisions on income, pensions, and investments
This isn’t just about saving money today. It’s about being ready for tomorrow.
Start by checking where you stand. Then act before the window closes.
Year-End Tax Planning: Income Tax & National Insurance
Your income tax bill can increase quickly if you cross key income thresholds.
Here’s what to focus on before 5 April:
A. The 60% Trap
If you earn between £100,000 and £125,140, you lose your personal allowance.
This creates a steep, hidden tax cost.
To reduce your income in this band, you can:
Make pension contributions
Donate to charity through Gift Aid
Shift income to a lower-earning spouse or civil partner
B. Additional Rate Exposure
Income above £125,140 is taxed at the highest rates.
You can manage this by deferring income, spreading it over time, or reducing taxable income through allowable deductions.
C. National Insurance Changes
The rates have gone down slightly for both employees and the self-employed.
But don’t rely on that alone — the bigger savings come from strategic income planning.
D. Use Both Personal Allowances
If your partner pays less tax, consider:
Gifting them income-generating assets
Allocating dividends or savings income
Using the Marriage Allowance if you qualify
Make sure the transfer is genuine and unconditional.
Pensions and Retirement Contributions
Pensions are one of the most effective tools for reducing your tax bill.
They also help secure your long-term financial future.
Before 5 April 2025, review how much you’ve contributed — and how much more you can still add.
A. Maximise Your Annual Allowance
Each year, you can contribute up to your annual allowance and receive tax relief.
In most cases, the limit is £60,000. If your income is higher, this amount may be reduced.
Not used your full allowance in the last three years. You might be able to carry it forward — but only if you were part of a pension scheme in those years.
Actions you can take:
Check your total contributions this year
Review unused allowances from 2021/22 onwards
Speak to a financial adviser before making large contributions
B. Lifetime Allowance Abolished
The pension lifetime allowance has been removed.
But there’s still a limit on how much you can take tax-free.
Most people can withdraw 25% of their pension tax-free — up to £268,275.
Some have protection that allows a higher limit. These protections are still available but will close on 5 April 2025.
Review your options if:
You expect to take benefits soon
You have a large pension pot
You’ve applied for protection (like Fixed or Individual Protection 2016)
Capital Gains Tax (CGT) Planning
Capital Gains Tax (CGT) applies when you sell assets like shares, property, or a business for more than you paid.
Planning before the tax year ends can help reduce how much you owe.
A. Use Your Annual Exemption
Each person has a CGT allowance — but it resets every year.
In 2024/25, the exemption is just £3,000. If you don’t use it, it’s gone.
To make the most of it:
Review your portfolio
Consider selling assets with gains before 5 April
Reinvest if it fits your strategy — but watch out for the 30-day rule on shares
B. Offset Gains with Losses
Have you made a loss on any investments? You can use that to reduce gains elsewhere.
You can also claim unused losses from earlier years, but only if they were reported on time.
Deadline alert: Losses from 2020/21 must be claimed by 5 April 2025.
C. Plan for Reliefs
Some types of gains qualify for lower tax rates.
You may benefit from:
Business Asset Disposal Relief (BADR): 10% tax on qualifying business sales, up to £1 million lifetime
Investors’ Relief: 10% tax on certain shares — now limited to £1 million lifetime after 30 October 2024
Check the qualifying conditions early. Timing matters.
D. Property and Reporting Rules
Selling UK residential property? You may need to file a separate CGT return.
This must be done within 60 days of completion. Late filings could lead to penalties.
Changes Affecting Furnished Holiday Lets (FHLs)
If you own a Furnished Holiday Let, the current tax benefits are coming to an end.
From 6 April 2025, FHLs will be taxed the same as long-term rental properties.
This means:
A. Loss of Key Tax Reliefs
You will no longer be able to:
Deduct full mortgage interest from rental income
Claim capital allowances on furniture and equipment
Treat profits as “relevant UK earnings” for pension contributions
Access CGT reliefs like Business Asset Disposal Relief or rollover relief
These changes can significantly impact your tax position and long-term returns.
B. Income Splitting Will Change
From 6 April 2025, if you and your spouse jointly own an FHL, profits will be split 50:50 for tax purposes — regardless of who earns more.
To use a different split, you must:
Ensure ownership and income shares are genuinely unequal
Submit a Form 17 to HMRC
File the declaration on or after 6 April 2025 (it can’t be backdated)
C. Planning Actions Before Year-End
Act now to:
Review whether to sell before 5 April 2025 to benefit from current CGT reliefs
Consider bringing forward large capital expenses while allowances still apply
Evaluate pension contributions from 2024/25 profits — this will no longer be an option after the regime ends
If you’re planning to restructure, speak to a tax adviser. These changes may require a shift in your investment strategy.
Investment Structuring and Income Strategy
How you hold and receive income from your investments matters.
With rates and reliefs tightening, now is the time to assess whether your current structure is tax efficient.
Think about:
Personal ownership
Joint ownership with a spouse or partner
Holding through a company
Using a trust
Each has different tax outcomes for income, capital gains, and inheritance.
For example:
Companies pay 25% corporation tax on profits
Individuals may pay up to 39.35% on dividends or 24% on capital gains (higher rate)
Trusts come with complex reporting and higher rates if mismanaged
There’s no one-size-fits-all. The right approach depends on your goals and tax profile.
B. Plan Income Extraction Wisely
If you own a company, consider:
Paying dividends before 5 April 2025 to use the £500 allowance
Balancing salary and dividends for optimal tax treatment
Timing bonuses and expenses to stay in lower tax bands
If you receive investment income personally, check:
Whether you’ve used your full dividend and savings allowances
If it makes sense to transfer income-generating assets to a lower-earning spouse
Whether salary sacrifice or pension contributions can help reduce your tax burden
C. Don't Overlook the Small Wins
Use the £1,000 Personal Savings Allowance (if you're a basic-rate taxpayer)
Maximise your ISA before year-end
Review bank accounts, bonds, and joint investments for efficiency
Using Other 2024/25 Allowances and Exemptions
Some allowances are small — but together, they can make a noticeable difference.
These opportunities expire on 5 April. Use them or lose them.
You can gift up to:
£3,000 each tax year without any IHT implications
An extra £3,000 from the previous year if unused
Small gifts of £250 to as many individuals as you like (if they don’t also get the £3,000 gift)
These gifts fall outside your estate immediately.
If you’re making regular gifts from surplus income, document the pattern and intent. This can secure long-term IHT savings.
B. ISAs and Junior ISAs
ISAs offer tax-free income and gains.
For 2024/25:
You can invest up to £20,000 into ISAs
Junior ISAs allow up to £9,000 per child
You don’t pay income tax or CGT on returns. You can split the ISA across cash, stocks and shares, and other eligible investments.
Tip: ISAs don’t count toward your dividend or savings allowances — they sit outside the tax system entirely.
C. Stakeholder Pensions for Non-Earners
Non-earners (including children) can contribute up to £2,880 per year (£3,600 gross).
This is a simple way to build retirement savings and receive 20% tax relief — even without taxable income.
The pension grows tax-free and is locked in until age 55 (increasing to 57 from 2028).
D. Tax-Efficient Investments
If you’re looking for high-risk, high-reward options — and generous tax reliefs — consider:
Enterprise Investment Scheme (EIS):
Up to £2m investment (if £1m goes to knowledge-intensive companies)
30% income tax relief
CGT deferral options
Seed Enterprise Investment Scheme (SEIS):
Up to £200,000
50% income tax relief
CGT exemption if held for 3 years
Venture Capital Trusts (VCTs):
Up to £200,000
30% income tax relief
Tax-free dividends
These are complex and high-risk. Make sure you understand the rules and consult a regulated adviser before investing.
International and Non-Domicile Considerations
If you’re non-UK domiciled or have offshore income, big changes are coming.
The current remittance basis will end on 5 April 2025. After that, a residence-based tax system takes over.
Now is the time to act.
In 2024/25, you can still use the remittance basis if you're eligible.
This means:
Foreign income and gains are only taxed if brought into the UK
If your unremitted foreign income is under £2,000, you qualify automatically
You can opt out if it’s more beneficial to be taxed on the arising basis
Once the year ends, this option disappears.
From April 2025, domicile status will no longer determine how you’re taxed.
Instead:
If you’ve been UK resident for 4 years or less, and were non-UK resident for 10 years before, you can claim relief on foreign income and gains
Once you exceed 4 years of UK residence, worldwide income and gains become fully taxable
This means future planning will depend entirely on residence — not where you consider your permanent home.
A new window opens in 2025/26 to bring foreign income and gains into the UK at a reduced rate.
12% tax applies in 2025/26 and 2026/27
15% applies in 2027/28
Only pre-6 April 2025 untaxed income/gains qualify
You must have claimed the remittance basis for those years
This is a limited opportunity to clean up offshore funds at a lower cost.
Have you claimed the remittance basis since 2020/21?
If yes — and you want to use foreign capital losses — you must make an election.
The deadline to claim for 2020/21 is 5 April 2025.
Without an election, you can’t offset these losses against gains — even in future years.
The protected trust regime is also ending.
If you’ve set up a trust while non-UK domiciled:
The settlor may now be taxed on trust income and gains
UK-resident beneficiaries will no longer be able to use the remittance basis
Distributions from the trust may become fully taxable after April 2025
You may need to review your trust structure and consider distributions before year-end.
Inheritance Tax (IHT) Changes from 2025/26
From 6 April 2025, Inheritance Tax will become residence based. This is a major change.
If you’ve done any estate planning using non-UK domicile status, you may need to reassess everything.
A. Move to a Residence-Based IHT System
Right now, IHT is based on your domicile.
But from April 2025:
You’ll be within scope for IHT on your worldwide assets once you’ve been UK resident for 10 out of the last 20 tax years
If you leave the UK, you may exit the IHT net faster — depending on how long you were previously resident
This could bring offshore assets into the UK IHT system — even for people who never considered themselves UK domiciled.
You may also lose the benefit of non-UK domiciled spouse exemptions under the current rules.
B. Planning Considerations Before 5 April
Here’s what you should consider now:
Use your £3,000 annual exemption — or £6,000 if you didn’t use last year’s
Make small gifts (£250) to as many people as you like
Start or maintain a pattern of gifting from surplus income — but document it properly
If one spouse is currently non-UK domiciled, review the structure of joint ownership and gifting
Review and update your will, especially if you own assets overseas
Make sure you meet the conditions for Business Property Relief or Agricultural Relief, if applicable
Waiting until after 5 April 2025 could lock you into the new regime with fewer options.
Tax Administration and Reporting
Good tax planning means more than just using reliefs. It also means keeping your records straight and meeting key deadlines.
Don’t let admin errors undo smart strategy.
A. Keep Strong Records
HMRC expects you to back up what you claim.
You should:
Keep receipts, statements, and logs for at least 5 years after the 31 January filing deadline
For offshore matters, HMRC can look back up to 12 years
If HMRC believes there was deliberate error, they have 20 years to investigate
This applies whether you’re a business owner, landlord, or investor.
B. CRS and FATCA Reporting for Trusts
If you manage or benefit from a trust, reporting rules may apply.
Trusts that qualify as “financial institutions” must:
Review the tax residence of all account holders (including settlors and beneficiaries)
Report to HMRC by 31 May 2025 under the Common Reporting Standard (CRS)
Check for any US reporting obligations under FATCA
This is especially relevant for professionally managed trusts with investments.
C. Key Time-Sensitive Claims
Before 5 April 2025, check if you need to:
Claim relief on overpaid tax from 2020/21
Make any capital loss claims for 2020/21
Finalise a foreign loss election if you used the remittance basis
Top up National Insurance contributions for earlier years (where allowed)
Missing these deadlines can permanently reduce your tax relief options.
Final Thoughts & Call to Action
Tax planning isn't just about compliance — it's about protecting your income and wealth.
With the 2024/25 tax year ending on 5 April, this is your final window to take smart, practical steps.
At AMS Admin Services, we help individuals, families, and business owners:
Maximise reliefs before they’re lost
Avoid unexpected tax liabilities
Prepare for changes coming into effect from April 2025
Plan across income, pensions, investments, property, and international assets
Whether you're a contractor, landlord, company director, or high earner, these changes may impact your position.
Now is the time to act!
Book your tax review with AMS today — we’ll help you take the right steps before the deadline.
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