7 things to get right at the start of the new tax year

13/05/2026

The end of the tax year gets most of the attention – and rightly so. But the weeks after 6 April matter just as much. You now have a full set of allowances ahead of you and twelve months to use them well. A little thought now can save a lot of scrambling later.

Here’s a rundown of the key areas to focus on.

1.     Check your tax code

If you’re employed, check your first payslip of the new tax year. The numbers within your tax code refer to the amount of tax-free income you’re entitled to that year. For most people, it should read 1257L – reflecting the £12,570 Personal Allowance.

But around a third of tax codes contain errors; they can go wrong for all sorts of reasons: a second income, an unreported benefit, or an underpayment from a previous year being collected through this year’s code. If something doesn’t look right, contact HMRC early. It’s much easier to fix at the start of the year than to reclaim overpaid tax at the end of it.

2.     Keep on top of bank interest

With savings rates now around 4%, there’s an opportunity to earn strong returns, but you may need to declare these returns to HMRC if they exceed your Personal Savings Allowance, by completing a self-assessment.

The allowance is £1,000 for basic rate and £500 for higher rate tax payers. It’s worth keeping track from the start of the year rather than trying to piece things together later.

3.     Start your ISA early

You have a fresh £20,000 ISA allowance from 6 April. The earlier you use it, the longer your money benefits from tax-free growth. You don’t need to invest the full amount in one go – setting up a regular monthly contribution is a simple way to make steady progress throughout the year.

ISA allowances can’t be carried forward, so anything unused by next April is gone. The same applies to a Junior ISA (£9,000 per child) and a Lifetime ISA (up to £4,000 with a 25% government bonus, for those under 50).

While 2026/27 remains at £20,000, for the following tax year (April 2027), the Cash ISA limit for those under 65 is scheduled to drop to £12,000.

4.     Plan your pension contributions for the year

The annual pension allowance remains at £60,000 – and unlike ISAs, unused allowance from the past three years can be carried forward. If you had lower contributions in previous years, that’s a significant window of opportunity.

Pensions remain one of the most tax-efficient tools available. For every £1,000 you contribute, the government adds £250 in basic-rate relief. Higher-rate taxpayers can claim a further £250 through self-assessment. For business owners, employer contributions are also an allowable business expense – this means they can be deducted from the company’s taxable profits, which reduces your overall Corporation Tax liability.

It’s also worth thinking about family. You can contribute up to £2,880 per year into a pension for a non-earning spouse, child or grandchild, and the government will top it up to £3,600 automatically. Over decades, even modest annual contributions can grow into something substantial.

One to watch: National Insurance exemptions on salary sacrifice arrangements are set to be capped at £2,000 from 2029. If you currently benefit from unlimited salary sacrifice through your employer, it’s worth making the most of it while you can.

5.     Watch the £100,000 income trap

If your income is likely to fall between £100,000 and £125,140 this year, planning ahead now is essential. In this band, you lose £1 of Personal Allowance for every £2 you earn over £100,000, creating an effective tax rate of around 60%.

Pension contributions are the most straightforward way to bring your taxable income back below the threshold. For business owners, there may also be flexibility around how and when you take income. The key is to think about this now, when you still have a full year of options, rather than discovering the problem when your tax return is due.

6.     Be smart about Capital Gains Tax

The Capital Gains Tax (CGT) allowance is now just £3,000 per person – a fraction of what it was a few years ago. Combined with higher CGT rates (18% for basic-rate and 24% for higher-rate taxpayers), even routine transactions such as transferring money from a general investment account to an ISA can now trigger a tax charge.

The start of the year is a good time to plan how you’ll manage this. If you’re likely to sell investments or move funds, spreading transactions across the year – and between spouses where possible – helps you stay within the available allowances. And if you have unrealised losses, make sure they’re registered so they can be offset against future gains.

7.     Get ahead on Inheritance Tax planning

With Inheritance Tax (IHT) thresholds frozen and pensions set to be included in estates from April 2027, this is an area where time is your biggest asset. A few things to consider:

• Use your £3,000 annual gifting allowance – it must be used within the tax year or carried forward for one year only.
• Start the seven-year clock on larger gifts as early as possible.
• Consider gifts from surplus income – these can be immediately exempt, with no seven-year wait.
• Review your will and ownership structures – switching from joint tenants to tenants in common can protect the residential nil-rate band for estates over £2 million.
• Think about trusts – a discounted gift trust lets you retain income while moving capital out of your estate; a loan trust can ring-fence assets within a family.

From April 2026, 100% Agricultural and Business Property Relief is capped at £2.5 million (transferable between spouses), with 50% relief above that. If this affects you, review your position early.

A note for business owners

With dividend tax rates rising, it’s worth revisiting the balance between salary, dividends and pension contributions. Check you’re making the most of legitimate business expenses too – relevant life plans, family members’ Personal Allowances, and running private medical insurance through the company can all make a difference.

Start the year with a plan

Tax planning works best when you think about it early. If any of this has raised a question – or you’d like to get your annual planning meeting in the diary – just get in touch. We’re here to help you make sure your money is working as hard as it can.