The 2026/27 tax year started on 6 April 2026. While you have until 5 April 2027 to use tax-efficient allowances and exemptions, making a plan now could be valuable.
Here are four powerful reasons to consider your tax strategy for the current tax year.
Avoid last-minute stress as the end of the tax year approaches
Using tax year allowances and exemptions is often associated with the end of a tax year.
However, leaving decisions until the last minute could mean it’s more stressful than it needs to be, and you might make a rushed decision that isn’t right for you. In addition, delays could occur, which means you miss the 5 April 2027 deadline.
Instead, using the start of the year to review decisions means you have plenty of time to assess what’s right for you.
Potentially benefit from an additional year of interest or growth
If you have a lump sum to save or invest, using allowances early in the tax year means you could potentially benefit from additional months of interest or returns. When you consider the effect of compounding, you could be better off using some of your allowances now.
One option to consider is your ISA annual subscription limit. In 2026/27, you can place up to £20,000 into ISAs. You can choose to save or invest in an ISA to suit your goals.
Adding a lump sum to ISAs at the start of the tax year or drip-feeding contributions over the months could yield better results than waiting until April 2027, particularly when you factor in compounding.
Similarly, the pension Annual Allowance is £60,000 or 100% of your annual income, whichever is lower, in 2026/27. This is the amount you can add to your pension this tax year while retaining tax relief.
Your pension is usually invested. Depositing a sum now could mean your additional contribution has a longer period to potentially deliver returns and boost your retirement savings.
Remember that all investments carry some risk, and it’s important to understand what level is appropriate for you. Investment returns are not guaranteed, and you could lose money.
Create a strategy for disposing of assets
If you plan to dispose of assets, you might need to pay Capital Gains Tax (CGT) if you make a profit.
The Annual Exempt Amount means you can make up to £3,000 in gains in 2026/27 before tax may be due. Reviewing your options now could allow you to create an effective strategy for disposing of assets.
For example, if you have several assets to dispose of, you might spread the sale of them across the current and next tax years to use the Annual Exempt Amount for both years. Alternatively, you can pass on assets to your spouse or civil partner tax-free, which may allow you to use both your allowances.
Setting a plan early in the tax year means you have time to consider your tax position and goals, and adjust your plan if necessary.
Plan whether to gift assets this year
Over the course of the year, you might want to gift assets to loved ones. This could support beneficiaries and also make sense from an Inheritance Tax (IHT) perspective.
In 2026/27, the nil-rate band is £325,000. This is the amount you can pass on when you die before your estate might become liable for IHT. Fortunately, there are ways to mitigate a potential IHT bill, including passing on your assets during your lifetime.
Not all gifts are immediately outside of your estate when calculating IHT. Some gifts may be included in your estate for up to seven years, so making use of these allowances might be an important IHT strategy.
In 2026/27, gifting allowances include:
- Up to £3,000 to one or more people, known as the “annual exemption”, which you can carry forward for one tax year
- Up to £250 per person, so long as another allowance has not been used on them
- Gifts for a wedding or civil partnership of £5,000 for your child, £2,500 for your grandchild or great-grandchild, and £1,000 for anyone else
- Regular gifts that come from your income. There is no limit on how much you can give, but you must be able to maintain your usual living costs after making the gift.
Reviewing your plans now means you can make them part of your budget and overall plan. It could also allow you to identify effective ways to support your family and friends.
Get in touch
Your financial circumstances and goals will affect which allowances and exemptions are appropriate for you. If you’d like to discuss how you might improve your tax efficiency in 2026/27 and work with us to create a tailored plan, please get in touch.
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 value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
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.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
The Financial Conduct Authority does not regulate tax planning, Inheritance Tax planning or estate planning.
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