Tax Year End – The impact of Budgets past, present and future

Certain dates are fixed in the financial calendars, and none is more important than the end of the tax year.

In the UK, the tax year has started on 6 April since 1800, yet it still manages to catch some clients by surprise. 

Each year, individuals have access to a wide range of tax allowances and exemptions, many of which operate on a ‘use it or lose it’ basis. As the tax year draws to a close, it’s essential to ask clients:

Have you used your tax allowances? Are there exemptions that need to be maximised?

As financial planners, you understand the long-term benefits of tax-smart planning. Numerous studies highlight how annual tax-efficient decisions can significantly improve financial outcomes. Ensuring that pension annual allowances, ISA allowances, IHT exemptions, and dividend and savings allowances are utilised each year is vital.

The tax benefit can add up quickly, as an example.

• £60,000 pension contribution creates £24,000 income tax relief for a higher rate taxpayer
• £20,000 into an ISA gives tax-free growth and income for as long as the money is inside the tax wrapper
• £6,000 annual gift for a married couple can save £2,400 in inheritance tax.

There are many other exemptions available, and their value compounds when used consistently over time.

This has always been an important part of financial planning, and recent changes in the 2024 and 2025 Budgets make it even more critical. As taxes potentially rise, mitigating their impact annually becomes increasingly important.

What can the spectres of Budgets past, present and future teach us about tax year end planning?

Budgets past – October 2024

Significant changes were detailed in the Autumn Budget in October 2024.

Many of the changes which significantly impacted financial planning, were focussed on inheritance tax and capital gains tax.

• Defined Contribution pensions were brought into the scope of inheritance tax from April 2027.
• 100% Business and Agricultural Relief will be capped at £1 million from April 2026, creating IHT challenges for many business owners and farmers. It was announced in December 2025 that the £1 million limit for agricultural relief would be increased to £2.5m
• The inheritance tax thresholds and exemptions were frozen until 2030 (subsequently to 2031 in the 2025 Budget), potentially bringing more individuals into the scope of inheritance tax as asset values rise.
• Capital Gains Tax (CGT) rates increased to 18% and 24% from 10% and 20% for non-residential property assets.

Alongside the IHT changes, there were further alterations to employer National Insurance contributions, Domicile and Business Asset Disposal Relief.

Each tax year, planning opportunities exist to help manage the changes outlined in the 2024 Budget.

Where they are impacted by the inheritance tax changes, clients may consider making IHT gifts which use the annual exemption, making use of the gifts from income exemption understanding the future impact if asset values rise against frozen bands.

The change in CGT rates increases the benefit of utilising the annual CGT exemption and utilising annual ISA allowances to mitigate the impact of these changes.

Some of the changes are yet to come into force, giving clients time to consider planning strategies as we move through tax years.

Budgets present – November 2025

November 2025 saw the much anticipated delivery of the Chancellor’s Autumn Budget. After months of rumour and speculation, the release provided certainty for planners. As with 2024, there were potentially significant changes for the financial planning profession, including.

• Income tax thresholds frozen until 2031, an extension of the freeze for a further 3 years.
• The ISA annual subscription limit would remain at £20,000 with cash limit reduced to £12,000 for under‑65s from April 2027. 
• National Insurance relief on pension Salary Sacrifice limited to £2,000 from April 2029

These key changes, alongside a number of others, again demonstrate the value to clients in use their annual tax allowances and exemptions.

Where income increases, and bands remain frozen, clients can be pushed into higher rates of tax. Pension contributions, in particular, offer an effective way to offset tax increases while saving for retirement. Utilising generous allowances and upfront tax relief should be considered annually, especially while full NI relief on salary sacrifice is available.

The changes to ISA subscriptions and salary sacrifice don’t change until 2027 and 2029 respectively. For impacted clients, where appropriate, there is an opportunity to maximise the allowances in the tax years prior to the change.

Budget future – the unknown

We cannot predict how tax allowances and exemptions will change in the future. Recent years have shown how quickly things can shift, underscoring the importance of using allowances and exemptions annually. Asking clients, ‘Which allowance would you miss most if it were removed?’ can help them appreciate the value of acting now.

Ultimately, it has always been important to ensure clients are appropriately using their allowances and exemption on an annual basis. As you have seen, the value and impact of doing so will only increase for many clients following potential increased taxation for many.

While strategies focus on mitigating specific tax changes are important, the true value of financial planning lies in guiding clients through these adjustments and aligning them with their goals. 

In an uncertain tax landscape, proactive planning isn’t just beneficial—it’s essential. Encourage clients to review and use their allowances each year to stay ahead of potential changes.

Simon Martin, Technical Distribution Manager

Find out more

Speak to your usual Aviva contact or visit our Tax Year End page to find out more. Tax year end hub - Aviva