With the end of the tax year less than two months away, it’s the perfect time to get on top of your finances.

To help you get ahead, we’ve put together an end of tax year checklist with our five key areas to consider to make the most of the allowances available to you. Click here to download the full checklist.

Pensions are a great place to start

Your pension is one of the most tax-efficient ways to save for retirement. Money you put into your pension can reduce your tax bill today, investment growth within pensions is broadly tax-free and you can usually take 25% of your pension tax-free when you come to retire. All of this means that investing through a pension often means you end up with more (and the taxman ends up with less), relative to investing elsewhere. And the sooner you start, the more you might benefit.

If your pension planning has been neglected in recent years, we’re here to help. Below are some key areas to consider ahead of 5th April.

Pension contribution limits

Personal contributions are limited by the amount of your earnings. You (or generous friends or family on your behalf) cannot put more into pensions that you earn (though everyone can make personal contributions of up to £3,600 gross, if under age 75).

Total contributions (including employer contributions) are also limited by the ‘Annual Allowance’. This allowance depends on your taxable income and whether you have taken money out of your pensions in the past (and if so how), but the standard Annual Allowance is £40,000 gross.

Finally, the ‘Lifetime Allowance’ places a limit on the total amount you can build up in your pensions in the most tax-efficient way. For some, it might no longer make sense to carry on contributing.

We can help you to review your position relative to your earnings, the Annual Allowance and the Lifetime Allowance, and advise on the right contribution strategy for you and, if appropriate, on other tax-efficient ways to invest in your future.

Carry forward your unused Annual Allowances

For many, earnings and affordability are the limit, but for those with high incomes the Annual Allowance often comes into play. Those whose taxable income is more than £200,000 gross also need to be aware that their Annual Allowance could be tapered down from the standard £40,000 gross to potentially as little as £4,000 gross.

However, under current rules, you can normally carry forward any unused Annual Allowances from the previous three tax years (2017/18 to 2019/20). This gives some with high incomes a valuable chance to catch up on their pension contributions before it’s too late.

Make pension contributions on behalf of others

If you find yourself ‘capped out’ by the level of your earnings, the Annual Allowance or the Lifetime Allowance, you could consider making contributions on behalf of others, for example your spouse or children. Even new-borns can contribute £3,600 gross per year to pensions (or cry until their parents – or grandparents – do it for them).  With no risk that they’ll spend it before pensionable age, many like to know that the value of such gifts can compound over a lifetime.

Pensions and Inheritance Tax

Finally, pensions very rarely count as part of your estate for Inheritance Tax purposes, and current rules mean that so-called ‘money purchase’ pensions such as a SIPP (Self-Invested Personal Pensions) can often be inherited on very favourable terms. As a result, it can make sense to spend such pensions last, after you have depleted non-pension investments that do form part of your estate.


Pension contribution planning can be complex, and with several changes having been made to the rules in recent years, it can pay to take advice to ensure that you are making the most of the available tax advantages, while staying within the relevant limits.

If you wish to discuss any of the above or wider financial planning, please do not hesitate to get in touch.

About The Author

Ian McNally
Ian began his career in Financial Services in 1986 with Willis Faber and has subsequently gained a breadth of ...
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