Costs are rising in 2025. Water bills have risen, with some UK regions experiencing a 26% rise. Council tax is also up by an average of 6.1% compared to the previous year. With speculation of further tax rises in the Autumn, now is a good time to reassess your tax plan.
Below, our financial planners in Burnley offer some tax-saving tips for the summer, to help you maximise your income and wealth. For more information or to discuss your own goals with us, please get in touch for a free consultation.
Optimise your ISAs
You may know that ISAs (individual savings accounts) offer some powerful tax advantages. However, are you taking full advantage of them?
In 2025-26, you can contribute up to £20,000 to your ISAs. Within this “wrapper” all interest, capital gains and dividends are earned without their respective taxes.
One issue is that many people leave their ISA contributions to the last minute, before the 5th April deadline. This is when the tax year ends – at which point, all unused ISA allowance is lost. If your ISA planning is not considered until January, February or March, it leaves less time to organise your finances to maximise your ISA contributions.
One way to address this is spread out ISA contributions across the year. This summer in 2025 could be a good time to review our strategy to ensure you get the most from your ISAs.
Examine your Personal Allowance
A UK taxpayer can earn up to £12,570 per year without paying income tax in 2025-26. After that, the basic rate (20%) applies on income up to £50,270. Thereafter, the 40% higher rate (40%) applies on income up to £125,140 – at which point, the 45% additional rate applies.
This system can present challenges, but also tax planning opportunities. For instance, if your income is slightly above a tax band (e.g. the higher rate), it may be worth exploring ways to bring your income under it.
One idea is to consider using Gift Aid to make charitable donations. This can enable you to reduce your adjusted income and preserve more allowance. Another option is to use salary sacrifice (e.g. into a pension), which has the added benefit of boosting your pension pot.
Utilise other allowances
Outside of the ISA structure, it is possible to generate capital gains without facing capital gains tax (CGT). This is due to the Annual Exempt Amount, which lets an individual earn up to £3,000 in capital gains each year, tax-free.
One option to maximise this allowance is to spread out asset disposals across multiple tax years (if you can afford to wait). For instance, fully using it each year, over a decade, could allow for £30,000 of tax-free capital gains.
Another idea is to “combine” allowances with your spouse or civil partner. In 2025-26, spouses can gift or transfer assets between each other (e.g. owned shares). Then, the recipient can make the disposal using their own Annual Exempt Amount.
Dividends can also be maximised for tax efficiency. Each year, an individual can earn up to £500 in dividends outside an ISA without paying tax. This allowance is less generous than the Annual Exempt Amount for CGT, and it not everyone may be in a position to appoint their spouse as a director at their own company (so they can take dividends under their own dividend allowance).
As such, some taxpayers who want their portfolio to generate an income may prefer to focus their ISA allowance on dividend-paying investments.
Optimise your pension
Pensions are some of the most tax-efficient tools for building a retirement fund. In 2025-26, the standard maximum for annual pension contributions enjoying “tax relief” is £60,000 (or up to 100% of your earnings – whichever is lower).
Tax relief effectively allows you to send the money you would have paid to the government in tax into your pension instead. For instance, a basic rate taxpayer is entitled to 20% tax relief (i.e. it “costs” them 80p to put £1 into their pension).
Contributions reduce your taxable income, helping high earners retain child benefit or personal allowance. This is particularly useful for those earning over £100,000. For every £2 earned over this threshold, an individual’s Personal Allowance is reduced by £1 (introducing an effective tax rate of 60% on income between £100,000 and £125,140).
Yet, pension contributions could bring this person’s taxable income under £100,000, effectively reinstating their tax-free Personal Allowance for £12,570 of income.
Invitation
We hope these insights have been useful. If you want to ensure you’re taking the right steps to safeguard your financial future, please get in touch. We’d love to discuss your goals with you!
Please note:
Your capital is at risk. Investments can go down as well as up. Past performance is not indicative of future results. Tax treatment depends on individual circumstances and may change. This content is for information only and not investment advice. Any decision to invest is the reader’s own. Diversification is key to managing risk. Market volatility affects investment values. Inflation erodes savings. Liquidity risks may prevent quick access to funds.
