Personal Tax – Year End Tax Planning Guide 2024/25

If you are considering significant capital or revenue expenditure in the near future, you may wish to consider bringing forward this expenditure and claiming tax relief in the accounts to 31 March 2025 (or your year end if different) to benefit from reduced tax liabilities a year earlier.   This could, for instance, include the purchase of equipment for use in the business or carrying out repairs to business premises.

Certain types of capital expenditure can qualify for tax relief. 

The Annual Investment Allowance (AIA) is £1,000,000.  Qualifying expenditure, for example plant and machinery, up to the Annual Investment Allowance will qualify for 100% relief. 

There are separate rules for capital allowances on motor cars with tax relief being given at 100%, 18% or 6% depending upon the type of vehicle purchased.  For cars bought from April 2021 the rates are:

• A first year allowance of 100% of the value of the car is available for new and unused electric cars until 5 April 2026
• A writing down allowance of 18% is available for second-hand electric cars
• A writing down allowance of 18% is available for new or second hand cars with CO2 emissions of 50g/km or less
• A writing down allowance of 6% is available for new or second hand cars with CO2 emissions which are over 50g/km.

As a reminder, ‘new and unused’ means ‘new and not second-hand’.  HMRC will accept, however, that a vehicle is unused and not second-hand even if it has been driven a limited number of miles for the purposes of testing, delivery, test driven by a potential purchaser, or used as a demonstration car.  An ex-demonstrator vehicle, therefore, should be accepted as new and unused for the purposes of capital allowances.

From 6 April 2025 HM Revenue & Customs will classify double cab pick-ups as cars rather than as goods vehicles.  For capital allowance purposes, entering into a contract to purchase a double cab pick-up prior to 6 April 2025 will secure the beneficial capital allowances treatment provided the date the obligation to pay for the vehicle is before 1 October 2025.

Investing in qualifying expenditure before 31 March 2025 could reduce your tax liabilities for 2024/25 by reducing your taxable profits for the year.  We will be happy to discuss this with you further.

You may wish to consider revaluing stock to reduce this to its current realisable value if you are carrying stock on your balance sheet and the value of the stock is now less than its original cost.  The effect of this is to reduce your trading profit or increase your losses for the year which, in turn, will also reduce your tax liabilities.

As a business owner, you could pay a non-earning spouse/partner or adult child a salary on which you will get tax relief and if paid at a certain level no income tax or National Insurance Contributions would be payable but credit would be given towards the State Pension.  The business can also pay an employer’s pension contribution to your spouse/partner’s pension plan and this would also reduce your tax liability.  The total package of salary, benefits and pension contributions must be justifiable when considering the actual work performed by your partner or adult child.  Please contact us to discuss this further.

If you are a Director or a Shareholder of a close company and have received funds from the company in the form of a loan, the company will incur a 33.75% tax charge if the loan is not repaid within nine months of the end of the company’s accounting period.  Therefore, repaying any loans within the nine month period will avoid the 33.75% tax charge.  

Income over £125,140 is taxed at 45% (or 39.35% on dividends) and it may be possible to avoid paying this additional rate by delaying the payment of a bonus or dividend until after 5 April 2025 to avoid exceeding this threshold.  Conversely, if your income is likely to exceed £125,140 in 2025/26 but is below this level in the current tax year, you may wish to consider bringing forward income to avoid the additional rate next year. 

This strategy should also be used to keep your income below £100,000, as once your income reaches this level you will start to lose your personal allowance.  Income falling between £100,000 and £125,140 has an effective tax rate of 60%.  If delaying a bonus or dividend is not an option, then you could consider sacrificing salary to bring your income down below one of these thresholds in exchange for a tax-free employer’s pension contribution.  

The Dividend Allowance charges the first £500 of dividends received at 0% regardless of your other income.  It is important that you do not miss out on this allowance if you have not already received dividend income of at least £500.  For total dividends above £500 the rates of tax are 8.75% for basic rate taxpayers, 33.75% for higher rate taxpayers and 39.35% for additional rate taxpayers. 

When bringing forward a bonus or dividend you must also consider the impact that doing so would have on your personal allowance, tax credit and child benefit claims and Student Loan repayments.

A car benefit will arise when a car is made available to a Director or employee for private use.  Broadly, the amount that the Director or employee is taxed on is based on the original list price of the car (plus the cost of any accessories) multiplied by the appropriate percentage which is based upon the vehicle’s CO2 emissions.

Currently the appropriate percentage applied to electric vehicles is 2% but this is increasing 1% a year from 6 April 2025 until 5 April 2028 and then by 2% a year to reach 7% in 2028/29 and 9% in 2029/30.  The appropriate percentages applied to most other vehicles will increase by 1% per year up to a maximum of 38% in 2028/29 and 39% in 2029/30.

Currently, the benefit in kind for hybrid cars with CO2 emissions of 1 to 50g/km is based upon the electric range.  From 2028/29 all cars with emissions of 1 to 50g/km will have an appropriate percentage of 18%, increasing to 19% for 2029/30.  This is an increase for all hybrid cars, but a particularly drastic increase for the most efficient of hybrid cars with an electric range of 130 miles or more where the appropriate percentage will increase from 5% to 18% on 6 April 2028. 

From 6 April 2025 double cab pick-ups with a payload of one tonne or more will no longer be treated as goods vehicles but will instead be treated as cars for benefit in kind purposes.  Transitional rules will apply for vehicles purchased, leased or ordered before 6 April 2025.  For these vehicles, the previous benefit in kind treatment may continue until the earlier of the disposal of the vehicle, the lease expiry or 5 April 2029. 

If your employer pays for the private fuel used in your company car you can avoid the fuel benefit charge for 2024/25 if you repay your employer in full for all of the private fuel before 6 July 2025.  It may be a worthwhile exercise for you to calculate the amount that you will need to repay to your employer as you may find that the amount to repay is much less than the tax charge arising on the benefit in kind (which will be based on the CO2 rating of the car applied to the car fuel benefit multiplier, currently £27,800).  Additionally, you may wish to consider changing your current company car to an electric car or a car with lower carbon dioxide emissions, for example a hybrid car, as this can save tax.  You may also wish to consider giving up your company car altogether and using your own vehicle for business travel and claiming a tax free mileage allowance from your employer instead.

Pension contributions made on behalf of directors and employees are a tax efficient means of extracting profits from the company.  Unlike personal pension contributions, employer contributions are not limited to 100% of earnings.  It is important to consider the Annual Allowance and to calculate any carried-forward relief when deciding upon the level of pension contribution that your employer should make.  Further information is included in the section “Personal pension contributions to reduce tax” in the Individuals section below.

Under the Tax-Free Childcare scheme eligible families get 20% of their annual childcare costs paid for by the Government.  The way it works is that for every 80p you pay into a Childcare Account, the Government will contribute 20p. This could mean up to £2,000 per child (the scheme assumes a maximum of £10,000 per year childcare costs per child. If you pay more, you won’t get more help).  Crucially, both parents need to be working in order to qualify and must earn the equivalent of 16 hours a week on average of the National Minimum Wage.

The Cycle to Work scheme is a UK Government tax exemption initiative introduced in the Finance Act 1999 to promote healthier journeys to work and to reduce environmental pollution.  It allows employers to loan bicycles and cyclists’ safety equipment to employees as a tax-free benefit provided that at least 50% of the bicycle’s use is for qualifying journeys (which includes home to work cycling).

Although it is not necessary, a salary sacrifice arrangement may be put in place, where the employee agrees to give up part of their pre-tax salary in exchange for the hire of a bicycle to be used as detailed above.  Although the bicycle remains the property of the employer, the salary sacrifice arrangement can save both employers and employees National Insurance as well as employees PAYE.

If, after the salary sacrifice arrangement has finished, the employee wishes to purchase the bicycle from the employer, HMRC has a set range of percentages based on the age and original cost of the bicycle.

A booklet entitled Cycle to Work Scheme – Guidance for Employers may be obtained from Gov.UK by using the following link which will provide you with further information:-

If an employer and employee wish to take advantage of the cycle to work scheme via a salary sacrifice arrangement, we suggest that they use one of the many cycle to work scheme providers to ensure the correct paperwork including consumer hire arrangement is correctly recorded.

If an employer does not require a salary sacrifice arrangement to be put into place, they may simply purchase a bicycle for the employee to use.

If you are married or in a civil partnership and one spouse/ civil partner has lower income, you could consider transferring income producing assets to the spouse/ civil partner with the lower income for the following reasons:

• to utilise lower tax rates where one spouse/civil partner pays higher rate (40%/33.75%) or additional higher rate (45%/39.35%) tax
•  to preserve the personal allowance where income for one spouse/civil partner exceeds £100,000

if Child Benefit is claimed, to reduce the income of the higher earning spouse/partner to mitigate the High Income Child Benefit Charge.

Married couples and civil partners may transfer 10% of their unused basic personal allowance (currently £1,260) to their spouse or civil partner.  Those receiving the marriage allowance must not be a higher rate tax payer and will benefit from a tax reduction of 20% of the transferred amount i.e. £252 (20% of £1,260).  Claims may be made online and can be backdated to include any tax year since 5 April 2020 that you were eligible for Marriage Allowance. 

If your investment income is at a level where you will lose your personal allowance, or pay tax at 45%, it may be worth considering investing in an insurance backed investment bond instead.  This type of investment can be relatively secure and has the added tax advantage that 5% of the original capital investment can be withdrawn each year tax-free.  Withdrawals which exceed this amount are taxable however, as are the gains arising on surrender. 

Income received from ISAs is tax free.  There are strict limits as to how much you can invest into ISAs in a tax year and for 2024/25 the maximum allowance is £20,000. 

If you haven’t utilised the maximum amount allowable for 2024/25 now could be the time to make your investment so that you do not lose out.  Your 2024/25 investment allowance must be used by 5 April 2025 or it will be lost. 

As a reminder, your ISA investment for the year of up to £20,000can be held in cash, or investments, or a mixture of the two.  Since 6 April 2024 it has been possible to open and pay into as many ISAs of the same type as you choose but you must not pay in more than the total ISA limit of £20,000. 

With the increases to the rates of savings interest paid over the last few years, sheltering interest from tax will be beneficial if your interest will exceed the savings allowance now or in the future.

Help to Buy ISAs, the government scheme designed to help you to save for a mortgage deposit to buy a home, closed to new applications on 30 November 2019.  If you opened your Help to Buy ISA before this date you can keep saving into your account until 30 November 2029. 

There is no minimum monthly deposit and you can save up to £200 per month and the Government will add a 25% cash bonus on any savings that you make, up to a maximum bonus of £3,000, and this bonus must be claimed by 1 December 2030.  The minimum amount you will need to have saved to qualify for a government bonus is £1,600, giving you a bonus of £400.

You can use a Lifetime ISA to buy your first home (costing £450,000 or less) or to save for later life.  You must be 18 or over but under 40 to open a Lifetime ISA.  You can save up to £4,000 each year into your Lifetime ISA until the age of 50 and the Government will add a 25% bonus to your savings, up to £1,000 per year. 

You can withdraw from a Lifetime ISA if you are buying your first home, if you are aged 60 or over, or in the event that you are terminally ill with less than 12 months to live.  If you make a withdrawal for any other reason (which is known as an ‘unauthorised withdrawal’) you will incur a withdrawal charge penalty of 25% of the amount withdrawn. 

A withdrawal charge may arise if you intend to use a LISA to purchase your first home if you have at some time owned or inherited a property.  If you think that this might apply to your situation, then we will be happy to discuss this with you.

Income Tax relief at 50% is obtainable when investing in qualifying SEIS start-up companies up to the annual limit of £200,000.  These are considered to be high risk investments. 

Investing in EIS qualifying companies attracts income tax relief at 30% on a maximum annual investment of up to £1million (rising to £2million provided £1million of this is invested in knowledge-intensive companies, which are companies engaged in technological or scientific innovation) for qualifying individuals.  Again these are considered to be high risk investments. 

The SEIS and EIS income tax relief may be given in the year that the investment is made or the previous tax year. 

Capital gains Tax deferral relief is also available for qualifying EIS investments enabling gains in the previous 36 months or following 12 months to be reinvested in EIS shares.

Both SEIS and EIS shares are normally exempt from Capital Gains Tax and Inheritance Tax (on the first £1 million from April 2026) if you received income tax relief on the investment.

Should you be considering making either a SEIS or an EIS investment, then please contact us further to discuss this.

As we approach the end of the 2024/25 tax year you should review your pension contributions made since 6 April 2024 and consider whether or not you should make a further one-off personal pension contribution before 5 April 2025.  Making a further pension contribution this tax year could save tax and could utilise any carried-forward relief from 2021/22 which will be lost if not used by 5 April 2025. 

Tax relief is available on personal pension contributions of up to 100% of relevant earnings or £3,600 (whichever is the highest), though this figure may be restricted by the annual allowance and any available carried-forward relief.

The standard annual allowance for 2024/25 is £60,000 plus any unused allowance brought-forward from any of the previous three tax years. 

Your annual allowance may be lower than £60,000 (known as the tapered annual allowance) if your taxable income for the year exceeds £200,000 or if you are only entitled to the Money Purchase Annual Allowance of £10,000 because you have previously flexibly accessed your pension savings.

The tax relief on a personal pension contribution will be at least 20%, rising to 40% and 45% for higher rate and additional rate taxpayers and even 60% for those whose income exceeds £100,000 where the personal allowance is withdrawn. 

Personal pension contributions are made net of basic rate tax.  If, for example, you wished to utilise £10,000 of your available pension relief, you will need to make a net contribution to your pension scheme for £8,000.  Your pension scheme will then reclaim the £2,000 tax credit from HM Revenue & Customs on your behalf, adding this to your pension savings to give you a gross contribution of £10,000.  If you are a higher rate taxpayer, you may claim an additional £2,000 of tax relief from HM Revenue & Customs and your £10,000 pension contribution will have cost you £6,000.

If your income is more than £100,000 you will lose £1 of your personal allowance for every £2 of income which exceeds £100,000, until your personal allowance is reduced to nil. Making a pension contribution before the end of the tax year could enable you to keep your personal allowance by reducing your taxable income to less than £100,000. 

In addition to the personal allowance taper, a pension contribution would reduce your adjusted net income for the High Income Child Benefit Charge and access to Tax-Free Childcare. 

A pension contribution would also reduce your taxable income and lower your Student Loan repayments.

Should your total pension contributions (including any employer contributions made for you) exceed your annual allowance plus any available brought forward relief from earlier years you will incur an Annual Allowance Charge.  If the charge is more than £2,000, and this has arisen because your pension contributions exceeded £60,000, you can ask your pension provider to pay HM Revenue & Customs for you out of your pension pot. If a charge has arisen for 2024/25 you have until 31 July 2026 to notify the scheme.

If, however, the charge has arisen because your pension contributions did not exceed £60,000 but, instead, exceeded the tapered annual allowance or the money purchase annual allowance you may still ask the pension scheme to pay the charge for you voluntarily out of the pension pot, but they do not have to do this and the scheme may have its own deadline for you to request this (possibly as early as 31 July following the end of the tax year).

You could consider making a pension contribution for a non-earning spouse/civil partner or child before the end of the tax year.  The maximum net payment that may be made will be £2,880 and HM Revenue & Customs will increase this to £3,600.

Currently, pension savers aged 55 or older may flexibly access their pension savings, though the government has confirmed plans to increase the minimum pension age to 57 from 6 April 2028.  Currently, 25% of the savings may be received free of tax (up to a maximum of £268,275) with the rest being treated as taxable income subject to income tax at your marginal rate.  It is possible to take the entire savings pension as a lump sum or draw down on the savings over a number of years.  Care must be taken and you should always consider the effect that drawing on your pension will have on your tax position and the ability to make future pension contributions.

Finally, the government have announced that from 6 April 2027 unused pension savings may be included in your estate when you die for Inheritance Tax purposes.  Previously pensions were seen as a tax-efficient way of passing on your wealth but this loophole will close with effect from 6 April 2027.

Did you know that you can get tax relief for any gifts to charity if you make a Gift Aid declaration?  You make your gift to the charity out of taxed income and the charity is able to claim back basic rate tax on the value of the gift.  Higher rate and additional rate taxpayers are also able to obtain higher rate or additional rate tax relief on the gift, therefore, you should ensure that the donation is made by the spouse/civil partner who pays the highest rate of tax.  

You should keep a record of all Gift Aid donations that you make but remember that you should only use Gift Aid when giving to charity if you are a taxpayer.  If you are not a taxpayer, you should consider stopping making charitable donations using Gift Aid as this will give you a tax liability.  You should instead make your donation without Gift Aid.

Gifts to charity are made free of Inheritance Tax, so remembering a charity in your Will can reduce the IHT that will be paid on your estate.

It is a good idea to consider your Capital Gains Tax position before the end of the tax year.

Each individual has an annual exemption for Capital Gains Tax (CGT) purposes.  For 2024/25 the exemption is £3,000 and this is the amount of gains that may be made tax-free this year.  If you have not already used your annual exemption for the tax year, you may wish to consider doing so now.  You should review your chargeable assets (for example, stocks and shares) and consider making disposals before 6 April 2025 to realise capital gains and utilise the annual exemption for the tax year before it is lost.

It is not possible to “bed and breakfast” shares by selling shares at a gain and immediately buying the shares back, as there are rules to prevent this from being effective.  Instead, you could consider buying the shares back after 30 days, or immediately repurchasing the shares by your spouse/ civil partner or within your ISA. 

As the end of the tax year approaches, this may also be a good time for us to review your Capital Gains Tax position for the year as you may wish to know if you have a Capital Gains Tax liability arising on disposals made since 6 April 2024.  This will give you an opportunity to consider taking action by 5 April 2025 to reduce any charge to Capital Gains Tax that may arise, for instance, by selling further assets which are standing at a loss.

A husband and wife, or civil partners, each have their own annual exemptions, therefore, transferring assets to your spouse or civil partner may mean that you can each make gains of £3,000 tax free for 2024/25.  Ideally, you should leave as much time as possible between making the transfer and the sale.

Capital Gains Tax for 2024/25 is payable on 31 January 2026.  You could delay a significant disposal until after 5 April 2026 to delay paying the tax liability on the gain by 12 months (but not a disposal of residential property – see below). 

A UK resident taxpayer is required to make a return and payment of Capital Gains Tax within 60 days following the completion of a disposal of a residential property in the UK.  These reporting requirements do not apply, however, where the gain on disposal is not chargeable to CGT, for example where the gains are covered by private residence relief. 

Non-UK resident taxpayers are required to report any capital gains arising on disposals of all UK land and property (not just residential property) within 60 days even if there is no Capital Gains Tax to pay.  If tax is due, this should also be paid within 60 days.

Sometimes shares and assets that you own become worthless.  Should this occur, you can crystallise the loss without disposing of the asset by making a negligible value claim.  In some circumstances, you can backdate the loss claim to either of the two tax years before the one in which the claim is made to offset the loss against gains arising in that earlier year.

Currently, Capital Gains Tax is charged at a rate of 18% for gains which fall within the basic rate band when added to other taxable income or at 24% for gains which exceed the higher rate threshold. 

Please note that prior 30 October 2024 the rate of Capital Gains tax charged on gains arising on the disposal of all assets other than residential property were 10% for gains which fall within the basic rate band when added to other taxable income or at 20% for gains which exceed the higher rate threshold.

Business Asset Disposal Relief (BADR) will apply to reduce the rate of Capital Gains Tax when you dispose of a business or shares in a private company.  Currently the rate of Capital Gains Tax payable on disposals qualifying for Business Asset Disposal Relief is 10% but this will increase to 14% from 6 April 2025 and to 18% from 6 April 2026.

Please contact us if you would like us to review your Capital Gains Tax position.

The Furnished Holiday Let (FHL) regime is coming to an end on 5 April 2025.  For income tax purposes, from 6 April 2025, an FHL property will be subject to the same rules as residential property businesses. 

Currently, for Capital Gains Tax purposes, when a qualifying FHL property is disposed of this will be a qualifying disposal for Business Asset Disposal Relief (BADR) and the rate of Capital Gains Tax payable will be 10%.  FHLs will no longer qualify for BADR after 5 April 2025. 

Additionally, roll over relief and gift hold over relief will no longer be available after 5 April 2025.  Therefore, an opportunity exists to give away an FHL property before 6 April 2025 to avoid a CGT bill from arising.

Where an individual ceases their qualifying FHL business they can claim BADR up to three years after the cessation.  Therefore, it may also be possible to claim Business Asset Disposal Relief on the sale of a FHL property after 5 April 2025 and before 5 April 2028 if the property ceases to qualify as a FHL before 6 April 2025.  We will be happy to advise you further on how to cease your FHL business before 6 April 2025 if you wish to reman eligible for this relief.

Inheritance Tax is the tax charge that arises on certain lifetime gifts, on the value of your estate when you die, and on certain transfers in and out of trusts. 

IHT is currently payable at 40% on assets exceeding the nil rate band, currently £325,000, subject to any available exemptions and reliefs.  The nil rate band has been frozen at this level since 2009 and is not now due to increase until 2030.

The unused percentage of a deceased spouse’s nil rate band is transferable on the death of the second spouse.  This could, potentially, give £650,000 of nil rate band before IHT becomes due. 

A main residence nil rate band has been available since 6 April 2017 where a residence is left to a direct lineal descendant.  Currently the main residence nil rate band is £175,000.  For couples, this will give an additional allowance of £350,000.  For estates with a net value that exceeds £2 million the main residence nil rate band will be tapered away. 

It is important that your Will is reviewed carefully to make sure that your estate will be entitled to the main residence nil rate band, which could be worth up to £140,000 in Inheritance Tax savings, as there are a number of qualifying conditions which must be satisfied to qualify for this additional relief.  In order to qualify, your estate on death must leave a residential property, which you must have lived in at some point during the period of ownership, to a direct lineal descendant.  Where someone has sold or given away their home, or downsized to a smaller property, they may still be able to get this relief.  If, on death, you have left your estate including the property to a trust arrangement, your estate may not qualify for this relief.

If you own your own home and have some savings and other assets then your estate could be liable to IHT when you die.  You should plan well ahead to minimise your liability to IHT. 

Proposals to drastically reform Agricultural Property Relief and Business Property Relief were announced in the Autumn Budget held on 30 October 2024.  Relief of up to 100% is currently available on qualifying business and agricultural assets with no financial limit.  From 6 April 2026, 100% relief will only apply to the first £1 million of combined agricultural and business property, with the relief reducing to 50% on the value that exceeds £1 million.  A further change was announced reducing the rate of relief from 100% to 50% for shares not listed on a recognised stock exchange, such as AIM.  We will be happy to discuss these changes with you.

A simple measure that you can use to reduce your potential IHT liability is to ensure that you fully utilise the annual exemption each year for gifts.  For 2024/25 the annual exemption is £3,000 and, if you have not used your exemption for the preceding year, this amount doubles to £6,000.  Additionally, any number of small gifts of up to £250 per recipient may also be made each year and gifts made in consideration of marriage or civil partnership up to certain limits are also exempt from IHT.  Although these limits are reasonably modest, they do add up over time.  Other gifts made which exceed these amounts could, potentially, be chargeable to IHT should you not survive the gifts for a full 7 years. 

Gifts to charities are exempt from Inheritance Tax.  Where 10% of the estate is left to charity the main rate of IHT is reduced to 36%.

Gifts made as part of your ‘normal expenditure out of income’ (not capital) are also exempt from IHT and we would be happy to advise you further on this.

You could consider introducing a programme of lifetime gifts to reduce the potential IHT liability on your estate.  To completely escape a charge to IHT you will need to survive the gift by seven years and no longer continue to benefit from the gift yourself.  The tax charge is tapered down where gifts exceed the nil rate band and are made between three and seven years before death. 

Lifetime gifts are one way that you may be able to significantly reduce your IHT liability with the added advantage that you can see the benefit that the gift has made in your lifetime. 

You could also consider taking out a policy of life assurance to cover any potential IHT liability arising on your death.  The policy should be written into trust in order that the proceeds do not form part of your estate when you die.

Please contact us if you would like us to review your potential liability to IHT and how best you may be able to plan to reduce this. You should also review your Will to ensure that it is tax efficient, up to date and continues to reflect your wishes.  We would be delighted to review your Will for you to ensure that it is tax efficient and we also offer a will writing service to assist you in updating your Will.  If you have not made a Will, then we would be happy to prepare one for you.  Please contact us if this is of interest to you.

Currently, you will need 35 qualifying years of National Insurance Contributions to qualify for a full State Pension.  You should review your contribution record to check if there are any gaps as you may make voluntary Class 3 NIC payments to fill these gaps. 

You have until 5 April 2025 to pay voluntary contributions to make up for gaps between 6 April 2006 and 5 April 2018 (2006/07 to 2017/18) if you’re eligible.  This extended deadline will come to an end on 5 April 2025 and after this date you will only be able to pay voluntary contributions for the past 6 years.  Therefore, from 6 April 2025 it won’t be possible to make voluntary contributions in respect of the tax years from 6 April 2006 to 5 April 2019. 

You may be liable to the High Income Child Benefit Charge if you, or your partner, have “adjusted net income” (income after deducting the gross amount of pension payments and charitable donations made under Gift Aid) of more than £60,000 and one of you receives Child Benefit.  This tax charge may withdraw all or just part of the child benefit that has been received. 

The end of the tax year provides a good opportunity to consider with your partner whether or not you wish to claim Child Benefit or, perhaps, arranging your financial affairs to ensure that neither of you has adjusted net income of £60,000 or more. 

Making a pension contribution before 6 April 2025 could be a useful way to reduce your adjusted income for the year to below £60,000.  Please contact us to discuss this if you have any queries or need any help in deciding whether to make a claim or continue claiming this benefit. 

Please note that if your child is under 12 and you are not working or not earning enough to pay National Insurance contributions, claiming Child Benefit can help you qualify for State Pension Credits which will count towards your State Pension. 

Junior ISAs allow you to invest money on behalf of a child under the age of 18.  A parent or guardian must open the account on the child’s behalf but the money in the account belongs to the child, though they cannot withdraw it until they are 18.  The Junior ISA limit is £9,000 for 2024/25.  Any interest or investment gains are tax-free and, importantly, Junior ISAs are not caught by the parental settlements legislation.

A child is eligible for a pension from the day they are born.  The maximum that may be contributed to the pension each year for the child is £2,880 and 20% tax relief will be added to this by the Government.