Mike Ambery, Retirement Savings Director at Standard Life said: “We’re only a few weeks away from 5th April, the last day of the tax year, but there’s still a lot you can do to make the most of both your pension allowance and the other valuable tax efficiencies available – including ISAs as well as dividend and savings allowances. They reset annually, so it’s important not to leave money on the table. Pensions are one of the most powerful long-term savings tools, and making full use of them alongside other key tax breaks can help ensure you don’t pay more tax than necessary and keep more of your income working for you.
“Now is also a great time to think ahead to the new tax year. Small increases to regular pension or ISA contributions can build substantially over time thanks to the potential for compound growth, strengthening your financial future.”
Mike Ambery’s top tips to help you make the most of the 2025/26 tax year
1. Make full use of your pension annual allowance – “Your pension annual allowance – the amount you can save into your pension each tax year while still receiving tax benefits – is currently the lower of £60,000 or 100% of your earnings. This includes contributions from you, your employer and third parties. Higher earners may have a tapered allowance, reducing to as little as £10,000 if adjusted income exceeds £260,000. You may also be able to carry forward unused allowances from the previous three tax years.
“If you’ve already accessed your pension, it’s important to be aware that the Money Purchase Annual Allowance (MPAA) may apply instead, reducing the amount you can contribute to £10,000 a year while still receiving tax benefits. This is triggered when someone begins taking taxable income from their pension, so it’s good to know which allowance applies to you.”
2. Top up your pension payments with tax relief – “Tax relief makes your pension one of the most tax-efficient ways to save for retirement. When you pay into your pension, you receive tax relief on your contributions - meaning the money you put in is effectively free of income tax. This boosts your pension savings at no extra cost to you.
“For example, if you’re a basic-rate taxpayer and pay £80 into your pension, the government adds £20 in tax relief, so £100 goes into your pension pot.
“Most savers receive 20% tax relief automatically. Higher- and additional-rate taxpayers may be able to claim extra relief (to reach 40% or 45%) through Self Assessment. However, some people don’t need to claim anything because their scheme gives full tax relief through payroll - for example, via salary sacrifice or a ‘net pay’ arrangement, where contributions are taken before income tax is applied.
“It’s a good idea to check with your employer or pension provider to understand exactly how tax relief works in your specific scheme.”
3. Take advantage of tax-efficient saving via ISAs, dividends and interest allowances – “Pensions may be the foundation of most people’s retirement plans, but making the most of wider savings allowances in combination with pension saving can make a big difference to how tax-efficient your money can be.
“In the 2025/26 tax year, you can put up to £20,000 into ISAs, with any interest, dividends or gains sheltered from tax. Beyond ISAs, the Dividend Allowance is £500, and your Personal Savings Allowance lets basic-rate taxpayers earn up to £1,000 in savings interest tax-free, or £500 for higher-rate taxpayers.
“It’s worth taking a moment before 5 April to check where your savings are held. A quick review can help you avoid paying unnecessary tax and make the most of the allowances available to you.
4. Consider bonus sacrifice – ““For those expecting a bonus, redirecting some or all of it into your pension can be a highly efficient way to strengthen your retirement savings. Bonus sacrifice can result in savings on Income Tax and National Insurance, making it a smart way to keep more of the value of your reward while giving your pension a meaningful boost. It’s a straightforward step that can help your money go further - just be sure to check that your total contributions remain within your annual allowance.”
5. Review any capital gains – “If you hold investments outside an ISA or pension, it’s sensible to check your capital gains position before 5 April. The tax-free Capital Gains Tax allowance has been sharply reduced in recent years, which means more people could find themselves paying CGT on profitable sales. Releasing gains gradually - rather than letting them build up - can help manage future tax bills and reduce the chance of large, unexpected charges later on.
“You may also be able to make smarter use of tax-efficient wrappers. Moving investments into an ISA or contributing to a pension can protect future growth from both income tax and capital gains tax. Many people also use this time of year to rebalance their portfolios, trimming back investments that have performed strongly and reinvesting in line with their long-term goals. A quick review can help keep your finances tax-efficient and your investment strategy on track. It’s always worth speaking to a qualified financial adviser for support when managing your investments.
6. Regain your tax-free personal allowance if you’re a higher earner – “Most people get a tax-free personal allowance, which is £12,570 for the 2025/26 tax year. When your taxable income reaches £100,000, your personal allowance is cut by £1 for every £2 of your income. Currently, you lose the personal allowance once your income reaches over £125,000.
“You may be able to recover any loss to your personal allowance by reducing your income through paying into your pension plan.”
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