The end of the tax year is a busy time for advisers and planners, and for high net worth individuals (HNWIs) too. High levels of wealth bring added complexity and increase the need for tax-efficient planning.
While we’re only a few months into the current tax year, it’s important to remember that it’s never too early to begin your tax year end planning. This is especially true when the new tax year is set to bring tax and legislation changes that could impact your wealth and long-term plans.
This is the case for 2027/28, which will see changes to the Inheritance Tax (IHT) treatment of pensions and a new cap on Cash ISAs, among others.
Planning – and acting – early can have financial and psychological benefits, so keep reading to find out more.
Early investment can be financially and emotionally rewarding
IFA Magazine reports that one investment company saw its final customer max out their 2025/26 ISA Allowance at 23:40 on 5 April 2026. Meanwhile, the first customer to max out their 2026/27 allowance did so just twenty minutes into the new tax year, at 00:21 on Monday 6 April 2026.
If there are allowances you plan to make maximum use of this year, doing so as early as possible in the tax year could have financial advantages.
Early investment increases the benefits of compound growth
ISAs were introduced in 1999, and MoneyWeek recently reported on the potential difference in overall investment returns for those who maxed out the ISA Allowance at the end, compared to the start of each tax year since that date.
The report finds that putting the £20,000 annual ISA Allowance into the MSCI ACWI Net Total Return (GBP) index on 6 April each year (starting in April 1999) would have built a pot worth £1,277,963.
This is around £83,000 higher than the £1,195,127 return for an investor making the same contribution over the same period but making their payments at the end of each tax year (starting on 5 April 2000).
This difference results from the increased investment time, as well as the effects of compound growth on a higher invested amount over that longer period.
The same principle applies to your retirement fund if you intend to make the full use of the Annual Allowance in 2026/27.
You’ll have peace of mind and less stress as the next tax year end approaches
There are psychological benefits to early investment, too.
There’s peace of mind knowing that you’ve ticked a financial housekeeping job from your tax year end to-do list. And you’ll also avoid the panic of a last-minute rush to use up your allowance in ISA season 2027.
Making significant one-off payments early in the year leaves you free to concentrate on enjoying your remaining disposable income by doing the things you love.
Early planning allows you to get ahead of upcoming changes
As well as making full use of your available annual allowances, engaging with the new tax year early gives you longer to prepare for imminent changes. For 2027/28, upcoming changes include:
- Cash ISA subscription limits for under 65s
ISAs are extremely tax-efficient. You don’t pay tax on the interest you earn in a Cash ISA, while the gains you make in a Stocks and Shares ISA are free of both Income Tax and Capital Gains Tax. But your annual subscriptions are limited to just £20,000.
If you have yet to use up your full allowance for 2026/27, consider doing so now before changes to Cash ISAs come into force from 6 April 2027.
From that date, the Cash ISA limit will drop from £20,000 to just £12,000. The overall ISA Allowance – the amount you can save and invest across all ISAs you hold – remains at £20,000. But if you choose to make full use of the Cash ISA Allowance, the remaining £8,000 will need to be directed elsewhere, most likely into the Stocks and Shares ISAs you hold.
The change means this is the last tax year in which you can make a full £20,000 Cash ISA subscription, unless you are over the age of 65, in which case the above changes do not apply.
Once you have made full use of the ISA Allowance, you can begin to look for alternative tax-efficient arrangements for your remaining wealth.
- The Inheritance Tax treatment of pensions
Back in our Spring 2025 edition of The Wire, we wrote about the potential estate planning implications of the chancellor’s decision to bring pensions into scope for IHT from April 2027.
If you had previously accrued pension wealth specifically to pass on tax-efficiently on death, you’ll already be aware that the landscape is changing. You’ll likely have looked at ways to lower the value of your estate, possibly through gifting, and might have begun taking a more holistic look at your wealth to find the right IHT-mitigation strategy for you.
This might involve HMRC gifting rules, such as the annual exemption that allows you to gift up to £3,000 a year IHT-free. This also includes the often overlooked “normal expenditure from income” exemption, which means you can give regular gifts of any amount IHT-free as long as they are made from surplus income and making them doesn’t detrimentally affect your standard of living.
Use 2026/27 to put plans in place to mitigate the impact of this 2027/28 change.
Get in touch
There are financial and emotional advantages to planning for tax year end early in the tax year, and the above changes are just two that are set to come into force from April 2027. Planning for tax year end now could help to improve tax efficiency and give you peace of mind, so contact us online or call 020 7400 4700 today if you have any questions.
Please note
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
