With the new tax year around the corner, now is your last chance to make sure you’ve maximised all your tax-efficient allowances and exemptions for the year.
While you might have already made full use of your Annual Allowance, ISAs, or Capital Gains Tax (CGT) Annual Exempt Amount, you can also contribute to other people’s allowances.
This can not only provide them with a financial boost but also ensure that more of your wealth is efficiently used. Looking to the long term, it can also reduce the value of your estate for Inheritance Tax (IHT) purposes, which would be another benefit to your family.
Read on to discover three ways your allowances can support your family before the new tax year starts on 6 April.
1. Boost your family’s pension savings
The Annual Allowance is a limit on the amount you can contribute to your pension each year while still receiving tax relief at your marginal rate, and as well as paying into yours, you can also contribute to other people’s.
For most people in the 2025/26 tax year, the Annual Allowance is £60,000 or 100% of your earnings, whichever is lower. You can also backdate any unused allowance up to three tax years using the “carry-forward rule”.
If you’ve already maximised your Annual Allowance or if you want to help build your loved one’s future financial security, making pension contributions on their behalf can be a highly efficient and effective way of doing so.
As long as the total contributions don’t exceed their Annual Allowance, you can contribute as much as you want, and the recipient will receive relief at their marginal rate. This also includes backdating their unused allowance from previous years.
Even if the recipient doesn’t work, perhaps if they’re a child or an out-of-work partner, you can still contribute up to £2,880 and they will receive 20% relief, which will immediately boost the contribution to £3,600. If the recipient doesn’t have an income, you can’t backdate their Annual Allowance.
Due to the tax relief and growth potential of pensions, they are one of the most effective ways to build wealth over the long term. Moreover, if you utilise the carry-forward rule, you could potentially make a significant contribution. This would ensure more of your wealth is efficient and could form part of your wider legacy plan by reducing the value of your estate for IHT purposes.
Supporting your family by contributing to their pensions can have multiple benefits, so it’s worth exploring this option with a financial planner before the Annual Allowance renews.
2. Pay into your family’s ISAs and JISAs
ISAs offer tax-efficient interest and returns on your savings and investments and are one of the simplest ways to improve the efficiency of your wealth.
However, your contributions are limited by the annual ISA allowance, which is £20,000 in 2025/26. If you’ve already used your full allowance, you could consider giving your partner some additional funds to maximise theirs. This helps ensure more of your wealth remains efficient.
In addition to this, the Junior ISA (JISA) allowance is £9,000 per child. This allows you to contribute to an account held by a child who won’t be able to access the money until they’re 18.
It’s important to note that the JISA allowance is per child and not per adult. So, you can make multiple contributions of up to £9,000 to all your children or grandchildren.
If you were to use the current full JISA allowance each year for a child from their birth until they’re 18, you would contribute £162,000. When combined with long-term interest or returns, the sum they receive would likely be considerably more and completely tax-free.
So, paying into your family’s ISAs and JISAs can be a great way of keeping your money efficient and supporting their future.
3. Use your gifting allowance
The gifting allowance lets you gift a certain amount each year without the funds being potentially liable for IHT. If you gift beyond the allowance and die within seven years, the gift will be considered a Potentially Exempt Transfer (PET) and may be liable for IHT.
In 2025/26, the gifting allowance is £3,000. You can also backdate your unused allowance by one year, meaning you can gift up to £6,000. Additionally, married couples can combine their allowances, enabling you and your partner to gift up to £12,000 in a single year.
Gifting can be a simple way to reduce the value of your estate for IHT purposes and can form an integral part of your estate planning when managed properly. Because the allowance is annual, it’s important to make use of it each year if it’s part of your wider estate plan.
A financial planner can work with you to build gifting into your financial and legacy plans, ensuring your family is supported, your needs are met, and your estate remains efficient.
Get in touch
To find out more about how you can keep your wealth efficient while supporting those you care about the most, get in touch.
Email info@blueskyifas.co.uk or call us on 01189 876655.
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.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.