How Can I Legally Reduce My Tax Bill Before April?

One of the first principles of good financial planning is simple: use every tax allowance available to you. Many allowances reset every year, though. So, if you don’t use them before 5th April, you lose the ability to use them against that year’s tax bill. Plus, with the UK tax system being so famously complex, knowing which ones you can use in the first place is tough.

That’s why tax year-end planning matters.

With the right strategy, it’s possible to know how to reduce your tax bill legally while strengthening your long-term financial plan at the same time. So, if you’ve ever wondered “how can I reduce my tax bill” before the tax year ends, there are several practical steps you can take now.

Let’s explore them.

Why tax planning before April matters

Timing is crucial when it comes to tax planning. The UK tax year ends on 5th April, and several valuable allowances reset on 6th April. If they go unused, they cannot normally be carried forward.

At the same time, frozen tax thresholds are quietly increasing the tax burden for many people. Income tax bands and allowances have been largely frozen until 2031, meaning that as salaries rise, more income gets pulled into higher tax brackets – a phenomenon known as fiscal drag.

As a result, proactive tax planning has never been more important.

As one financial planner at First Wealth explains:

“Many people assume tax planning is something you do after the tax year ends. In reality, the biggest opportunities come before 5th April, when you can still take action.”

So if you’re wondering “how can I reduce my tax bill”, the next few weeks could make a real difference.

7 ways to legally reduce your tax bill before April

1. Maximise your pension contributions

One of the most powerful ways to reduce your tax bill is through pension contributions. For the 2025/26 tax year, you can generally contribute up to £60,000 or 100% of your annual taxable earnings (whichever is lower) into your pensions while receiving tax relief.

If you earn less than £3,600 or have no earnings, you can still contribute up to £3,600 per year (including tax relief).

However, the annual allowance can be reduced for very high earners. Your allowance may be tapered if:

• Your threshold income is over £200,000 (generally your income minus personal pension contributions), and
• Your adjusted income is over £260,000 (all income plus employer pension contributions).

If both thresholds are met, your allowance may be reduced to somewhere between £60,000 and £10,000. For every £2 of adjusted income above £260,000, your annual allowance is reduced by £1.

Making the most of your allowance can be valuable because when you pay into a pension:

• Your taxable income can be reduced
• Basic-rate tax relief (20%) is added automatically
• Higher-rate and additional-rate taxpayers can claim further relief through their tax return

In some circumstances, unused pension allowances from the previous three tax years can be carried forward, allowing significantly larger contributions.

For example, Emma, a consultant earning £120,000, faced a significant tax bill. By contributing £21,000 into her pension before the tax year ended, she reduced her taxable income and reclaimed higher-rate tax relief. The contribution also helped reduce the impact of the 60% tax trap. In another example, a consultant earning £150,000 used the carry-forward rules to contribute £90,000 in a single year, dramatically reducing their tax liability.

However, pension rules can be complex and legislation can change regularly. For instance, pensions are likely to become subject to inheritance tax from 2027, making professional advice especially valuable when planning contributions.

Could boosting your pension contributions help you keep more of what you earn?

2. Use your ISA allowance

ISAs remain one of the simplest and most effective answers to ‘how to reduce my tax bill’ over the long term.

Each tax year, you can put up to £20,000 into an ISA or a combination of ISAs. Any money you put in an ISA is then inside a tax-efficient wrapper, which means:

• Any investment growth is free from capital gains tax
• Income is free from income tax

Over time, building ISA investments can create a large pool of tax-free wealth. If you don’t use your ISA allowance before 5 April, you lose it. Any investments in a Stocks and Shares ISA, however, can go down in value as well as up.

3. Reduce income to avoid the 60% tax trap

One of the most surprising features of the UK tax system affects those earning between £100,000 and £125,140.

In this range, the personal allowance (£12,570) is gradually withdrawn. Your personal allowance decreases by £1 for every £2 your adjusted net income exceeds £100,000. In general, adjusted net income is your total taxable income (such as salary, bonuses, rental income and investment income) minus certain tax deductions, including pension contributions and Gift Aid donations.

Because the personal allowance is reduced as income rises, people in this band effectively pay tax not only on the extra income they earn but also on income that had previously been tax-free. This creates an effective 60% marginal tax rate.

For example, if someone earns £110,000, they exceed the £100,000 threshold by £10,000. As a result, they lose £5,000 of their personal allowance and so that £5,000 is no longer tax-free. Instead, it becomes taxable at 40%, amounting to £2000. Combined with the £4000 higher-rate tax already due on the extra £10,000 of income, the effective marginal tax rate on that portion of earnings is 60% as they now owe £6000 in total for the extra income.

A key strategy, therefore, for how to reduce your tax bill is reducing your adjusted net income. Pension contributions can be a particularly effective way of doing so because they reduce taxable income, which can help restore your personal allowance.

4. Use Gift Aid donations

Sometimes people ask us: can I reduce my tax bill by donating to charity?

And the answer is yes.

When you donate under Gift Aid:

• The charity can claim basic rate tax relief
• Higher-rate and additional rate taxpayers can claim additional relief on their tax return
• Donations reduce adjusted net income

This means charitable giving can sometimes help reclaim lost personal allowance or reduce exposure to the 60% tax band.

A planner at First Wealth explains:

“Charitable giving can be a powerful tax planning tool. For many clients, it allows them to support causes they care about while also managing their tax position.”

5. Consider salary sacrifice schemes

Salary sacrifice schemes allow you to exchange part of your salary for non-cash benefits. Doing so reduces your taxable income, which can lower both income tax and National Insurance.

Common examples include:

• Pension contributions
• Cycle-to-work schemes
• Electric vehicle schemes

However, it’s important to bear in mind that from April 2029, the amount of pension contributions that is exempt from National Insurance contributions (NICs) is due to be capped at £2,000 a year for employee contributions made via salary sacrifice. While contributions above £2,000 will still be allowed, they will be treated as standard pension contributions. That means they’ll be eligible for tax relief but without NI savings.

6. Use tax-efficient investment schemes

For experienced investors looking for additional ways of how to reduce their tax bill, certain investment schemes may help.

These include:

• Enterprise Investment Scheme (EIS)
• Seed Enterprise Investment Scheme (SEIS)
• Venture Capital Trusts (VCTs)

These schemes can offer:

• Income tax relief
• Potential capital gains tax benefits
• Tax-efficient dividends in some cases

However, they involve higher-risk investments in smaller companies where investors could lose some or all of their capital. Investment advice should always be sought to ensure suitability.

7. Make use of family allowances

Tax planning doesn’t always happen at the individual level. Sometimes it works best across a household.

Strategies may include:

• Marriage Allowance transfers
• Contributions to a Junior ISA
• Spousal transfers of assets to use both partners’ allowances

These approaches can help families optimise tax allowances and potentially reduce the overall household tax bill.

Tax planning checklist before 5 April

If you’re thinking about how to reduce your tax bill, here’s a quick checklist of ideas to consider before the tax year ends:

• Top up pension contributions
• Use any remaining ISA allowance
• Make charitable donations
• Review tax-efficient investment wrappers
• Consider salary sacrifice options

A quick review now could help avoid missed opportunities later.

Common tax mistakes people make before the end of the tax year

Many people only start asking “how can I reduce my tax bill” once the tax year has ended – when it’s often too late. But even financially savvy professionals can overlook valuable opportunities. Common mistakes include:

• Waiting until April to start planning
• Ignoring pension carry forward rules
• Not claiming higher-rate tax relief
• Leaving ISA allowances unused

When to seek financial advice

Tax planning becomes more complex if you are:

• A high earner
• A business owner
• Approaching retirement
• Managing multiple investments

This is where professional advice can help.

At First Wealth, financial planners work with clients to create personalised strategies that answer questions like how to reduce tax bill while supporting broader goals such as retirement planning, investment growth and financial security.

As one First Wealth adviser puts it:

“The aim isn’t just to save tax this year. It’s to structure your finances in a way that supports your long-term life goals.”

Ready to reduce your tax bill?

Smart tax planning before 5th April can help you keep more of your money while strengthening your long-term financial plan. So, if you’ve been wondering “how can I reduce my tax bill”, now is the time to act.

Get in touch with First Wealth today to speak with one of our financial planners. We can help you explore practical strategies tailored to your circumstances, so you can make the most of the allowances available before the tax year ends.

This article does not constitute tax, legal or financial advice and should not be relied upon as such. Tax treatment depends on the individual circumstances of each client and may be subject to change in the future. For guidance, seek professional advice. This document is provided for information purposes only and it is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial product. The Financial Conduct Authority does not regulate estate planning or tax planning. 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. Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amount originally invested.

This document is marketing material for a retail audience and does not constitute advice or recommendations. Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amount originally invested.