Smart Tax Strategies to Keep More of Your Wealth

Tax planning isn’t just about compliance—it’s about making strategic moves to reduce your liabilities and grow your wealth efficiently. With the right approach, you can keep more of what you earn while taking advantage of government-approved tax relief opportunities. Here are some of the most effective ways to cut your tax bill and enhance your financial future.

Maximise Pension Contributions

One of the most effective ways to reduce your taxable income is by making pension contributions.

For the 2024/25 tax year, you can contribute up to £60,000 into your pension (or up to your total annual earnings if lower).

If you’ve not used your full allowance in the past three years, you can ‘carry forward’ unused allowances to make an even larger contribution.

This is especially useful for those earning over £100,000, where each £2 earned reduces your tax-free Personal Allowance by £1. A well-timed pension contribution can restore your Personal Allowance and avoid an effective 60% tax rate.

📌 Example: Richard earns £115,000 per year. By contributing £40,000 into his pension, he lowers his taxable income to £75,000, saving £14,000 in tax.

Invest in Tax-Advantaged Schemes (EIS & VCTs)

The government offers generous tax relief for those willing to invest in certain high-risk companies through the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs).

EIS: Invest up to £1M per year and receive 30% income tax relief, plus potential capital gains tax exemptions.

VCTs: Invest up to £200,000 per year with 30% income tax relief and tax-free dividends.

Both options provide tax-efficient opportunities to diversify your portfolio while benefiting from substantial tax savings.

Use Your ISA Allowance

An Individual Savings Account (ISA) is one of the easiest ways to shield your money from tax.

• You can invest up to £20,000 per year in a Stocks & Shares ISA, with no tax on capital gains or dividends.

  
  

• A Lifetime ISA (LISA) offers a 25% government bonus on contributions (up to £1,000 per year), making it an excellent option for first-time homebuyers and retirement savers.

Charitable Donations Under Gift Aid

Giving to charity isn’t just about generosity—it’s also tax-efficient.

• Donations under Gift Aid allow charities to claim 25% extra on your contribution, while higher-rate taxpayers can claim additional relief on their tax return.

  
  

• Example: If you donate £1,000, the charity receives £1,250, and if you’re a higher-rate taxpayer, you can claim £250 back in tax relief.

Plan for Capital Gains Tax (CGT) Efficiently

If you’re selling investments, a second property, or other assets, you may face Capital Gains Tax (CGT). Strategies to mitigate CGT include:

• Use your CGT allowance (£3,000 in 2024/25) before the tax year ends.

  
  

• Offset losses against gains to reduce taxable amounts.

  
  

• Transfer assets to a spouse before selling to make use of both allowances.

  
  

• Invest in EIS or SEIS to defer or eliminate CGT liabilities.

Final Thoughts

Being proactive about tax planning can lead to substantial savings and better financial security. Whether it’s maximising pensions, leveraging tax-efficient investments, or making the most of allowances, the right approach can make all the difference.

If you’d like tailored advice on how to reduce your tax bill, get in touch with us today!