The power of having a tax plan in place

Keep more of your hard-earned money

The most obvious benefit of having a tax plan is that you can keep more of your money.

We all need to pay tax, and tax planning isn’t about dodging your obligations. Instead, it’s about looking for the most tax-efficient ways to earn an income, hold your assets and transfer your wealth.

For example, some high earners can get caught by the 60% tax trap. Smart tax planning can lower this back down to 40% and potentially unlock other allowances like tax-free childcare.

If you’re self-employed, claiming allowable expenses can reduce your tax bill. If you’ve moved abroad, a tax plan is useful for highlighting the most efficient arrangements in terms of where you pay tax and if you’re still entitled to UK allowances.

A well-structured tax plan takes a holistic view of your circumstances. This should include any partner or spouse. For example, you may be able to lower your tax liability by claiming the marriage allowance.

It can also help you be more resilient and cope with whatever changes the government announces, such as the mansion tax, which will take effect from April 2028, and the upcoming two percentage point increase to the tax rates on dividends, property and savings income.

Give your savings and investments a boost

There are several powerful tax perks available for savers and investors. First, the ISA allowance means every adult can currently shelter up to £20,000 of savings and investments from tax each tax year.

Note that the cash ISA limit will fall to £12,000 from April 2027, for those aged under 65. The overall £20,000 ISA allowance will remain the same, and you’ll still be able to save up to £20,000 in a stocks and shares ISA. Those aged 65 and over are unaffected by the cut to cash ISAs, as announced in the 2025 Autumn Budget.

If you’re aged under 40, you can also open a Lifetime ISA to save for your first home or for retirement, which comes with a juicy 25% government bonus. You can save up to £4,000 each tax year, and this forms part of your overall ISA subscription limit. Beware that the government has signalled that it plans to replace the Lifetime ISA with a product aimed at first-time buyers in future.

If you have children, you can additionally save for their future tax-efficiently, with a junior ISA. Up to £9,000 can be contributed each tax year, and the child can access the pot when they reach their 18th birthday.  

Taking advantage of these allowances, where appropriate, should form part of your tax plan. Savings and investments outside of ISAs will require some extra planning to ensure they are as tax efficient as possible.

It may be possible to use the personal savings allowance, dividend allowance and/or annual capital gains tax (CGT) exempt amount, while married couples and civil partners can usually transfer assets between themselves without any tax implications so as to make use of both personal allowances, basic-rate bands and/or CGT exempt amounts. Although the CGT limit has been cut in recent years, and now sits at £3,000, using both partners’ allowances means couples have the potential to enjoy tax-free gains of up to £6,000.

Similarly, investors who carefully time the sale of assets can spread gains across multiple tax years, reducing their CGT liability.

Prepare for retirement

Pensions tax is a notoriously tricky topic. So, a comprehensive tax plan is a crucial tool for retirement preparation.

Contributing to a pension is one of the most tax-savvy ways to build up a retirement nest egg. But, you’ll need to be aware of myriad rules – from the maximum amount you can pay into a pension each tax year to how pensions are taxed once you retire..

If you pay into a workplace pension using salary sacrifice, note that the amount that is exempt from National Insurance contributions will be capped at £2,000 a year from April 2029. A tax plan can help you prepare for this and potentially highlight other ways to save tax-efficiently and whether you need to squirrel away more money to beat the tax changes and keep your retirement plans on track.

You may be thinking of using pensions, ISAs, other investments and even property to fund your dream retirement, and this can all be included in your tax plan. In turn, the plan can help ensure your later life income is both sufficient and tax efficient.

A tax efficient way to pass on wealth

A tax plan isn’t just about your lifetime wealth, it’s also about ensuring your legacy passes on smoothly.

Inheritance tax is becoming an issue for a growing number of families, due to the frozen £325,000 tax-free allowance (known as the nil-rate band) and rising house prices. Accumulated pension funds will also become subject to the IHT on death from April 2027.

By planning ahead - making lifetime gifts, creating trusts or using life insurance policies to fund the liability - more of your wealth can go towards supporting your loved ones, and less to the taxman.

How to get tax smart and achieve peace of mind

Tax is unavoidable but overpaying it is not. With the right plan in place, you can take control of your money, your future and your peace of mind. Get in touch today.

The value of an investment with St. James's Place will be directly linked to the performance of the funds selected and the value may fall as well as rise. You may get back less than the amount invested.

The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.

Trusts are not regulated by the Financial Conduct Authority.

Please note that Cash and Lifetime ISAs are not available through St. James's Place.