The end of the tax year may still be a few months away, but it pays to start thinking now about what needs to be done to make the most of your personal tax allowances.

When it comes to managing your wealth as efficiently as possible, using the tax-friendly allowances available to you is essential to make the most of your hard-earned money.

In recent years, the Government has squeezed allowances too. This is most notable with the dividend allowance and capital gains tax allowance reductions.

However, it is also relevant in a higher inflationary environment, where the value of allowances effectively diminishes through an effect called “fiscal drag”.

For example, while the annual ISA limit is still a fairly healthy £20,000, it has been set at this level since 2017/18.

Thanks to inflation, you’d need to save more than £25,000 into an ISA now to match the spending power of £20,000 saved into an ISA in 2018, according to the Bank of England.

Ensuring you’re doing everything you can to take advantage of those allowances is crucial for maximising the efficiency of your portfolio. Here are the top ones to have in mind before 5 April 2024.



As mentioned above, the traditional ISA has a limit of £20,000 currently. You can spread this across one of each kind of ISA – investment, cash, innovative and, if you are under 40, the Lifetime ISA.

An ISA is an excellent vehicle for your money as it is totally protected from any tax within the pot, so any growth within that is tax-free. Maximising the £20,000 allowance every year is possible, is crucial for long-term wealth growth and efficiency.

If you’re under 40 a Lifetime ISA (LISA) can be a good alternative product too, especially for those looking to buy their first home, or alternatively as a retirement pot. You can save £4,000 per year into a LISA and the Government will top this up by £1,000 – effectively a 25% bonus.

There is a caveat with the LISA though that you have to use the savings for a deposit on a first home or leave the cash in situ until you turn 60. If you withdraw for any other reason, then the Government penalises you with a 25% charge on the whole pot amount – which would leave you with less money than you started with.



Junior ISAs or JISAs are another kind of ISA, but designed for children under 18. These can be a great product to use if you’re planning on passing some of your wealth forward to the next generation and want to make a plan to do it as efficiently as possible.

JISAs have a £9,000 per year allowance per child. One drawback however is the named recipient, be they a child or grandchild, will have free rein over the money once they turn 18, which might not be ideal if you want them to use the money for something specific you have in mind.



Pensions are the other major long-term wealth savings vehicle we have to draw upon in the UK. Pensions are more complex than ISAs and come with various sets of rules both when saving money into them or taking money out of them.

In terms of allowance, you can save up to £60,000 a year or 100% of what you earn – depending on which figure is less – into a pension.

Pension contributions come with valuable tax relief of 20% for basic ratepayers or

  • 20% up to the amount of any income you have paid 40% tax on


  • 25% up to the amount of any income you have paid 45% tax on

Although pensions have more tax implications when taking money out, they are seen as superior retirement vehicles because of this tax relief, which will help your wealth grow more in the long run thanks to higher contributions levels. The growth on any contributions is protected from taxation the same as in an ISA.


Inheritance tax

Around Inheritance tax is a highly complex set of rules and allowances which determine how much of your wealth you can pass on to loved ones without incurring any penalties.

This comes chiefly in the form of gifting. You can give away up to £3,000 a year tax-free – this is called the annual exemption. If you didn’t give a gift in the previous tax year you can roll up the allowance to a maximum of £6,000 the next.

For married or civil partnership couples this means if you’ve never used your gifting allowance you can give up to £12,000 in total in one year.

You can make any other financial gift you like beyond this, as long as it provably came out of your normal expenditure. If not, this can be classified as a “potentially exempt transfer” or PET. You won’t face any IHT on this gift – but only if you live for seven years after it was made.



The Government cut the dividend allowance in half for 2023/24 – and it is currently set to remain at £1,000 for 2024/25.

If you receive dividends from a business of which you are a shareholder, it is important to keep this in mind. It is worth exploring all the tax efficient options available, such as holding shares within a tax wrapper such as an ISA.


Capital Gains Tax

Similar to dividends, capital gains tax or CGT has seen its allowance slashed in recent years and is currently set at £6,000. The main rate of CGT is 20%, or 28% if selling a second home.

Where it becomes potentially salient to use your CGT allowance is what is called “Bed and ISA”. This means selling assets you hold outside of an ISA, up to the CGT allowance, and then repurchasing them with the cash within the ISA wrapper. It can be an effective way to move assets to tax-sheltered status.

You can also transfer assets to a spouse without incurring any tax, and they can then sell the asset to use up their CGT allowance.

What is key, with the myriad rules and procedures in place, is to make sure you’re using the allowances available to you and your loved ones to their maximum benefit.

If you would like to discuss any of the ideas or themes in this blog, or anything else relating to your personal wealth, don’t hesitate to get in touch.