How to plan for tax year-end and save for retirement

Understanding tax year-end

As tax year-end approaches, it’s important to review your finances before you lose out on any unused allowances from the 2025/26 tax year.

But how can going over your finances and tax liability now also help you to save for retirement?

What is tax year-end and why does it matter?

The current tax year ends on 5 April 2026. After this date, any unused allowances for the year will expire.

Using your allowances can help you keep more of your take‑home pay and support your long‑term retirement goals. This is especially true when you use tax‑efficient options like ISAs and pensions.

The key is to understand how much of your allowances you’ve used so far so you can make informed decisions before the deadline.

How can you make the most of your allowances?

There are several ways to use your allowances more effectively, especially if you’re thinking about your retirement plans.

Maximise your pension contributions

Adding more to your pension is one of the most tax‑efficient ways to save. It can be especially useful if you’re close to moving into a higher tax bracket. You can contribute up to £60,000 to your pension each tax year and receive tax relief on your contributions.

As a teacher, you can increase your pension savings through Additional Voluntary Contributions (AVCs) or by opening a private pension.

Your main Teachers’ Pension Scheme (TPS) or Local Government Pension Scheme (LGPS) is a defined benefit scheme, which provides a guaranteed income in retirement.

AVCs and private pensions are usually defined contribution schemes, where you invest your money to build a pot you can access flexibly in retirement.

AVCs are taken through payroll, so you receive tax relief at your highest rate straight away. This can be helpful if your taxable income is close to a threshold that affects things like child benefit.

With AVCs and private pensions, you need to make sure you stay within your allowances and understand how your money is invested.

Private pensions are typically advised and managed, giving you support in choosing investments that match your goals. Although contributions aren’t taken from your salary, you receive a 20% government top‑up, and higher‑rate taxpayers can usually claim extra relief through their tax return.

Keep in mind that the value of your investment can go down as well as up, so you could get back less than you invested.

Tax treatment depends on your individual circumstances and may be subject to change in future.

Make the most of your ISA allowance

Using your ISA allowance is another key step, especially as changes announced in the Autumn Budget will reduce the cash ISA allowance to £12,000 of the overall £20,000 limit for under‑65s from April 2027.

An ISA protects your savings and any interest or investment returns from UK tax. In a standard savings account, interest counts as income and is taxed. In an ISA, it’s completely tax‑free.

For now, you can still save up to £20,000 across your ISAs, including cash ISAs and stocks and shares ISAs. The exception is the Lifetime ISA, which has a maximum contribution of £4,000 per year.

Lifetime ISAs are designed for saving towards retirement or a first home only, with a 25% government bonus available each year. However, you can only open one between the ages of 18 to 39 and contribute up to £4,000 per tax year.

You can withdraw money from an ISA at any time without paying income tax or capital gains tax. Some accounts may charge a penalty for early withdrawal, so always check the terms.

Keep up to date

Rules around pensions, ISAs and tax can change, so staying informed is important. For example, changes to pension allowances and tax relief are planned for April 2029. While it may feel far away, understanding these updates now can help you make clearer, more confident decisions about your future.