Tax Year End – Costly Mistakes People Make Before the end of the Tax Year

As the end of the tax year approaches, many individuals and business owners begin thinking about what they should do before 5 April. Unfortunately, this often happens too late.

Each year, we see the same common and often costly, year-end tax planning mistakes repeated time again. Overall, tax-saving opportunities are achievable, but in most circumstances, these aren’t reviewed early enough or are misunderstood. The result is missed allowances, unnecessary tax, and rushed decisions that could have been avoided with better planning.

Here are some of the most common tax mistakes before the tax year ends, and how to avoid them.

1. Leaving Year-End Tax Planning Too Late

One of the biggest mistakes is assuming that meaningful year-end tax planning can be done in the final few weeks of the tax year. In reality, many strategies require:

• ✅ Time to review your full financial position
• ✅ Coordination with advisors and accountants
• ✅ Proper implementation before the end of the tax year

By the time late March arrives, some tax planning options may no longer be available. Starting early provides far more flexibility and better outcomes.

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2. Failing to Use “Use It or Lose It” Tax Allowances

Several valuable tax allowances are lost if they are not used within the tax year. Commonly overlooked allowances include:

• ✅ Income tax personal allowance thresholds
• ✅ Capital gains tax exemptions
• ✅ ISA allowances
• ✅ Certain business-related reliefs

Failing to review which allowances you have already used and which remain readily available, can often result in paying more tax than necessary.

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3. Overlooking Pension Planning Opportunities

Pension contributions are one of the most tax-efficient year-end tax planning strategies, yet they are often underused. Common pension-related mistakes include:

• ✅ Not maximising annual allowances
• ✅ Missing carry-forward opportunities
• ✅ Failing to consider employer pension contributions

A proactive review of pension planning earlier in the year can help ensure contributions are structured efficiently and made in good time.

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4. Overlooking Charitable Giving and Gift Aid Planning

Charitable giving is often overlooked in year-end tax planning. Gift Aid donations can provide valuable tax relief, particularly for higher-rate taxpayers.

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5. Ignoring Capital Gains Tax Planning

Many people only think about capital gains tax (CGT) planning after an asset has already been sold. This often means:

• ✅ Missing the opportunity to use the annual CGT exemption
• ✅ Failing to time disposals across tax years
• ✅ Not considering spousal transfers
• ✅ Overlooking available reliefs

With advance tax planning before 5 April, it is often possible to structure disposals more tax-efficiently and reduce or defer CGT liabilities.

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6. Not Reviewing Business Profits and Extraction Strategies

For business owners and directors, year-end tax planning mistakes can be particularly costly. Common issues include:

• ✅ Leaving profits unreviewed until after the year end
• ✅ Failing to optimise salary vs dividend strategies
• ✅ Missing pension contribution opportunities
• ✅ Not timing bonuses or dividends efficiently

These decisions frequently require coordination with accountants and payroll teams and cannot always be implemented at short notice.

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7. Assuming Tax Planning Is Only for High Earners

Another common misconception is that year-end tax planning only matters if you are a very high earner. In reality, many allowances and reliefs are available to a range of taxpayers such as:

• ✅ Basic and higher-rate taxpayers
• ✅ Business owners and contractors
• ✅ Investors and landlords
• ✅ Families with joint tax plans

Failing to review your position simply because you believe your income is “not high enough” can still result in unnecessary tax.

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How to Avoid These Costly Tax Mistakes

The good news is that most year-end tax planning mistakes are entirely avoidable with the right approach. Key steps include:

• ✅ Starting your review early
• ✅ Gaining a clear overview of your income, gains, and allowances
• ✅ Identifying which opportunities are time-sensitive
• ✅ Prioritising actions before 5 April
• ✅ Seeking professional tax advice where appropriate

Take Control Before the Tax Year Ends

Year-end tax planning isn’t about last-minute paperwork. It’s about making informed decisions while you still have time to act.

To help you review your position and avoid these common tax mistakes before April, we’ve created a comprehensive Year-End Tax Planning Guide. It outlines key allowances, planning opportunities, and a practical steps to consider before the tax year ends.