Two savings moves to make before April 5 to boost wealth and 'swerve tax trap'

Brits have been urged to act before the end of the tax year on April 5 to avoid paying more tax than necessary, as new figures show a sharp rise in income tax receipts.

Data from HM Revenue and Customs showed that self-assessment income tax receipts reached a record £55.7billion in the first 11 months of the 2025/26 tax year. That figure is 13.5% higher than the previous year and nearly double the total from a decade ago. The increase reflects growing pressure on taxpayers, particularly the self-employed, company directors, landlords and investors, as frozen tax thresholds and reduced allowances continue to pull more people into higher tax brackets.

One of the most effective ways to reduce taxable income is by increasing pension contributions before the tax year ends.

Craig Rickman, personal finance expert at interactive investor, said pensions offer immediate tax relief and can help people avoid higher tax rates.

"Most people can pay up to £60,000 a year into a pension and receive income tax relief at their marginal rate," he explained. "For higher-rate taxpayers, that means a £1,000 contribution could effectively cost just £600."

He added that boosting pension savings can also help individuals avoid the so-called "62% tax trap", which affects those earning between £100,000 and £125,140, as well as protect eligibility for benefits such as free childcare.

For business owners, contributions can be made either personally or through their company, potentially reducing corporation tax.

Savers are also being urged to make full use of their Individual Savings Account (ISA) allowance before it resets on April 6.

Each year, individuals can save or invest up to £20,000 in an ISA, where any interest, dividends or capital gains are tax-free. However, any unused allowance cannot be carried over.

"With savings rates still relatively high, more people are exceeding their personal savings allowance and paying tax on interest," Rickman said. "ISAs protect against this entirely."

He added that ISAs can provide flexible access to funds, making them particularly useful for self-employed workers who may need access to cash during quieter periods.

The warning comes as more people are being drawn into higher tax bands due to frozen thresholds, which have not increased since 2021. The additional rate threshold was also reduced in 2023, further increasing the number of higher earners paying more tax.

At the same time, the dividend allowance has been sharply cut in recent years, falling from £5,000 in 2018 to just £500 today.

Savings are also being hit, with many now earning enough interest to exceed their tax-free allowance, which has remained unchanged for a decade.

With further tax changes expected in the coming years, experts say taking action before April 5 could make a significant difference.

Rickman said: "With tax receipts continuing to rise, it's more important than ever that people use the tools available to them to keep more of their hard-earned money."