WITH just under four months to go until the end of the tax year there is a window of opportunity to make the most of ISA, pension and other allowances so you don’t pay more tax than necessary.

Jo Jackson, Head of Financial Planning at Brewin Dolphin Newcastle, says: “It’s a good time to revisit your finances to see what has changed this year so far and what is still to come.”

Top of the list is making sure you use your ISA allowance before 6 April, after which it is lost. At the start of this financial year, the government introduced a higher savings limit of £15,240, which can be used for cash, stocks and shares, or a combination of both. ISAs are now more flexible, as you can transfer a cash ISA to stocks and shares and vice versa.

Another consideration is whether you can afford to pay more into your pension. Jackson says: “Remember that for every £80 you pay in, normally it gets topped up with £20 in tax relief. And if you are a higher- or additional-rate taxpayer you will get further relief, reducing your overall tax bill.”

According to government guidance, if you are a higher-rate taxpayer you can claim an extra 20% tax relief on your pension contributions, taking it up to 40% and if you are an additional-rate taxpayer, you can claim tax relief at 45%. Unlike basic rate taxpayers, who receive this tax relief at source, higher and additional-rate taxpayers have to claim the extra relief when they file their tax return.

Pension contributions are capped at £40,000 or your total earnings – whichever is lower. You can top up your allowance for the current tax year with any allowance you have not used from the previous three tax years. The allowance was £50,000 until 5 April 2014. HM Revenue & Customs’ online calculator will help you to work out if you can top up your allowance. The government is limiting the contributions for higher earners (with income over £150,000) from next April.

For those with much larger pension funds the overall maximum fund that can pay benefits without additional taxation is being reduced from April 2016 (from £1.25m to £1m) but there is protection available meaning that those affected may be best maximising their contributions this side of the tax year end.

It is worth remembering that recent changes in the benefit rules for pensions have made them far more flexible and mean that any funds available on death can now be passed on much more tax efficiently. So a pension investment has become a flexible tax-efficient investment vehicle and most people see contributions as much more attractive.

If you have various pension pots you could consider bringing them together, making it easier to track the performance of your pension and potentially reducing annual charges. However, it is important to speak to an expert as you could lose valuable guarantees.

Jo says: “If you are worried about inheritance tax (IHT) liabilities, don’t forget that you can make a gift of £3,000 every year to any individual, or unlimited gifts of £250 to any number of people.” The government is adding a ‘Residence Nil Rate Band’, eventually worth £175,000 per person, to the existing £325,000 tax-free allowance from 6 April, 2017. It means that from April 2020, couples leaving residential property to their children or grandchildren may pay no IHT on homes worth up to £1m.

For sophisticated investors who want to manage the cost of capital gains tax, one option is to reinvest your gains into an Enterprise Investment Scheme (EIS) – however, these are high risk. Jo says: “If someone sells shares and makes a £100,000 gain, that would be taxed at 28%, but if the money is reinvested into an EIS that bill is rolled over for up to three years – but it is not for everyone.”

Finally, changes to the way dividend tax is calculated mean that some taxpayers will pay more. However, there is a new £5,000 allowance per person, so from April 2016 it is worth looking at how your shares are distributed between you and your spouse to see if there is the potential for savings to be made.

Jo adds: “It is often when filing one’s tax return in January that you learn the lessons of the year before.” So use the coming months wisely, know your tax allowance and make your money work harder in the financial year ahead.