UK Households Face Unnecessary HMRC Bills by Overlooking Tax Allowances
Millions of UK households are at significant risk of paying more tax than required by failing to utilize key allowances and reliefs, financial experts have warned. With the 2025/26 tax year concluding on April 5, 2026, savers and investors now have approximately two months remaining to take decisive action to protect their finances.
Urgent Calls to Act Before Deadline
Laura Suter, director of personal finance at AJ Bell, has issued a stark warning to the public. "With the end of the tax year fast approaching, millions of people are at risk of paying more tax than they need to simply by overlooking key allowances and reliefs," she emphasized. "Small decisions made or missed before April can have a lasting impact on your tax bill. We've identified some of the most common end-of-year tax mistakes and the simple steps savers can still take to safeguard their money."
Critical Mistakes to Avoid
The primary error highlighted is allowing ISA allowances to go unused. ISA allowances operate on a strict 'use it or lose it' basis, meaning failure to utilize the £20,000 allowance before April 6 results in permanently losing tax-free protection on savings and investments. This oversight could potentially cost thousands in future tax on interest, dividends, and capital gains.
Ms Suter elaborated: "Each individual receives the £20,000 ISA allowance, enabling a couple to shelter £80,000 in tax-efficient accounts over the coming months. Additionally, children benefit from a £9,000 annual limit each, creating a substantial potential tax shelter for families."
She advised savers to meticulously track all funds across different ISA types, as the annual limit applies collectively to Cash, Stocks and Shares, Lifetime, and Innovative Finance ISAs.
Proactive Financial Planning Strategies
Leaving financial decisions until late March increases the likelihood of errors, missed allowances, and rushed choices. Savers who neglect to automate investing and contributions often underutilize their tax shelters annually, compounding long-term financial costs.
"On top of that, it makes the end of the tax year more stressful than necessary," Ms Suter noted. "It's advisable to establish your finances at the start of the tax year, determining what you can afford to contribute to ISAs and pensions, and then implement automation. This approach ensures you claim eligible government allowances, plan gifting if applicable, and allows mid-year reviews to adjust for financial changes."
By acting now, households can avoid unnecessary HMRC bills and optimize their financial positions before the impending deadline.
