Smart tax moves every retiree should make before April 2026

Some deadlines creep up quietly. The end of the 2025/26 tax year on 5 April 2026 won’t shout. Yet for retirees, it’s a line in the diary that can lock in thousands, or quietly let them slip away.

He wasn’t in trouble. He was in limbo. “Do I take more from the pension now or next month? And why is my bank paying tax on my interest?” he asked, half to me, half to the orchid on the table.

We’ve all had that moment when the money admin you’ve parked for months suddenly asks for a decision. April is unforgiving like that. The choices feel small — £500 here, a form there — yet they stack into real money over years. He grinned when I showed him a trick that doubled an allowance in 24 hours by straddling two tax years.

He paid for the tea. I paid with a tip that might save him a few grand. The calendar is your quiet superpower.

Use the calendar to turn one allowance into two

Every retiree has a simple lever: timing. Make one move on 4 April, then a second on 6 April, and you’ve used two tax years two days apart. That can mean two lots of ISA allowances, two rounds of tax-free capital gains, two years’ worth of small gifts for inheritance planning.

Picture a couple with £60,000 in a share account outside an ISA. On 4 April 2026, they “bed and ISA” £20,000 each, sheltering £40,000. On 6 April, a fresh tax year opens — they do it again. In one long weekend they move up to £80,000 into ISAs. Dividends and interest become tax-free going forward. A tidy, boring miracle.

It’s the same with capital gains. The annual exemption is small now (£3,000), yet crystalising a modest gain before 5 April and another after 6 April resets your cost base twice. That trims future tax without gutting your portfolio. Pair that with gifts — £3,000 IHT exemption per tax year, with one year’s carry-forward — and the calendar starts to pay you back.

Smooth your income bands before HMRC does it for you

Retirement money tends to arrive from different taps: State Pension, drawdown, cash savings, maybe dividends from a fund. The knack is to fill your tax bands neatly. Use your Personal Allowance, then the starting rate for savings (up to £5,000 if other income is low), then your Personal Savings Allowance (£1,000 for basic-rate, £500 for higher-rate).

One practical rhythm: map your expected income for 2025/26 now, then adjust withdrawals. If you’ll sit £2,000 below the basic-rate ceiling, consider taking that from your pension this year rather than next. You fill the 20% band today, maybe dodge 40% tomorrow. Gift Aid can help, too — it stretches your basic-rate band while supporting a cause you love.

There’s a paperwork angle people miss. The State Pension is paid without tax deducted, so your tax code on a private pension often compensates. If that code is off, you can overpay through the year. A quick call or online check avoids an April surprise — or unlocks a refund with forms like P55 after a flexible drawdown.

Shelter, shift, and share

ISAs do heavy lifting for retirees. Feed them every year, ideally before 5 April 2026. “Bed and ISA” turns a taxable holding into a tax-free one: you sell, then rebuy inside the ISA. Want to trim the capital gains hit? Transfer part of the holding to a spouse first, so you both use the £3,000 CGT exemption, then each wrap shares into your ISA.

Pensions still matter after you’ve retired. If you’ve flexibly accessed a pot, the Money Purchase Annual Allowance bites, capping new contributions at £10,000 a year. If you haven’t, the standard annual allowance can be higher, and you may even carry forward from the past three years. A small top-up can win tax relief and nudge your estate below inheritance thresholds later.

Moving income between spouses is old-fashioned — and wildly effective. Transfer dividend-heavy funds to the lower-rate partner. Use the Marriage Allowance if one of you has spare Personal Allowance and the other pays basic-rate. Before 5 April 2026, you can still backdate certain claims — miss it and the oldest year drops off.

“Tax planning in retirement isn’t about clever schemes,” a veteran adviser told me. “It’s about housekeeping — done on time.”

• Use two tax years in two days for ISAs and capital gains.
• Fill your basic-rate band with well-timed pension withdrawals.
• Shelter dividends inside ISAs; the dividend allowance is tiny now.
• Log gifts out of income if you’re trimming a future IHT bill.

Real numbers, real choices

A retiree in Manchester wrote down her 2025/26 income: full new State Pension, £2,400 bank interest, and £6,000 from drawdown. She sat roughly around the Personal Allowance. By nudging £1,500 of interest into a Cash ISA before April and shifting £1,000 of drawdown into the following year, she kept tax on savings at 0% via the starting rate. No tricks. Just a neat stack of bands.

Another reader owned a small buy-to-let and a basket of high-yield shares outside an ISA. He sold a slice of the shares to realise a £3,000 gain in late March, then did the same again in early April. He moved the income-heavy holdings into his ISA and kept lower-yield, growth-leaning funds outside. The dividend allowance is now just £500 — so he stopped paying needless tax on payouts.

Some tactics feel small. They repeat, though. That’s the beauty. A yearly “spring clean” creates a groove you can trust. Let’s be honest: nobody does this every day. Book one hour each February, write down your expected income, and pick two moves — not ten. *A small habit beats a big intention, every time.*

Leave room for later you

The smartest move before April 2026 might be leaving doors open. Keep flexibility in where your income comes from: a slice in ISAs for tax-free cash, a slice in pensions for controlled drawdowns, some in easy-access cash for surprises. Think in bands, not products. Gifts today can shrink a future IHT bill, yet so can directing withdrawals so your estate doesn’t bloat in cash you don’t need. Scotland’s income tax bands differ from the rest of the UK, so local rates matter. If you’re charitably minded, Gift Aid can stretch your basic-rate band now, and a 10% legacy in your will can cut the IHT rate on the rest. **This isn’t personal advice; tax rules change and your circumstances will differ — yet the calendar is fixed, and it’s on your side until 5 April 2026.** Share this with a friend over a cuppa. That conversation might be worth more than the biscuits.

FAQ :

• What should I prioritise before 5 April 2026?Use your ISA allowance, crystallise up to £3,000 of capital gains if helpful, and check if a well-timed pension withdrawal fills your basic-rate band without tipping you higher.
• Is “bed and ISA” still worth it with low allowances?Yes. Moving dividend and interest-producing assets into an ISA stops future tax every single year. It’s especially useful now the dividend allowance is just £500.
• How do I use the starting rate for savings?If your non-savings income (like State Pension or drawdown) sits below the Personal Allowance, up to £5,000 of savings interest can be taxed at 0%. Keep other income low enough and use Cash ISAs for the rest.
• Can I still get tax relief if I’m retired?Often, yes. You can contribute up to your UK relevant earnings, or up to £3,600 gross if you have little/no earnings. If you’ve flexibly accessed pensions, the Money Purchase Annual Allowance (currently £10,000) applies.
• What about inheritance tax gifting?Use the £3,000 annual exemption, carry forward last year’s if unused, and log regular gifts out of surplus income. Charitable gifts get Gift Aid now, and a 10% legacy can reduce the IHT rate on the rest.