If you’re saving up to buy your first home, the end of the tax year is a more important time than many people realise.

The main reason for this is because it’s when your ISA allowances reset, meaning any unused allowance for the year is lost.

The tax year ends on April 5th, so if you haven’t maximised all your allowances by then, you will lose your remaining allowance on April 6th, when the new tax year begins.

This makes the run-up to tax year end a great time to check you’ve made the most of your allowances.

It’s also a perfect time to make sure your finances are generally in the best shape possible for the start of the new financial year.

Make the most of your Lifetime ISA allowance

In a single tax year, you can currently contribute up to £4,000 into a Lifetime ISA (LISA).

A LISA is a savings product where the government pays a 25% top up for every pound you save. So, for every £4 you save into a LISA, the government adds £1.

If you contributed the maximum of £4,000 in a single tax year, you would get a bonus of £1,000. Over a number of years, this could add up to tens of thousands of pounds in free money from the government towards your first home.

If you don’t maximise your £4,000 allowance by the end of the tax year, it will reset, meaning your potential to earn extra free money from the government on those contributions is gone.

You must be 18–39 to open a LISA, and the property you’re intending to buy must be worth £450,000 or less.

To note: With the current LISA product, be sure you’re comfortable that you won’t be able to access the money again unless it’s for your first home (or retirement – the other use for a LISA).

Once it’s in, you can’t get it out again without paying a 25% withdrawal penalty on the whole pot. That means you don’t just pay back the government bonus – you pay a penalty on your own cash.

For example, if you paid in £4,000 and got the £1,000 bonus, then withdrew your money, you would be charged 25% on the whole £5,000, meaning you would owe £1,250.

Make the most of your other ISA allowances

You can currently save up to £20,000 into your ISAs every tax year, including in a Cash ISA, a Stocks & Shares ISA, and your Lifetime ISA.

You can contribute the full £20,000 into a Cash ISA or Stocks and Shares ISA, but if you’re maximising your contributions to a Lifetime ISA, remember you will only have £16,000 left to use per year.

Saving the rest of your money in an ISA rather than a regular savings account can save you extra money towards your house purchase long-term because the returns in an ISA are tax-free, while earnings in regular savings or investment accounts are taxable.

If you are a basic-rate taxpayer and have a deposit of £50,000 saved earning 3% annual interest, you’d receive £1,500 in total interest in one year.

In a taxable savings account, £1,000 is covered by your personal savings allowance (tax-free interest), but the remaining £500 is taxed at 20%, leaving you with £1,400 net. In a Cash ISA, the full £1,500 is tax-free, so you take home £100 more.

Over time, this difference could widen to thousands of pounds.

Review your other tax-free allowances

When you’re saving for your first home, every little bit helps, so making the most of all the tax allowances on offer could boost your deposit by hundreds or even thousands of pounds.

The government offers a number of tax breaks for savers looking to earn extra income with various side hustles, so being aware of these could help you earn some extra cash without having to report it to the tax man.

The trading allowance – £1,000 per year

The trading allowance means you can earn up to £1,000 a year from selling goods or services, which could save basic-rate taxpayers up to £200 per tax year.

This could be selling clothes, washing cars, walking dogs or even selling jams at a local market.

Rent out your driveway – £1,000 per year

If you’re renting a home or live with family and there’s a driveway going spare, you could rent it out and earn another £1,000 per year tax-free. This could save basic rate taxpayers another £200 per year.

Savings allowance – £1,000 per year (for basic rate taxpayers)

If you’re a basic rate taxpayer, you can earn £1,000 per year in interest on your savings tax-free, saving another £200 in tax.

Making sure you’ve made the most of these allowances before the end of the tax year, if you’re able to, could give you an extra boost towards getting on the property ladder faster.

Tax treatment depends on individual circumstances and may change in the future. Investments can go down as well as up, and you may get back less than you invest. Moneybox or its associated third parties do not offer personal financial advice or make specific recommendations based on your individual circumstances. If needed, seek independent financial advice before making decisions regarding your financial goals.