As the new UK tax year approaches, now is the time to review your finances, maximise tax allowances and prepare for significant changes coming in 2026/27 and beyond. From frozen thresholds to rising rates and new reporting rules, ensure your wealth planning is ready for the year ahead.
The lead up to a new tax year is the ideal time to review and improve your tax position and make sure you are making full use of available tax allowances. Understand how the changes for 2026/27 impact you and look ahead to those scheduled for April 2027. Establish how to adjust your wealth management strategy to reduce the impact of upcoming reforms, and map out the steps to take over the year so that you are fully prepared for 2027.
Tax year end checklist
You can add up to £20,000 per adult into ISAs each tax year. Any unused allowance cannot be carried forward; if you have spare cash or investments held outside tax shelters, consider whether to move some into an ISA to protect future income and gains from tax.
Junior ISAs allow tax free saving and investing up to £9,000 per child per year. Pension contributions for children can also be very effective over many decades.
- Consider your pension annual allowance
Pension contributions benefit from tax relief and grow in a very tax‑efficient environment – and remain one of the most effective ways to reduce taxable income. High earners approaching the tapered annual allowance, or those losing part of their personal allowance due to income above £100,000, may find contributions particularly tax efficient.
The standard annual allowance is up to £60,000, with the ability to carry any unused allowance forward by up to three years. If calculated correctly, a well-timed pension contribution can reduce your adjusted income, help restore your personal allowance, and pull you out of the £100,000 tax trap. But carry forward rules are technical and contribution limits, earnings tests and historic allowances all must be accurate. Get it wrong, and you could face an annual allowance charge that wipes out the benefit.
- Review your tax bands and income
If you are close to a threshold, establish if you can reduce taxable income, for example by deferring or bringing forward income, bonuses and expenses, or making pension contributions.
You can currently realise £3,000 per person per year before capital gains tax becomes due, and it cannot be carried forward. With the annual CGT exempt amount having been cut in recent years and more people dragged into the tax net, it is sensible to review your portfolios to see whether crystallising some gains (such as selling and re‑buying in a tax-efficient arrangement or rebalancing) could use up this year’s allowance.
Transferring assets between spouses could spread gains more tax efficiently. Such transfers are generally free of CGT and inheritance tax. Staggering disposals over more than one year can help keep each year’s gains within or closer to the exemption.
- Check savings and dividend income outside tax‑sheltered accounts
Review interest from bank accounts and dividends from shares and funds held outside ISAs and pensions. If you are close to or over the relevant allowances, consider your options. You could move some holdings into ISAs or pensions, transfer assets to a spouse on a lower tax band or perhaps change the mix of investments (for example, towards growth rather than income) to reduce immediate tax drag but still suit your goals.
- Use gifting and inheritance allowances
Consider making use of your £3,000 annual gift exemption. Regular gifting year after year can help reduce a future inheritance tax bill, and any unused amount can only be carried forward for one year.
- Check your National Insurance and State Pension record
Review your National Insurance record and State Pension forecast. If you have gaps, you may be able to make voluntary NI contributions for certain past years, often only within specific deadlines. Filling strategic gaps can be good value if it increases your eventual State Pension entitlement.
Changes from 6 April 2026
The basic and upper rates of tax on dividend income climb by 2%. From 6 April, the basic rate rises from 8.75% to 10.75% and the higher rate from 33.75% to 35.75%. The additional rate remains unchanged at 39.35%.
The dividend allowance remains just £500, making tax efficient wrappers such as ISAs and pensions more valuable than ever.
- Business Asset Disposal Relief (BADR)
Individuals claiming Business Asset Disposal Relief (BADR) or Investors’ Relief (IR) will see their capital gains tax rate increase from 14% to 18%.
This follows a 2025 increase and, as an illustration, a £1 million qualifying gain now incurs £180,000 in tax, up from £100,000 pre-2025.
- Inheritance tax relief caps
Agricultural Property Relief (APR) and Business Property Relief (BPR) face new limits. From 6 April, the 100% rate of relief is restricted to the first £2.5 million of combined agricultural and business property, with 50% relief for values above this. This is per individual and can be transferred between spouses.
The rate of Business Property Relief on AIM-listed shares will also be limited to 50%.
- Making Tax Digital becomes mandatory
Making Tax Digital (MTD), which applies to self-employed individuals and landlords with incomes over £50,000, requires quarterly digital reporting using compliant software.
Maximum income tax relief for VCTs will reduce from 30% to 20%.
Non-UK residents can no longer pay voluntary Class 2 National Insurance contributions and are limited to Class 3 contributions.
Frozen thresholds
The income tax personal allowance stays at £12,570 for the 2026/27 tax year, and the higher and additional rate thresholds remain £50,270 and £125,140 respectively.
For higher earners, the real impact is fiscal drag: as salaries rise, more income is pushed into higher tax brackets even though the rates themselves have not changed. This can disproportionately affect individuals with bonuses, carried interest arrangements or income from multiple sources.
The inheritance tax nil-rate band is frozen at €325,000 and the residential nil-rate band at €175,000.
The above allowances will remain frozen until April 2031
The personal savings allowances also remain unchanged for the new tax year, at £1,000 for the basic rate and £500 for higher rate taxpayers. The capital gains tax exempt amount stays at £3,000 and the dividend allowance at £500.
Looking ahead to April 2027
- The most significant reform to hit UK families is pension funds becoming subject to inheritance tax for the first time. Effective from 6 April 2027.
- Tax on savings income will increase by two percentage points from April 2027.
- The cash ISA limit will fall from £20,000 to £12,000 for those aged 64 and under.
- Landlords face higher tax bills. Rates on rental income will increase from 20% to 22%, 40% to 42% and from 45% to 47%.
Review your financial planning
Tax planning is often most effective when done before a new tax year commences. If you are too late for this year, start thinking now making adjustments over 2026/27 to be ready for April 2027 and beyond.
The new tax year is a natural moment to step back and not only review your tax arrangements, but also that your overall plan remains on track –
- Do your savings and investments still match your goals and timeframe?
- Has your risk tolerance changed?
- Are you on course for retirement?
- wills, powers of attorney and protection policies up to date?
- Have you established an effective estate plan to meet your wishes for your heirs and transfer wealth effectively.
Take professional, personalised advice to establish exactly how all the tax reforms impact you and you how you may be able to improve your tax position.
Blevins Franks offer highly bespoke integrated wealth management solutions covering taxation, estate planning, investing and pensions – all designed to give you long-term peace of mind.
Get in touch today.
