Don’t let tax year end catch you off guard

The Autumn Budget in 2025 brought a wave of tax changes aimed at stabilising the UK’s finances and encouraging long‑term investment. With tax year end (TYE) approaching on 5 April, this is a good moment to pause, review your plans, and make sure you’re making the most of the allowances available to you.

New rules take effect from 6 April, so small steps now could make a real difference. And as always, we’re here to make the decisions clearer and help you make confident, well‑informed choices.

A quick reminder:

Because 5 April falls on Easter Sunday, Thursday 2 April is the final working day before the new tax year. If you’re planning to act, it’s sensible to do so before then.

Pensions: strengthening your long‑term plans

If you’re working and have room to save more, adding to your pension can help grow your retirement pot in a tax‑efficient way.

The standard annual allowance you can add across all pensions is £60,000. You’ll receive tax relief on contributions up to this limit.

• The basic‑rate relief is added automatically.
• For higher‑rate and additional‑rate taxpayers they can claim further relief through self‑assessment (up to 40% or 45% total).

This can be particularly valuable if your income sits in the band where your personal allowance tapers once you earn over £100,000.

If you haven’t used all your available allowance in the last three tax years, carry forward may allow you to contribute more before 6 April. And if you’re a higher‑rate taxpayer, it’s worth checking whether you need to claim any extra relief on this year’s return.

For business owners and directors

Your company can pay into your pension directly. Payments that meet HMRC’s ‘wholly and exclusively’ test usually count as an allowable business expense – reducing Corporation Tax – and they aren’t treated as a taxable benefit for you personally.
With changes coming to dividend taxation, using pension contributions to take value from your business may become even more appealing.

State Pension: checking your National Insurance record

The full New State Pension is expected to rise to £241.30 a week in 2026/27, following earnings growth. If you’re nearing State Pension age and have gaps in your National Insurance record, topping up now could increase what you receive for life.

You can check your NI record and use the gov State Pension forecast tool to see whether voluntary contributions would help.

ISAs: making the most of tax‑free allowances

ISA limits stay frozen until April 2030:

• £20,000 for adult ISAs
• £4,000 for Lifetime ISAs
• £9,000 for Junior ISAs and Child Trust Funds

Even though limits haven’t changed, using your allowance each year helps protect more of your savings from tax.

VCTs and EIS: changes worth noting

If you invest in early‑stage companies, or are considering doing so, there are adjustments on the way.

Income tax relief on Venture Capital Trusts (VCTs) is set to reduce from 30% to 20%.
Both VCTs and the Enterprise Investment Scheme (EIS) remain tax‑efficient routes to support growth businesses, but the changing rules mean it’s worth revisiting how they fit into your plans.

Remember: tax treatment depends on your personal circumstances and may change in future.

Inheritance Tax: updates to BPR and APR

From April, a new £2.5m cap applies to full relief under Business Relief (BPR) and Agricultural Property Relief (APR).

Couples can combine their allowances, meaning up to £5m of qualifying business or agricultural assets may pass free of IHT – on top of other allowances such as the nil‑rate band.

For Alternative Investment Market (AIM) shares, note that from April 2026, the available relief reduces to 50%, meaning the effective IHT rate on qualifying shares becomes 20%.

IHT and pensions: a significant future change

A major shift is expected in April 2027, when inherited pensions are set to fall within the scope of IHT. Any pension wealth over the £325,000 nil‑rate band could be taxed at 40%.

Depending on your plans, you may want to consider:

• Taking income gradually to reduce the size of your pot
• Using lifetime gifting allowances
• Creating a bypass trust to give more control over how wealth passes down your family

We’re here to help if you want to explore what fits your goals.

General IHT planning

Although the main thresholds remain frozen until 2031, reviewing your situation now may highlight opportunities to reduce future IHT exposure – especially if rising asset values push you close to key limits.

Dividend income: higher rates ahead

From April:

• Ordinary rate increases to 10.75%
• Upper rate increases to 35.75%
• Additional rate stays at 39.35%

The dividend allowance remains at £500.

These shifts may influence how you draw income or profits in the year ahead.

Other changes you may want to understand

We can support you with other tax updates, including:

Capital Gains Tax on Employee Ownership Trusts (EOTs)

CGT relief on qualifying disposals to EOTs reduced from 100% to 50% on 26 November 2025.
This may affect succession planning for business owners, though EOTs can still be attractive for those wanting to boost employee engagement and create a lasting legacy.

Non‑resident dividend tax credit

The tax credit for non‑UK residents will be removed from April, bringing their treatment closer to that of UK taxpayers.

We’re here if you need us

With TYE just around the corner, now’s a good time to revisit your finances and ensure you’re using the allowances available to you.

If you’d like to understand how the upcoming changes might affect your plans, we’re here to help. Please contact your adviser.

Important information

The information and references in this article do not constitute investment or tax advice. They are provided for general information only and reflect our understanding of current legislation. Tax treatment will depend on your individual circumstances and may change in future. Past performance is not a guide to future returns.