Final 2025/26 Tax Year Actions

With only a few weeks remaining before the tax year ends on April 5, 2026, the window for using your 'use it or lose it' allowances is closing fast.

This year-end is particularly critical. From April 6, 2026, we will see a marked shift in the tax landscape - including increases in dividend tax rates and higher rates for Business Asset Disposal Relief. Acting now isn't just about efficiency; it’s about defensive planning.

Your essential Year-End checklist:

• Maximise Your ISA: Shield up to £20,000 from both income and capital gains tax.
• The £3,000 CGT Gift: Ensure you utilise your annual Capital Gains Tax exemption of £3,000. It cannot be carried forward to next year.
• Defuse the 60% Tax Trap: If you earn between £100,000 and £125,140, making a pension contribution can 'win back' your Personal Allowance and secure vital tax relief.
• Business Owners: With the 14% BADR rate set to rise to 18% next month, ensure any business sales in progress are finalized before the deadline.
• Trustees: Utilise the £1,500 trust CGT exemption and consider distributing income to beneficiaries to take advantage of their lower tax bands.

Looking Ahead: The Pension IHT Shift

While not an immediate deadline for this month, you should begin preparing for a major structural change starting in April 2027. For the first time, most unused pension funds and death benefits will be included in your estate for Inheritance Tax (IHT) purposes.

For years, pensions have been the 'last asset touched' because they sat outside your estate. From 2027, that strategy may flip. Large pension pots could not only face a 40% IHT bill but also push your total estate over the £2 million threshold, triggering a taper of your Residence Nil Rate Band. This 'double tax trap' - where a pot is hit by IHT and then the beneficiary pays Income Tax on withdrawals - means the 2026/27 tax year will be a vital period for re-evaluating your withdrawal and gifting strategies.

Don't leave it until April 4th.

If you'd like to discuss the tax changes mentioned above or how the changes affect your long-term legacy, please contact Taras Tymofijiw.