The run-up to 5th April 2026 is the ideal time to ensure your family and business finances are arranged in the best way possible.
This Year-End Tax Planning summary highlights practical ways to take advantage of available tax reliefs and upcoming changes. All information uses 2025/26 rates and allowances, and spouse includes civil partner.
Key areas to consider include:
- The effect of fiscal drag from the continuing freeze of the Personal Allowance and tax thresholds.
- The start of Making Tax Digital for Income Tax from April 2026.
- Increase in the rate of tax on dividend income from 6 April 2026.
- Measures impacting property income, including abolition of furnished holiday letting rules and new separate property income tax rates.
- Forthcoming change to ISA rules.
- New limits for venture capital reliefs.
- Further change to Business Asset Disposal Relief.
- Latest news on agricultural and business property relief.
- Extension of Inheritance Tax to unused pension funds and death benefits.
For companies and business owners
Corporation tax
The rate payable depends on taxable profits:
- £0 – £50,000: 19%
- £50,001 – £250,000: 25% less marginal relief
- Over £250,000: 25%
Maximise capital allowances, including AIA (£1m), WDAs and Structures and Buildings Allowance. New FYAs apply from 1 January 2026.
R&D
R&D claims face increased scrutiny and new compliance requirements, including advance notification for new claimants and an additional information form. Reliefs now include a merged RDEC scheme and the Enhanced R&D Intensive Support scheme.
Profit extraction
Dividend tax rates increase from 6th April 2026, making it important to assess whether dividends or salary are more efficient. Consider acceleration of dividends before April 2026. Salary levels, NIC thresholds and the higher Employment Allowance also influence planning. Pension contributions remain a key planning tool.
Directors’ loan accounts
HMRC scrutiny has increased. Overdrawn loan accounts risk a s455 charge (35.75% from April 2026). Loans must be cleared within nine months and a day of year-end to avoid the charge.
Unincorporated businesses
Making Tax Digital for Income Tax applies from:
- April 2026 for income over £50,000
- April 2027 for income over £30,000
- April 2028 for income over £20,000
Quarterly updates will be required. Basis period reform continues to impact businesses not using 31st March or 5th April year-ends.
Tax and side hustles
People earning over £1,000 from trading or property income must notify HMRC. Digital platforms will now report user income directly to HMRC.
Business motoring
Significant tax incentives continue for electric vehicles, including 100% FYA for new zero‑emission cars until 2027. Benefit in kind percentages remain far lower than for ICE vehicles. Salary sacrifice remains beneficial for EVs.
Property matters
From 2027/28, separate Income Tax property rates apply:
- Basic: 22%
- Higher: 42%
- Additional: 47%
MTD: landlords may face up to 12 updates per year where multiple property types and self-employment income exist. Furnished holiday letting rules ended from April 2025.
Family business considerations
Involving family members can improve tax efficiency, but roles must be genuine and commercially justifiable. Review use of the Employment Allowance. Succession planning is more important due to changes in IHT and CGT. BADR becomes less generous (18% rate from 6th April 2026), creating a short window for action.
For families, couples and individuals
Tax rates and allowances
Rates differ across UK nations. Freezes to the Personal Allowance and thresholds continue until 2031. Manage the loss of Personal Allowance above £100,000 (effective 60% rate).
Savings and dividends
Savings income tax rates rise from April 2027. Dividend tax increases from April 2026, except for the additional rate.
Property income
Separate tax rates apply from April 2027.
Tax and the family
Marriage Allowance continues to allow transfer of 10% of the Personal Allowance. For jointly owned assets, income is split 50:50 unless Form 17 is filed.
Capital gains tax
Annual exemption fixed at £3,000. Spouse-to-spouse transfers remain CGT-neutral.
Children and grandchildren
Children have their own allowances. Gifts from grandparents, including via pension contributions, can be very tax efficient.
Gift aid
Used to reduce adjusted net income for key thresholds, including HICBC and the Personal Allowance taper.
Pension planning
Annual allowance remains £60,000, with tapering for high earners. Unused allowances can be carried forward three years. New HMRC evidence requirements apply from September 2025.
High income child benefit charge and tax-free childcare
HICBC now applies from income over £60,000, fully withdrawn by £80,000. A new PAYE option is available for payment. Tax-Free Childcare eligibility ends at £100,000 income.
Investing tax efficiently
Venture capital schemes (EIS, SEIS, VCTs) offer generous incentives. VCT Income Tax relief falls from 30% to 20% from April 2026.
ISAs
ISA limits frozen until 2031. Cash ISA limit falls to £12,000 from April 2027 (under age 65).
Capital taxes: CGT and IHT
Includes changes to BADR (18% rate from April 2026), cryptoasset reporting, and significant revisions to agricultural property relief (APR) and business property relief (BPR), including a new £2.5m joint lifetime allowance.
Unused pension funds and death benefits become subject to IHT from April 2027.
Year-end checklist
Highlights include:
- Maximise deductions and capital allowances
- Review remuneration and profit extraction
- Consider early dividends
- Prepare for MTD IT
- Review Employment Allowance
- Assess BADR eligibility before April 2026
- Use ISA limits and pension allowances
- Minimise HICBC impact
- Update wills and estate planning
