How to maximise your tax position
The 2025/26 income tax year began on 6 April 2025 and will end on 5 April 2026.With only a couple of weeks left, make sure that you’ve taken steps to improve your tax position, and prepare for key tax changes coming in 2026/27.
Beat the dividend rate rise. If you run a company and are planning on paying yourself a dividend, consider doing so before the tax year end. In 2025/26, dividends are taxed at 8.75% for basic rate taxpayers, 33.75% for higher rate taxpayers and 39.35% for those that pay the additional rate. However, from 6 April 2026, the basic and higher dividend rates will increase by two percentage points, to 10.75% and 35.75% respectively. Don’t forget the £500 dividend allowance either, which resets every tax year and offers further tax savings.
Consider capital disposals. The annual exempt amount for individuals is £3,000 in 2025/26, with most gains above this amount taxed at either 18% or 24% depending on whether you’re a basic or higher/additional rate taxpayer. While these rates and allowances will remain the same in 2026/27, the rates of business asset disposal relief and investors’ relief will increase from 14% to 18% from 6 April 2026. Time is short, but if you are considering selling a business, or qualifying assets or shares, reviewing the timing of your sale could result in tax savings.
Be proactive with IHT planning. From 6 April 2026, a new £2.5 million allowance will apply to the combined value of property eligible for 100% agricultural relief and 100% business relief, with a 50% rate of relief applicable to any qualifying relievable property over £2.5 million. If you have significant agricultural or business assets, estate planning will be critical to plan for these changes, including whether any action need be taken before 6 April 2026.
Finalise end of year housekeeping. The end of the tax year is a great time to make sure that all possible allowances and deductions have been claimed. This means maximising pension contributions, ISA investment limits, and making use of the personal allowance and personal savings allowance, if you haven’t done so already.
Get Ready for Making Tax Digital for Income Tax
From 6 April 2026, Making Tax Digital (MTD) for Income Tax will be mandatory for self-employed individuals and landlords with qualifying income over £50,000. Those in the regime will need to keep digital records and send quarterly updates to HMRC using compatible software, with a tax return still required by 31 January following the end of the tax year.
Need support with your tax affairs?
For bespoke tax planning advice, book some time with our team. Our expert advisers can help, and work with you to prepare for a tax-effective 2026/27.
