There will be several tax changes coming into place on April 6th. Are you and your business prepared?
Inheritance tax (IHT) reforms: The new rules for agricultural and business IHT reliefs come into effect. The 100% relief allowance will be a combined £2,500,000 and will be transferable between surviving spouses and civil partners. This change comes following the announcements made in the Autumn 2025 Budget.
Dividend tax: Businesses will be impacted by the rate of tax on dividends, which is set to increase by two percentage points if you pay tax at the basic rate (8.75% to 10.75%) or a higher rate (33.75% to 35.75%). The additional rate tax on dividends remains unchanged at 39.35%, as does the dividend allowance at just £500.
Venture capital trusts (VCTs): There are more changes affecting VCTs as the rate of income tax relief for the high-risk investments will drop from 30% to 20%. At the same time, the size of companies covered by the scheme will double.
Capital gains tax (CGT): The rate of CGT on gains that qualify for business assets disposal relief will also increase from 14% to 18%. On the other hand, the rates of CGT as well as the annual exemption of £3,000 will remain unchanged.
National insurance contributions (NICs): Other changes will come into effect, impacting those living or working abroad. From April 6th, you will not be able to pay voluntary Class 2 NICs (£3.65 a week) to accrue a UK State pension for 2026/27 and subsequent years. You may be eligible to pay Class 3 NICs, but the cost is much higher at £18.40 a week.
State pension age (SPA): For those planning for retirement, the phasing in of a new SPA of 67 will begin in April 2026. If you were born between 6 April 1960 and 5 March 1961, then your SPA will increase to between 66 years 1 month and 66 years 11 months. If you were born on or after 6 March 1961, your SPA will be at least 67.
Making Tax Digital (MTD) for income tax: This change starts to operate for the self-employed and landlords who have qualifying income (broadly gross income) from both sources that exceeded £50,000 in 2024/25. MTD will require you to submit quarterly returns of income and expenses to HMRC using approved software.
If you would like more information on how any of these changes could affect you, please get in touch.
Comments are closed.