The start of the new tax year on 6 April (which falls on Easter Monday this year) brings a series of significant adjustments to the UK’s fiscal landscape. From shifts in investment incentives to the way you report income, these changes may have a direct impact on your financial planning.
Shifts in Investment and Dividend Taxation
Investors should take note of several adjustments to tax rates and reliefs:
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Dividend Tax: The rate of tax on dividends will increase by two percentage points for most. Basic rate taxpayers will see a rise from 8.75% to 10.75%, while higher rate taxpayers will increase from 33.75% to 35.75%. The additional rate remains at 39.35%, and the dividend allowance is held at £500.
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Venture Capital Trusts (VCTs): To balance a widening of the scheme to include larger companies, the income tax relief for these high-risk investments will drop from 30% to 20%.
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Capital Gains Tax (CGT): For those qualifying for Business Asset Disposal Relief, the CGT rate will rise from 14% to 18%. Other rates remain unchanged, with the annual exemption staying at £3,000.
New Reporting Rules: Making Tax Digital (MTD)
For the self-employed and landlords, a major administrative shift begins this April. Making Tax Digital now applies to those with qualifying gross income exceeding £50,000 in the 2024/25 period. This mandate requires individuals to submit quarterly returns of income and expenses to HMRC using approved software, replacing the traditional annual self-assessment for many.
Inheritance Tax (IHT) and Agricultural Reforms
Following the Autumn 2025 Budget, significant reforms to agricultural and business IHT reliefs take effect. The 100% relief allowance is now a combined £2,500,000 limit. Crucially, this allowance is transferable between surviving spouses and civil partners, providing a layer of protection for family-run enterprises and farms.
National Insurance and State Pension Adjustments
Changes are also coming to how we accrue benefits and when we can claim them:
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Expat NICs: If you live or work abroad, you will no longer be able to pay voluntary Class 2 NICs (£3.65 a week) to accrue UK State Pension for the 2026/27 year onwards. You may still be eligible for Class 3 NICs, though the cost is notably higher at £18.40 per week.
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State Pension Age (SPA): The gradual shift to a State Pension age of 67 begins this April. Those born between 6 April 1960 and 5 March 1961 will see their SPA rise to between 66 years and 1 month and 66 years and 11 months. Those born after 6 March 1961 should prepare for a minimum SPA of 67.
Secure Your Financial Future with Chartwell
With tax thresholds frozen and rates rising, “fiscal drag” and legislative changes are increasingly impacting personal wealth. Navigating these complexities requires a proactive approach to ensure your estate and investment strategies remain efficient.
At Chartwell Wealth Management, we help our clients stay ahead of the curve, providing clarity in an ever-changing regulatory environment. If you would like more information on how any of these changes could affect your specific financial position, please get in touch with our team today.
Important Information: Tax treatment varies according to individual circumstances and is subject to change. The Financial Conduct Authority does not regulate tax advice. The value of the investment and the income from it can fall as well as rise and investors may not get back what they originally invested. Past performance is not a reliable indicator of future performance.
