Are you ready for the new tax year?

7 minute read

Are you ready for the new tax year?

4 questions you should ask to maximise your finances

Tax rises, high interest rates, and geopolitical tensions. The last few months have been interesting to say the least. For this very reason, effective financial planning is more crucial than ever. As we head into the new tax year, here are some fundamental questions you should ask yourself to ensure you maximise your finances.

1. Are you aware of all budget changes?

Major changes to tax brackets, allowances, reliefs and more – with so many adjustments over the past few years, you’d be forgiven for missing one. Keep abreast of these changes so you can adapt your plans accordingly, while taking advantage of new opportunities.

Recent and upcoming budget changes:

National insurance contributions (NICs): The rate for employer NICs has increased to 15%, and the secondary threshold has decreased from £9,100 to £5,000. This change means businesses face higher costs when it comes to employee contributions.
Capital gains tax (CGT): The CGT rates have increased to 18% for basic rate taxpayers and 24% for higher and additional rate taxpayers. The annual CGT exemption has also been reduced to £3,000.
Inheritance tax (IHT): New rules affecting estates have been introduced, including changes to Agricultural and Business Property Relief.
Individual Savings Accounts (ISA): From 6 April 2027, the annual ISA cash limit within the overall annual ISA limit of £20,000 will be reduced to £12,000 for under 65s.
Pensions: From 6 April 2029, only the first £2,000 of pension contributions through salary sacrifice each year will be exempt from NICs. Contributions through salary sacrifice, like all contributions within existing limits, will still benefit from tax relief at one’s highest marginal rate of tax. This comes on top of the previous announcement bringing unused pensions pots within the IHT regime from April 2027 onwards.
Council tax: An average increase of 5% in council tax at the start of April. This will affect household budgets and should be factored into financial planning.
Non-domiciled tax status: Non-domiciled tax status was replaced with a residence-based regime in April 2025, impacting global wealth management.

Tax rules are subject to change and depend on individual circumstances.

2. Are you utilising ALL of your tax allowances?

Here are some key allowances that could be particularly relevant to you:

Allowances at a glance for the 2026/2027 tax year:

Allowance	Amount	Benefit
Personal allowance	£12,570	Tax-free income up to this amount
Pension contributions	Variable	Reduces taxable income, reclaim Personal Allowance if earnings exceed £100,000
Dividend allowance	£500	Tax-free dividends up to this amount
Capital gains tax exemption	£3,000	Tax-free gains up to this amount
Inheritance tax nil-rate band	£325,000	Tax-free threshold for IHT

Personal allowance: The Personal Allowance remains at £12,570. This means you can earn up to this amount without paying any income tax. If your earnings exceed £100,000, the allowance is reduced by £1 for every £2 earned above this limit.

Pension contributions: Pension contributions can reduce your taxable income, helping you reclaim the Personal Allowance if your earnings exceed £100,000. Moreover, the tax relief on pension contributions can enhance your savings, making it a win-win strategy. The annual allowance for pension contributions is £60,000 (or your Net Relevant Earnings if lower), but this is reduced by £1 for every £2 of adjusted income over £260,000, down to a minimum of £10,000.

Dividend allowance: The dividend allowance for the 2026/27 tax year is £500. This means you can receive up to £500 in dividends without paying tax. For those investing, this allowance can help minimise tax on dividend income. From 6 April 2026 the ordinary tax rate rises to 10.75% from 8.75%; and the upper rate to 35.75% from 33.75% (the additional rate is unchanged at 39.35%).

Capital gains tax (CGT) exemption: As mentioned above the annual CGT exemption currently stands at £3,000. Additionally, CGT rates have increased to 18% for basic rate taxpayers and 24% for higher and additional rate taxpayers. By timing the disposal of assets and offsetting gains with losses, you could minimise your CGT liability and keep more of your investment returns. Changes have been made to how capital gains and losses are reported so it is important that any reporting complies with the new requirements. Guidance can be found on here on the government’s website.

Inheritance tax (IHT) planning: The UK has shifted to a residence-based system for IHT, meaning long-term residents will be taxed on their worldwide assets. The nil-rate band remains at £325,000, and the residence nil-rate band is £175,000. Effective planning – such as making use of trusts and gifting assets during your lifetime – can help reduce the IHT burden and ensure more of your wealth is preserved for future generations**.

3. Are you maximising your ISA allowance?

Individual Savings Accounts (ISAs) can help grow your wealth tax efficiently. You can still invest across multiple types of ISAs up to a total of £20,000 each year without paying any tax on the returns. To make the most of this opportunity, start adding to your ISA funds early in the tax year. This way, you avoid the last-minute rush to maximise your allowance and give investments held in a stocks and shares ISA more time to grow.

Types of ISAs:

Cash ISAs: Savings accounts where the interest earned is tax-free. For the 2027/28 tax year, the annual ISA cash limit within the overall annual ISA limit of £20,000 will be reduced to £12,000 for under 65s. ISA investors do not pay any personal tax on income or gains, but ISAs do pay unrecoverable tax on income from stocks and shares received by the ISA manager. Tax treatment varies according to individual circumstances and is subject to change.
Stocks and Shares ISAs: Invest in a range of assets, including shares, bonds, and funds. The returns, whether from dividends or capital gains, are tax-free.
Lifetime ISAs: UK resident investors aged between 18 and 40 can contribute up to £4,000 per year, and the government will add a 25% bonus on top. In the 2025 Autumn Budget, the government announced it will consult on introducing a new, first-time buyer only product to replace the LISA. For now, it will still be possible to open a LISA until the new product becomes available. Account holders will also be able to continue to save into their LISA in line with the existing rules indefinitely.

Note: You will incur a Lifetime ISA government withdrawal charge (currently 25%) if you transfer the funds to a different ISA or withdraw the funds before age 60 and you may therefore get back less than you paid into a Lifetime ISA. And by saving in a Lifetime ISA instead of enrolling in, or contributing to an auto-enrolment pension scheme, occupational pension scheme, or personal pension scheme:

(i) you may lose the benefit of contributions from your employer (if any) to that scheme; and

(ii) your current and future entitlement to means tested benefits (if any) may be affected.

4. Are you receiving expert advice?

Over the past year, budgets have significantly altered the financial landscape in the UK. As a result, tax planning has had to evolve, making it trickier than ever to seize all financial opportunities. Navigating these changes can be challenging without expert guidance.

Our team excels in adapting to these shifts. Whether you're aiming to reduce tax liabilities, plan for retirement, build your inheritance, or invest wisely, we offer tailored advice to meet your specific needs.

Contact Financial Planning today to discuss how we could help you achieve your financial goals.

**Inheritance Tax is not regulated by the Financial Conduct Authority

Quilter Cheviot

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Investments and the income from them can go down as well as up, you may not get back what you invest.

This material is not tax, legal or accounting advice and should not be relied on for tax, legal or accounting purposes. Quilter Cheviot does not provide tax, legal or accounting advice. You should consult your own tax, legal and accounting adviser(s) before engaging in any transaction.

Quilter Cheviot and Quilter Investment Management are trading names of Quilter Cheviot Limited. Quilter Cheviot Limited is registered in England and Wales with number 01923571, registered office at Senator House, 85 Queen Victoria Street, London, EC4V 4AB. Quilter Cheviot Limited is a member of the London Stock Exchange and authorised and regulated by the UK Financial Conduct Authority and as an approved Financial Services Provider by the Financial Sector Conduct Authority in South Africa.