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 year, 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 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 will face higher costs when it comes to employee contributions.
Discover how your company can cut down on its National Insurance bill by reading our article: : A Simple Way for your Company to Reduce its National Insurance Bill | Quilter Cheviot
- 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, down from £6,000.
- Inheritance tax (IHT): New rules affecting estates have been introduced, including changes to Agricultural and Business Property Relief. .
For more information on Inheritance tax, check out our article: Inheritance tax: the new reality | Quilter Cheviot
- Council tax: An average increase of 5% in council tax at the start April. This will affect household budgets and should be factored into financial planning.
Upcoming changes:
- Stamp duty land tax (SDLT): The nil-rate thresholds for SDLT will be set at £300,000 for first-time buyers and £125,000 for subsequent purchases. This change will impact property transactions and could influence the housing market.
- Non-domiciled tax status: Major reforms are expected for individuals with non-domiciled tax status, impacting global wealth management.
2. Are you utilising ALL of your tax allowances?
The better you make use of tax allowances, the more likely your finances will be in tip top condition. Here are some key allowances that could be particularly relevant to you:
Allowances at a glance:
|
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, 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 2025/26 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. Dividend tax rates are 8.75% for basic rate taxpayers, 33.75% for higher rate taxpayers, and 39.35% for additional rate taxpayers.
Capital gains tax (CGT) exemption: The annual CGT exemption has been reduced to £3,000, down from £6,000. 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 can minimise your CGT liability and keep more of your investment returns.
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) are your best friend when it comes to growing your wealth while keeping the taxman at bay. For the 2025/26 tax year, you can invest up to £20,000 across multiple types of ISAs 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 your investments more time to grow.
Types of ISAs:
- Cash ISAs: Savings accounts where the interest earned is tax-free*. They are a safe option for those looking to preserve capital while earning some interest.
- 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: Contribute up to £4,000 per year, and the government adds a 25% bonus on your contributions.
For more information on ISAs, check out our article: Saving for the next generation: Who Wants to Be an ISA Millionaire? | Quilter Cheviot
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.
At Quilter Cheviot Financial Planning, 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 Quilter Cheviot Financial Planning today to discuss how we can help you achieve your financial goals and secure a prosperous future.
*For ISA’s 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.
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.
- 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.
**Inheritance Tax is not regulated by the Financial Conduct Authority