Best not get TYEd up in knots at tax year end

You’ll likely remember the 2025 Autumn Budget. Chancellor Rachel Reeves introduced a range of tax changes to help strengthen the country’s finances, while encouraging investment and supporting UK growth.

As Tax Year-End (TYE) approaches on 5 April, it’s a good time to check everything’s in order. New rules and thresholds start straight away on 6 April, so optimising your allowances and looking for opportunities to reduce your tax bill can make a real difference.

Below, we’ve highlighted the key points to think about. As always, we’re here to talk through anything that’s relevant for you.

A quick note: 5 April falls on Easter Sunday this year, which means Thursday 2 April is the last business day before the new tax year. If you plan to act, aim to do so before then.

Private pensions

If you’re still working and have extra funds available, topping up your pension could give your retirement savings a meaningful boost.
The annual allowance allows most people to contribute up to £60,000 a year to a private pension and receive tax relief.

• You get basic-rate relief automatically.
• If you pay higher-rate or additional-rate tax, you can claim extra pension tax relief (up to 40% and 45% respectively) through self assessment, further reducing your tax bill.

This can be especially helpful if you’re in the 60% ‘tax trap’, where your personal allowance reduces once your income rises above £100,000.

If you haven’t used all your allowance in the past three tax years, carry forward rules may let you pay in more before 6 April and still receive tax relief. If you’re a higher-rate taxpayer, it’s also worth checking whether you need to claim any extra relief via self-assessment this year.

Remember that if you’re a business owner/director, your business can make contributions to your pension, which will attract Corporation Tax relief and not be treated as a taxable benefit in kind. With changes coming to dividend taxation (see below), pensions may also become an even more attractive way to take profits from your business.

State Pension

The full New State Pension is set to rise to £241.30 per week in 2026/27, or £12,547.60 a year – an increase of around £575. The rise follows earnings growth of 4.8%.

If you’re nearing State Pension age and have gaps in your National Insurance (NI) record, topping up now could increase what you receive for life. You can check your record through HMRC and use the State Pension forecast tool to see if voluntary contributions would help. Acting now could increase your pension income for life.

ISA allowances

ISA limits remain frozen until 5 April 2030:

• £20,000 annual allowance for adults
• £4,000 for Lifetime ISAs
• £9,000 for Junior ISAs and Child Trust Funds

Even with unchanged limits, inflation may reduce the real value of any ISAs you hold over time. Maximising your ISA contributions before TYE helps you capture tax-free growth while the limits still apply.

Venture Capital Trusts (VCTs) and Enterprise Investment Scheme (EIS)

EIS and VCTs continue to offer tax efficient ways to support smaller companies, but some changes are on the horizon.

VCT income tax relief will drop from 30% to 20%. If you hold VCTs or are considering new investments, it’s worth discussing how these changes may affect you.

Do note that tax treatment depends on individual circumstances and may change in future.

Inheritance Tax (IHT): Business Relief (BPR) and Agricultural Property Relief (APR)

From April, both BPR and APR will have a new £2.5m cap for 100% relief.

Spouses and civil partners will be able to combine their allowances, meaning up to £5m of qualifying business or agricultural assets can be passed on free of IHT. This is in addition to existing allowances such as the nil-rate band.

Remember that from 6 April 2026 the relief for Alternative Investment Market (AIM) shares is limited to 50%, meaning that the effective rate of IHT on AIM shares is 20%.

IHT on pensions

A major shift is coming in April 2027: inherited pensions will be subject to IHT. This means pension valued at over the £325,000 nil-rate band could face a 40% tax charge.

You may want to consider steps such as:

• phased drawdown to gradually reduce your pension pot.
• gifting during your lifetime, using available allowances and exemptions.
• using a bypass trust to guide how wealth is passed on down your family.

These decisions depend on your wider plans, so we’re here to help you explore whether any of these might be right for you.

IHT in general

There are no new limits affecting you right now, and the current thresholds stay frozen until April 2031. Even so, reviewing your position may highlight useful planning opportunities to significantly benefit you.

Dividend income

From April, dividend tax rates will rise:

• Ordinary rate: 10.75% (an increase of 2%)
• Upper rate: 35.75% (an increase of 2%)
• Additional rate: 39.35% (unchanged)

The £500 dividend allowance also is still unchanged.

These changes may influence how you take income or profits this year.

Other changes to note

Through our PWM Private Office, we can support you with other tax changes:

• Capital Gains Tax (CGT) on employee ownership trusts (EOTs).
  CGT relief on qualifying disposals to EOTs fell from 100% to 50% on 26 November 2025.
  If you own a business, this may affect your succession plans – though selling to an EOT can still appeal if you want stronger employee engagement or to create a legacy.
• Non-resident dividend tax credit
  The dividend tax credit for non-UK residents will be abolished from this April, bringing their tax treatment closer to that of UK residents.

We’re always here to help

TYE is approaching quickly, so now’s a sensible time to revisit your finances and use any allowances before the new rules start.

Your annual review may have covered some of these points already, but if you’d like to talk through anything – or explore what the changes mean for your plans – we’re here to help. Please get in touch to discuss your plans with one of our experienced financial planners by telephone on 020 7444 4030 or by email info@partnerswealthmanagement.co.uk

The information and/or any reference to specific instruments contained in this article does not constitute an investment recommendation or tax advice. The contents of the article have been prepared solely for information purposes. The article holds information on financial products and services, and such information is designed for and addressed solely to individuals seeking generic industry information. This document reflects our understanding of current legislation. Past performance is no guide to future returns.