Hello everyone,
This month we will cover a few points from the Spring statement, tax return timings and prize draw and a reminder of some recent changes to consider for the coming year. As ever, if there are any questions please do get in touch.
Kind regards,
Simon
Spring statement – There was little in the statement on tax measures, although it was noted that the gulf war and other events were creating economic pressures with an expectation that there will be some help for consumers with fuel bills and measures to support youth employment. Previously announced changed remain in place (see later) and the freeze on allowances and tax thresholds continues.
Making Tax Digital (MTD) for sole traders and landlords is now being rolled out in the current year for anyone with qualifying annual income over £50,000 with the threshold reducing to £30,000 in 2027 and £20,000 in 2028. We are contacting individuals effected directly to advise the actions required and when.
HMRC is continuing to build up its enquiry capabilities and to use AI to reduce the tax gap, so we can expect to see increased activity over the coming years.
Changes to the ISA regime are being made with consultations on reducing the cash element of the annual ISA allowance for those aged under 65 to encourage equity investment.
Tax returns – a vital part of tax compliance and planning. Every year, we have over a 100 tax returns to complete and they cannot all be done in the last 3 months of the year! We would ask that you send in your tax return and accounts details as soon as they are available and by no later than 15 September 2026. To encourage early submission, everyone who has sent in all their tax year information by 15 July 2026 will be entered in a prize draw for a £50 gift voucher.
Reasons to file early include:
- Obtain tax refunds more quickly.
- To enable July payments on account to be reviewed.
- Know your tax liability to have more time to save to pay it.
- Avoid last minute stress and potential late filing penalties.
- Reduces the risk of error and allows time to resolve issues properly.
- Assist with MTD for those already mandated and preparing for MTD next year by getting up to date earlier.
- Enjoy Christmas without the thought of tax returns hanging over you!
We will be sending out our usual tax return information requests over the next few weeks but there is no need to wait for it to arrive! Start gathering the information now as it becomes available and send it when you have it ready.
We are aiming to complete all tax returns by 30 November 2026 this year so help us to achieve this target by sending in your papers once they are ready. Finally, a big thank you to those who have already brought in their papers it is much appreciated
Key changes for the coming year to be aware of:
Business owners should be aware the National Minimum Wage went up in April from £12.21 to £12.71 per hour for 21-year-olds and over see here for full details
Dividend tax rates are increasing and will be taxed at the following rates from 6 April 2026:
- 75% at the basic rate (previously 8.75%)
- 75% at the higher rate (previously 33.75%)
- 35% Additional rate (unchanged)
Dividend tax free allowance is just £500 now, so those with dividend income over £500 need to keep track of dividends to report on their tax return.
The tax rate for savings and property income will increase from 6 April 2027 and rates will be:
- Savings basic rate 22%
- Savings higher rate 42%
- Savings basic rate 47%
The personal savings allowance remains at £1,000 for basic rate taxpayers and £500 for higher rate taxpayers, additional rate taxpayers receive no allowance.
Capital Gains Tax Increases – rates for Business Asset Disposal Relief, i.e. selling your business, and Investors’ Relief, i.e. investing in other businesses increased from 14% to 18% from 6 April 2026 to match the main lower rate of 18%.
Inheritance tax – The current thresholds are being frozen until April 2031.
Unspent pensions will be subject to inheritance tax from April 2027. Anyone planning to leave unused pensions to children may wish to revisit their strategy as this may no longer be tax efficient.
IHT agricultural property relief and business property relief will reduce from April 2026. The 100% rate of relief will be restricted to the first £2.5 million of combined agricultural and business assets to help protect family farms and businesses and will be 50% thereafter. The rate of business property relief for AIM shares is reduced to 50% in all circumstances.
The new tax year means that a new set of annual allowances and exemptions become available e.g. ISA allowance, annual CGT exemption etc. There is no need to wait until later in the tax year to make ISA investments. If you have assets outside of a tax efficient wrapper, investing at the start of the tax year will enable the benefits to start earlier to shelter income and capital gains from tax.
Pension contributions – annual allowance is £60,000 (subject to taper for high earners) and the lifetime allowance is now removed.
Capital gains tax exemption remains at £3,000 for gains and in addition where disposal proceeds exceed £50,000, disposals need to be reported regardless of whether the gains exceed £3,000 (you may also want to report losses anyway as they have to be claimed within 4 years and can be carried forward indefinitely). People should keep track of capital gains and consider the need to report their gains and losses annually.
For more information or to discuss any issues raised above please contact Simon Bell by phone on 01376 571358 or email [email protected] .
This post is written in general terms and therefore cannot be relied on to cover specific situations; applications of the principles set out will depend on the particular circumstances involved and it is recommended that you take professional advice before acting or refraining from acting on any material in the newsletter.
