Tax Planning Strategies 2026: Managing Your Wealth in the New UK Landscape

Newly Introduced Key Rules to Know (From Budget 2025)

• Dividend Tax Rates Rise: From April 2026, the ordinary and upper dividend rates increase by 2 percentage points.(gov.uk)
• Changes to Capital Gains Tax (CGT) Reliefs:
  • Business Asset Disposal Relief & Investors’ Relief will increase to 18% from 6 April 2026.(gov.uk)
  • Agricultural Property Relief & Business Property Relief are being reformed from that date.(gov.uk)
• Growth in Taxation of Asset & Property Income:
  • New separate tax rates for property income from April 2027 (basic rate 22%, higher 42%, additional 47%) to better align asset income with earned income tax burdens.(gov.uk)
  • Savings income rates also increase by 2 pp from April 2027.(gov.uk)

Planning Techniques in the New Regime

• Accelerate asset disposals before April 2026 where results may benefit from lower CGT or reliefs.
• Dividend versus salary mix: With dividends being taxed more, assess if paying salary (subject to NIC) or extracting dividends is more advantageous. Consider salary sacrifice schemes.
• Use reliefs effectively: If retiring, gifting or passing business/property to spouse, now with transferable reliefs (£1 million allowance transfer between spouses for certain reliefs) from April 2026.(gov.uk)

Examples

• Example 1: A business owner selling part of a company and claiming Business Asset Disposal Relief before 6 April 2026 can benefit from current CGT treatment; post that date relief level drops.
• Example 2: Landlords with property income receive sharper tax impact. Taking mortgage interest, allowable expenses deductions becomes even more important to reduce taxable property income.

Other Wealth and Largeness-Based Changes

• High Value Council Tax Surcharge (HVCTS): From April 2028 in England, properties worth £2 million+ will face a surcharge ranging £2,500–£7,500/year. Use this in evaluating property ownership and timing.(gov.uk)
• Inheritance Tax (IHT) adjustments**: The unused £1 million allowance for agricultural/business reliefs becomes transferable between spouses/civil partners; but IHT including pensions from 6 April 2027 marks further wealth transfer scrutiny.(gov.uk)

Actionable Steps for 2026 Planning

1. Review proposed disposals and consider moving them before 6 April 2026 where reliefs change.
2. Consult a tax professional about dividend vs salary strategy, especially if extracting profits.
3. Trusts and succession: ensure spouses can use transferable allowances.
4. For real estate investors: monitor property valuations relative to HVCTS thresholds.
5. For high net worth individuals: plan pension withdrawals carefully—since from April 2027, unused pension pots may become subject to IHT.