The start of the tax year on Monday 6 April (Easter Monday) heralds a variety of changes to tax rules, few of them welcome.
Here are the main changes that come into effect from 6 April:
Dividend tax
The rate of tax on dividends will increase by two percentage points if you pay tax at basic rate (8.75% to 10.75%) or higher rate (33.75% to 35.75%). The additional rate tax on dividends remains unchanged at 39.35%, as does the dividend allowance at just £500.
Making Tax Digital (MTD) for income tax
This starts to operate for the self-employed and landlords who have qualifying income (broadly gross income) from both sources that exceeded £50,000 in 2024/25. MTD will require you to submit quarterly returns of income and expenses to HMRC using approved software.
Inheritance tax (IHT) reforms
The new rules for agricultural and business IHT reliefs come into effect. Following changes announced in the Autumn 2025 Budget and two days before Christmas, the 100% relief allowance will be a combined £2,500,000 and will be transferable between surviving spouses and civil partners.
Venture capital trusts (VCTs)
The rate of income tax relief for the high risk investments will drop from 30% to 20%. At the same time, the size of companies covered by the scheme will double.
Capital gains tax (CGT)
The rate of CGT on gains that qualify for business assets disposal relief will rise from 14% to 18%. Other rates of CGT remain unchanged, as does the annual exemption at £3,000.
National insurance contributions (NICs)
If you work or live abroad, then you will not be able to pay voluntary Class 2 NICs (£3.65 a week) to accrue UK State pension for 2026/27 and subsequent years. You may be eligible to pay Class 3 NICs, but the cost is much higher at £18.40 a week.
Contact us
Please contact us to find out how the above applies in your circumstances and how we can help you.
Please note that the above is for general information only and does not constitute financial or tax advice. You should not rely on this information to make or refrain from making any decisions. You should always obtain independent professional advice in respect of your own situation.
