As we approach the end of the 2025-26 tax year, it’s a good time to review your personal tax position and consider whether any action is needed before 6 April.
Several important changes are on the way from April 2026 and understanding them now can help you make well‑informed decisions and avoid unexpected tax charges.
Our practical planning points will help you and your family prepare for the April changes, and we also highlight some of the developments further ahead that could affect you in future years.
Key tax changes coming in April 2026: what individuals need to know
APR and BPR reforms from April 2026: how the new relief caps affect succession planning
From 6 April 2026, the current inheritance tax (IHT) Agricultural Property Relief (APR) and Business Property Relief (BPR) rules will be replaced with a capped 100% relief for qualifying agricultural and business property, with any qualifying property above the cap qualifying for 50% relief. This marks a significant shift from the longstanding unlimited reliefs, meaning the overall value of your land and business interests will play a much greater role in determining your IHT position. The reforms will also affect how qualifying assets held in trusts are taxed.
Since the reforms were first announced, the government has introduced two major changes. First, the relief cap has been increased from £1 million to £2.5 million, giving individuals far more capacity to protect qualifying assets. Second, the allowance will now be transferable between spouses and civil partners, allowing a surviving spouse to benefit from any unused allowance on the first death. This transferability will apply even where the first death occurs before the new rules take effect. Both changes will help some families maintain continuity of ownership without needing complex restructuring.
Preparing for the new APR/BPR rules: actions to take before 6 April 2026
Given this significant reform to APR and BPR, you may want to consider:
- Reviewing the value of your qualifying agricultural or business assets to assess whether the relief cap would be sufficient,
- Looking at how land, buildings and business interests are owned to check whether any restructuring would put your family in a better position under the new rules,
- Revisiting wills and succession plans to ensure they make full use of the transferable allowance,
- Considering whether any lifetime gifts or reorganisations might be more effective if completed before 6 April 2026,
- Ensuring that any existing planning undertaken under the old APR and BPR regime is still appropriate once the new rules apply, and
- Reviewing the position for trusts, including whether any action should be taken before 6 April 2026 and how any additional IHT will be funded.
For more on the APR and BPR reforms see our article Agricultural Property Relief and Business Property Relief reforms from 6 April 2026. If you’d like to discuss how these changes affect your position, please speak to your usual Saffery contact or get in touch with James Stevens in respect of trusts.
MTD for ITSA from April 2026: who is affected and what to do now
From April 2026, many self‑employed individuals and landlords will need to follow new digital reporting rules under Making Tax Digital for income tax self-assessment (MTD for ITSA). Those within scope will have to keep digital records and send quarterly updates to HMRC, with an end of period statement replacing the current annual return. The new system is intended to give taxpayers a clearer picture of their tax position throughout the year and reduce the risk of errors.
Individuals with 2024-25 trading and/or property income over £50,000 a year will come within the regime from 6 April 2026, with the first quarterly updates due by 7 August 2026. Those with such income over £30,000 a year in 2025-26 will follow in April 2027, and those over £20,000 in 2026-27 will follow in April 2028.
Not everyone whose trading and/or property income is above the £50,000 threshold will need to join the regime in April, as various exemptions are available. Some are temporary, some permanent, and some automatic while others require an application. It’s important to check whether you fall within the rules or whether an exemption may apply, particularly if your circumstances mean digital reporting would be difficult.
Ahead of April 2026, you should:
- Check whether your property or trading income brings you within the MTD for ITSA thresholds,
- Consider whether you qualify for an exemption, and whether it’s automatic or you need to apply,
- Review how you currently keep records to ensure they can be maintained digitally,
- Ensure you understand the new reporting cycle and what information needs to be submitted each quarter, and
- Look at software options early to avoid a last‑minute transition.
For more on MTD ITSA see our article MTD for income tax: what you need to know. If you’d like help preparing for MTD ITSA, please speak to your usual Saffery contact or get in touch with Shirley McIntosh.
BADR and Investors’ Relief: should you accelerate disposals before the April 2026 CGT rate rise?
Business Asset Disposal Relief (BADR) and Investors’ Relief offer valuable opportunities to reduce capital gains tax (CGT) on qualifying disposals of business interests. BADR is available to individuals disposing of their personal business, interests in a partnership, or shares in the company they work for where the qualifying conditions are met. Investors’ Relief is available to individuals disposing of qualifying shares in unlisted trading companies, provided they are not a director or employee. In some circumstances trustees can also benefit from these reliefs.
Both BADR and Investors’ Relief reduce the CGT rate applied to qualifying gains and are each subject to a £1 million lifetime limit. From April 2026 the rate of CGT applying under BADR and Investors’ Relief is increasing from 14% to 18%, meaning that the potential value of the relief is reducing as follows:
Example
Chloe is planning to sell shares in her own company in Spring 2026. She’s a higher rate taxpayer, the gain on the sale is £600,000, the disposal qualifies for BADR and she makes no other chargeable disposals in 2025-26 or 2026-27.
Anti-forestalling rules apply to certain share reorganisations and also where a contract for sale is made between 30 October 2024 and 5 April 2026 and completed on or after 6 April 2025.
Given the reductions in the benefits of these reliefs from 6 April 2026, if you’re considering imminently selling assets that qualify for BADR or Investors’ Relief, you should consider whether it would be beneficial to bring the transaction forward to maximise the relief.
For more about these reliefs see our articles on Business Asset Disposal Relief (BADR) and Investors’ Relief. For advice about the reliefs please speak to your usual Saffery contact or get in touch with Sean Watts.
Carried interest changes from April 2026: the new rules
From 6 April 2026, carried interest will no longer be taxed under the capital gains tax rules. Instead, it will be treated as trading profit and charged to income tax and Class 4 National Insurance contributions (NICs). Where the carried interest meets the conditions to be treated as ‘qualifying’, only 72.5% of the amount will be taxed, giving an effective rate broadly similar to today but with the addition of NICs.
Whether carried interest is ‘qualifying’ will depend on several factors, including the average holding period of the underlying investments. In many cases this will require more detailed calculations than under the current rules. Non-UK residents will be subject to income tax on carried interest to the extent that their duties were carried out in the UK, although some days can be excluded.
The changes could also lead to:
- Double taxation as some jurisdictions are likely to continue to treat carried interest as capital gains,
- Accelerated tax payments, as tax and NICs on trading profits are taken into account when calculating payments on account, whereas CGT is not.
For more on these changes see our article Changes to the tax treatment of carried interest from 6 April 2026 and if you would like specific advice on how these changes, please speak to your usual Saffery contact or Robert Langston.
Removal of dividend tax credit for non‑UK residents: impact from April 2026
From 6 April 2026, non‑UK tax residents who receive UK dividend income will no longer be able to claim the notional tax credit that currently applies at the ordinary dividend rate. This credit can sometimes be set against other UK tax liabilities, including where non‑UK residents also receive UK property or partnership income. Its removal may therefore increase the overall UK tax cost for some individuals.
The change will also affect non‑UK resident life interest trusts receiving UK dividend income, as they too will no longer benefit from the notional credit.
If you’re a non-UK resident in receipt of UK dividend income you should:
- Check whether you currently rely on the notional tax credit to reduce any UK tax liabilities.
- Understand whether the removal of the credit could affect your UK tax position from April 2026.
- Review the impact on any non‑UK resident trusts that receive UK dividend income.
If you’d like to discuss how this change may affect you or any trust you are connected with, please speak to your usual Saffery contact or Alexandra Britton-Davis.
Non-UK residents and NICs: Class 2 abolished from April 2026 – what are your state pension options?
From 6 April 2026, non‑UK residents will no longer be able to pay voluntary Class 2 National Insurance contributions (NICs) and as such will be unable to preserve or accrue UK state pension entitlement through these contributions. Instead, only Class 3 contributions will be available. Class 3 NICs are significantly more expensive, costing just under £1,000 a year in 2026–27, compared with around £190 a year for Class 2 NICs.
New applications to pay Class 3 NICs from overseas will also face tighter conditions. Individuals will need either 10 consecutive years of UK residence or have paid at least 10 years of National Insurance contributions while in the UK, which means you could lose the ability to make voluntary contributions completely.
To receive the UK State Pension, individuals need 10 qualifying years for the minimum entitlement and 35 qualifying years for the full amount. Voluntary NICs are therefore important for some of those living or working abroad to prevent gaps in their record.
If you currently pay Class 2 NICs abroad by Direct Debit, HMRC has asked you not to cancel it. HMRC will collect your final 2025–26 Class 2 payment on 10 July 2026.
If you currently pay Class 2 NICs as a non-UK resident, you should review whether you want to continue contributing from April 2026, whether you will qualify to pay Class 3 NICs, and, if so, ensure you apply under the new rules.
If you’d like to discuss your NIC position, please speak to your usual Saffery contact.
Expanded temporary non-residence rules from April 2026: how company distributions will be taxed?
The temporary non‑residence (TNR) rules are designed to prevent individuals leaving the UK for a short period, realising income or gains tax‑free while abroad, and then returning without paying UK tax. To avoid a UK tax charge under these rules, an individual must remain non‑UK resident for more than five complete tax years. If they return within five years, certain income and gains realised during their time abroad become taxable immediately on their return.
For individuals returning to the UK from 6 April 2026, the scope of the TNR rules will widen. Dividends and other distributions received from a UK close company, or from a non‑UK company that would be close if UK‑resident, will now fall within the rules regardless of when the underlying profits were made. The government is also expanding the rules to capture indirect payments, including distributions or stock dividends received through another entity or via another individual, and some loan arrangements.
These changes mean that individuals who become non‑UK resident and then seek to extract value from a closely held company during their period abroad may be caught more easily by the TNR rules if they return to the UK within five years.
Care will be needed to understand how these extended rules interact with any plans to take funds out of a company while non‑resident.
If you’d like to discuss how this change may affect you or any trust you are connected with, please speak to your usual Saffery contact or Alexandra Britton-Davis.
Essential year-end planning tips: allowances, reliefs and timing strategies
In addition to the above suggestions, don’t forget basic tax planning ideas such as:
- Using lower rate bands, dividend allowance, personal savings allowance, CGT annual exempt amount and IHT £3,000 exempt gift allowance,
- Making tax efficient investments eg using your ISA allowance,
- Making pension contributions and Gift Aid donations,
- Ensuring losses are used efficiently,
- Considering the timing of transactions,
- Claiming all available reliefs,
- Tax efficient extraction of business profits, and
- If you’ve previously claimed the remittance basis, consider whether the Temporary Repatriation Facility could help you bring historic foreign income or gains to the UK at a reduced tax rate.
Also see our 2025-26 year-end tax planning guide for businesses.
Key tax changes coming in 2027: pensions, property and savings tax increases to prepare for
- Prepare for unused pension funds and death benefits to fall within the inheritance tax regime from April 2027.
- Ensure you’re ready for new rules from April 2027 that will treat employment‑related image rights payments as employment income subject to income tax and NICs – a change expected to have its greatest impact on footballers and other professional athletes.
- Prepare for higher property and savings income tax rates from April 2027, with the basic, higher and additional rates increasing by two percentage points to 22%, 42% and 47%. These rates will apply to savings income UK‑wide, and to rental profits and income from Real Estate Investment Trusts (REITs) in England, Wales and Northern Ireland, with Scotland and Wales able to set their own rates.
Some of these ideas are based on government announcements which haven’t yet been legislated.
How Saffery can support your personal tax planning for 2025-26 and beyond
For personalised tax planning advice or to discuss other upcoming tax changes not covered in this article, please speak to your usual Saffery contact or contact us using this form.
