Year End Tax Review – Overview

There were a number of tax increases announced or confirmed at the 26 November 2025 Budget, but some of them don’t take effect for several years. Knowing how tax rates are changing is a key element in reviewing your financial position, but it can be difficult to keep up to date.

For example, the Chancellor announced that the cash ISA limit is reducing from £20,000 p.a. to £12,000 (except for the over-65s) but this is not happening until April 2027. Whether holding cash or investing in stocks and shares, it is usually worth topping up your ISAs each year if you have the funds to do so. The tax exemptions they give will become more valuable over the next 15 months, with dividend tax rates increasing this coming 6 April and savings income tax rates increasing a year later.

January is a good time to review your tax affairs, as there may be the chance to make use of planning opportunities before the end of the tax year on 5 April. Examples include topping up your pension (which may be very tax-efficient), making disposals that utilise your £3,000 CGT exemption or making gifts to utilise annual Inheritance Tax (IHT)exemptions.

Also mentioned are a number of matters that those running their own companies should be thinking about, including the timing of dividend payments, maximising relief for capital expenditure and the impact of increasing car benefit charges over forthcoming years.

For the self-employed and landlords, the biggest tax change on the horizon is the phasing in of Making Tax Digital for Income Tax (MTD IT) from 6 April 2026. If affected, don’t underestimate the significance of this.

You should also review the investments that you hold. Would it be more tax-efficient to transfer ownership to a spouse, so that you can both use up your personal allowance and lower tax bands? Do you have all the documentation you need to calculate capital gains or losses on disposal of investments, including land and buildings? Now is a good time to get your paperwork in order, even if you have no current plans to sell.

It is always sensible to check your wills once a year, to see if they still meet your family needs. A lot may have happened to your personal circumstances, asset values and tax rates since your will was written. It is particularly important to do so this year if you are a farmer or own a trading business, due to the restriction on IHT business reliefs that are coming in this April. Even if you are not a business owner, the IHT changes to pensions that are due to take place in April 2027 need to be considered, as they may mean many wills need re-drafting.

It is important to appreciate all the filing and payment deadlines that you need to comply with in the self-assessment system, as the penalties and interest can be onerous if you are late. By the way, the interest rate charged on late payment of tax has gone up significantly this year!