Whether you're a business owner, investor, or simply want to make sure you're not paying more tax than necessary, this guide walks you through everything you need to know to make the most of the time remaining.
What's Changing from 6 April 2026?
The Headlines
Before we dive into the detail, here's what's coming that makes these final weeks so important:
Dividend Planning: Accelerate?
If you're a business owner who takes dividends, you should know that dividend tax rates are increasing from 6 April 2026:
| Tax Band |
Current Rate (2025/26) |
New Rate (from 6 April 2026) |
Increase |
| Basic rate |
8.75% |
10.75% |
+2.00% |
| Higher rate |
33.75% |
35.75% |
+2.00% |
| Additional rate |
39.35% |
39.35% |
No change |
The dividend allowance stays at £500 for both years.
Let's put this into perspective with some real numbers. By bringing forward dividend payments into 2025/26, you can save:
| Dividend Amount |
Tax Saving (potential) |
| £20,000 |
£400 |
| £50,000 |
£1,000 |
| £100,000 |
£2,000 |
The actual amount you’ll save will depend on your other income sources.
If you were planning to take dividends anyway, it makes sense to consider the timing. Remember to take into account the dividends you have already declared for the year.
Remember: Additional rate taxpayers don't benefit from this acceleration since their rate isn't changing.
Distributable Reserves
Before you can declare any dividend, your company must have sufficient distributable reserves under the Companies Act 2006 - it's the law.
Common mistakes we see:
- Taking dividends before the accounts are prepared (and then discovering there aren't enough reserves)
- Not accounting for losses made during the current year
- Forgetting about accumulated losses from previous years
- Overlooking adjustments from prior year accounts
What happens if you get it wrong:
- You might have to pay the money back to the company
- Directors can be personally liable for authorising unlawful dividends
- The company could face Section 455 tax at 33.75% on overdrawn director loan accounts
- If its's not documented correctly, HMRC might treat it as salary, meaning PAYE and National Insurance become due
What you should do:
- Check your latest management accounts to confirm you have enough distributable reserves. If you're not sure, ask your accountant to help you confirm the distributable reserves
- Make sure any board resolutions are properly documented before 5 April 2026
Venture Capital Reliefs: Last chance for 30%
VCT Relief: The 30% Window is Closing
VCT income tax relief is dropping from 30% to 20% from 6 April 2026. This is a substantial reduction that makes the next few weeks your last chance to secure the higher rate.
In numbers:
- Maximum annual VCT investment: £200,000
- Relief at 30% (if you invest before 5 April 2026): £60,000
- Relief at 20% (if you wait until after 5 April 2026): £40,000
- The difference: £20,000 less relief for the same investment
If you’re considering a VCT investment, timing it before 5 April 2026 can potentially save you a lot of tax.
EIS and SEIS: Rates Staying the Same
The good news is that EIS and SEIS rates aren't changing, so there's no rush from a rate perspective. But there are still some smart planning opportunities:
| Scheme |
Income Tax Relief |
Annual Limit |
Can You Carry Back? |
| EIS |
30% |
£1m (£2m for knowledge-intensive companies) |
Yes - 1 year |
| SEIS |
50% |
£200,000 |
Yes - 1 year |
| VCT |
30% (dropping to 20%) |
£200,000 |
No |
With EIS, SEIS and VCT reliefs, you can only
reduce your income tax bill, it cannot create a refund of tax you weren’t due to pay.
The Two-Year Look-Back: A Clever Planning Tool
If you make an EIS or SEIS investment before 5 April 2026, you can choose to carry the relief back to 2024/25. This is particularly useful if:
- You already know you have a big tax bill for 2024/25
- Your income was higher in 2024/25 than it will be in 2025/26
- You want to get the tax relief sooner rather than later
These schemes have some strict rules, and getting them wrong can be expensive.
Issues to watch out for:
- You can't control more than 30% of the company you're investing in (including family members and associates)
- You can't be employed by the company (for EIS/SEIS)
- The company must be carrying on qualifying activities
- Not holding the shares for the minimum period (3 years for EIS/SEIS, 5 years for VCT)
Claim deadlines:
- EIS/SEIS: You have 5 years after 31 January following the tax year of investment
- VCT: You have 4 years after 5 April following the tax year of investment
Business Asset Disposal Relief: The Rate is Going Up
If you're thinking about selling your business and qualify for Business Asset Disposal Relief (what used to be called Entrepreneurs' relief), the rate is increasing from 14% to 18% from 6 April 2026.
That's a 4 percentage point increase, which on the maximum £1 million lifetime limit means:
- Tax at 14% (if you sell in 2025/26): £140,000
- Tax at 18% (if you sell in 2026/27): £180,000
- Extra cost of waiting: £40,000
The limit is per individual, so a married couple could save up to £80,000 if the conditions are met.
If you're already in discussions about selling business assets, it might be worth seeing if you can complete before 5 April 2026.
Capital Allowances: The Writing Down Allowance is Reducing
For businesses, the main rate writing down allowance is reducing from 18% to 14% from 6 April 2026.
The Annual Investment Allowance remains at £1,000,000, and Full Expensing (100% relief) continues for qualifying companies, so there are still good reliefs available.
Personal Allowances: Use Them or Lose Them
Every year, there are allowances that are lost if you don't use them. Here are the key ones for 2025/26:
| Allowance |
2025/26 Limit |
What it’s on |
| ISA |
£20,000 |
Tax-free savings and investments |
| Junior ISA |
£9,000 |
Per child under 18 |
| CGT Annual Exemption |
£3,000 |
See below |
| Dividend Allowance |
£500 |
Tax-free dividends |
| Personal Savings Allowance |
£1,000 (basic rate) / £500 (higher rate) |
Tax-free interest on savings |
Cash ISA Planning: Important Changes Coming in 2027
This is particularly important if you're under 65. From 6 April 2027, the cash ISA limit for under-65s drops to £12,000 (from the current £20,000 - you can also put in a further £8,000 into a Stocks and Shares ISA). The limit for over-65s stays at £20,000.
What this means: 2025/26 and 2026/27 are your last two years to make full use of the £20,000 cash ISA allowance if you're under 65.
Capital Gains Tax: Making the Most of £3,000
The annual exemption is just £3,000 now, but it's still worth using. Consider:
- Selling assets with small gains before 5 April 2026
- Selling investments and buying them back within an ISA to shelter future growth
- Transferring assets to your spouse so you can both use your exemptions
- Crystallising losses to offset against gains
Pension Planning
The annual allowance for 2025/26 is £60,000, and if you are a high earner that has yet to make significant pension contributions – there’s potential for some tax savings! You can carry forward unused allowances from the previous three years, potentially allowing you to contribute up to £220,000 in 2025/26:
| Tax Year |
Available Allowance |
| 2025/26 |
£60,000 |
| 2024/25 |
£60,000 |
| 2023/24 |
£60,000 |
| 2022/23 |
£40,000 |
| Maximum Total |
£220,000 |
Important: This is your last chance to use any unused allowance from 2022/23.
Pension contributions can be particularly valuable if you're a higher rate taxpayer (or caught in the £100k income tax trap!) because they:
- Reduce your adjusted net income, potentially saving you from the child benefit high income charge (which starts at £60,000), and reclaiming you personal allowance (which starts to be lost once your income goes over £100k)
- Help you avoid the tapered annual allowance if your income is over £260,000
- Give you immediate tax relief at your marginal rate by increasing the thresholds in which you start paying tax at the higher rates
The Tapered Annual Allowance
If your adjusted income is over £260,000, your annual allowance reduces by £1 for every £2 of excess income, down to a minimum of £10,000. Pension contributions can help keep you below this threshold.
Inheritance Tax Planning: Getting the Timing Right
Annual Exemptions
The annual exemption for inheritance tax is £3,000 per person, and you can carry forward one year's unused exemption. So, if you didn't use your 2024/25 exemption, you can gift up to £6,000 in 2025/26.
Other useful IHT exemptions:
- Small gifts: £250 per recipient (you can give this to as many people as you like)
- Wedding gifts: £5,000 (if you're a parent), £2,500 (grandparent), £1,000 (anyone else)
- Normal expenditure out of income: unlimited, as long as it's a regular pattern from your surplus income
Major Changes Coming for Family Businesses and Farms
From 6 April 2026, there are significant changes to Agricultural Property Relief and Business Property Relief
- 100% relief will be limited to the first £2.5 million of combined APR/BPR assets
- Assets above £2.5 million will get 50% relief (meaning an effective 20% IHT rate)
- Unused allowances can be transferred between spouses
- You'll be able to pay the tax in instalments over 10 years
If you own a family business or farm, this is definitely worth discussing with your adviser.
New Residence Rules for International Individuals
There's also a fundamental change to inheritance tax residence rules that affects internationally mobile individuals. From 6 April 2026, an individual's worldwide assets become subject to UK IHT after they have been UK resident for 10 out of the previous 20 tax years.
This replaces the previous complex domicile rules and creates new planning considerations for:
- Expatriates returning to the UK
- Internationally mobile professionals
- Individuals with significant overseas assets
If you're approaching the 10-year threshold, it's worth reviewing your asset structure and considering whether pre-residency planning is appropriate.
Employment and Business Considerations
Trivial Benefits
If you're a director of a close company, you can still use trivial benefits up to £300 per tax year, with individual benefits limited to £50 each. Just remember they can't be cash, cash vouchers, or rewards for performance.
FRS 102 Lease Accounting Changes
For businesses applying FRS 102, there's an important accounting change coming for accounting periods beginning on or after 1 January 2026. Operating leases will now appear on the balance sheet as "right-of-use" assets and lease liabilities, replacing the previous straight-line rental charges.
How does affect Corporation Tax?
- UK tax rules generally start from accounting profit, so these changes will directly affect corporate tax calculations
- On transition, companies may need to make one-off adjustments to their opening balance sheet
- Businesses with significant operating leases should review their accounting treatment and discuss the tax implications with their advisers
Corporation Tax Penalties
In other news, Corporation tax late filing penalties are doubling from 1 April 2026, so if you're cutting it close with company filings, the consequences are about to get more expensive.
Making Tax Digital for Income Tax
From 6 April 2026, Making Tax Digital for Income Tax becomes mandatory if you're:
- A sole trader with business income over £50,000
- A landlord with property income over £50,000
The thresholds will reduce in future years:
- April 2027: £30,000
- April 2028: £20,000
If this affects you, make sure you've signed up and chosen compatible software before the deadline.
The first quarterly update deadline is 7 August 2026. This covers the period from 6 April 2026 to 5 July 2026, so make sure you have this date in your diary.
Other Planning Points
Marriage Allowance
If you're married and one of you earns less than £12,570 while the other is a basic rate taxpayer, you can transfer £1,260 of personal allowance. This can save up to £252 per year, and you can backdate claims for four years.
Child Benefit High Income Charge
This starts when your adjusted net income hits £60,000, with full clawback at £80,000. Pension contributions and Gift Aid donations can help reduce your adjusted net income below the threshold.
National Insurance Gaps
You can fill gaps in your National Insurance record to boost your State Pension. You can normally go back six years (to 2019/20 for 2025/26).
Key Dates to Remember
| Date |
What You Need to Do |
| 5 April 2026 |
Last day for dividend acceleration, VCT investment at 30%, using CGT exemption, pension contributions with 2022/23 carry forward |
| 6 April 2026 |
MTD ITSA becomes mandatory (income >£50,000), dividend rates increase, BADR rate increases, APR/BPR changes take effect, new IHT residence rules |
| 1 April 2026 |
Corporation tax late filing penalties double |
| 7 August 2026 |
First MTD ITSA quarterly update deadline |
| 31 January 2027 |
Self Assessment deadline for 2025/26 |
Wrapping Up
The final weeks of the 2025/26 tax year offer some genuinely valuable opportunities, particularly with the changes coming from 6 April 2026. Making sure you use all your available allowances can add up to significant amounts.
The key is to act thoughtfully and make sure you understand the rules - particularly around things like distributable reserves for dividends and eligibility criteria for investment reliefs.
If you're unsure about any of these opportunities, or if your situation is complex, it's worth having a conversation with a tax adviser. The cost of getting professional advice is almost always less than the cost of missing these opportunities or getting something wrong.
Remember, good tax planning isn't about aggressive schemes - it's about understanding the rules and making sure you don't pay more than you need to.
This guide provides general information only and should not be relied upon as specific tax advice. Tax rules are complex and change frequently. Always consult a qualified tax adviser before making any decisions.
