The 6th April Shift: Are You Ready?

With the tax year ending this Sunday, now is the perfect time to ensure you have made the most of this year’s benefits. Significant updates are arriving next week, so a final check now will help keep your plans on track.

2025/26 Year-End Tax Guide & Future Outlook

• Dividend allowance: Individuals can receive up to £500 in tax-free dividend income each tax year.
• Capital gains tax allowance: Individuals can make up to £3,000 in profit from selling assets, such as shares or property (excluding the main home), before capital gains tax (CGT) applies.
• ISA allowance: Individuals can save up to £20,000 per year in ISAs tax-free for 2025/26 tax year. Note that the cash ISA limit is set to be cut to £12,000 from April 2027 to encourage investment in stocks and shares ISAs, so plan ahead.
• Pension annual allowance: Directors can contribute up to £60,000 into their pension each year with tax relief.
• Trading allowance: Individuals can earn up to £1,000 a year from other work, such as a side hustle, without paying tax on it.
• Inheritance tax annual gift allowance: Individuals can gift up to £3,000 each year to beneficiaries without it counting towards an estate for inheritance tax (IHT) purposes. You can also carry forward up to £3,000 from the previous year if it was unused.
• Marriage allowance: If one partner earns below the Personal Allowance, they can transfer up to £1,260 of their unused allowance to their spouse.
• Rent-a-room relief: If you rent out a furnished room in your home, you can earn up to £7,500 per year tax-free from that income.
• Pension unused relief: Any unused pension relief available for 2022/23 must be used by 5 April 2026.
• Pension contributions: Any pension contributions or top-up pension contributions must be paid by 5 April 2026 to obtain tax relief for the 2025/26 tax year.

Making Tax Digital (MTD) for Income Tax

Starting 6 April 2026, self-employed individuals and landlords with a gross income over £50,000 must transition from a single annual return to four quarterly digital updates, plus a final annual return.

This new mandate requires the use of HMRC-compatible software, such as Xero or QuickBooks, to maintain real-time digital records of all transactions.

To support our clients through this change, we provide our own internal software designed for MTD returns.

Inheritance Tax (IHT) Planning for Business Owners

Significant reforms to Agricultural Property Relief (APR) and Business Property Relief (BPR) are also set for April 2026. A new £2.5 million cap on 100% relief is being introduced for combined business and agricultural property.

If your business or farm is valued significantly above this, your current Will or succession plan may no longer be tax-efficient.

To be on the right side of accounting, choose us for all your accounting needs.