New tax year – What is changing?
The new tax year is just a few weeks away, starting on 6 April, so allow us to refresh your memory of the key changes in store for 2026/27.
Personal tax
The Government has decided to continue the Income Tax threshold freeze until at least April 2031, while keeping the tax-free personal allowance at £12,570.
With these rates and thresholds remaining unchanged, we will see more individuals dragged into higher tax bands.
Inheritance Tax (IHT)
From April 2026, the 100 per cent Agricultural Relief and Business Relief will be capped at £2.5m per individual.
A 50 per cent rate of relief will apply to assets above this threshold.
However, the Government have confirmed that it will be transferable between spouses and civil partners.
Business tax
The main rate of writing down allowance will drop from 18 to 14 per cent from April 2026.
However, a new first-year allowance of 40 per cent for main‑rate assets will be available to ensure start-ups are not too disadvantaged.
Business owners looking to exit their business using an Employee Ownership Trust (EOT) will also be required to pay Capital Gains Tax (CGT) on 50 per cent of their profits, following the removal of the existing 100 per cent relief.
Will there be a wealth tax?
No, but the ordinary and upper rates of tax on dividend income will increase by two percentage points from April 2026. The additional rate will remain unchanged.
There are additional changes to consider, including new separate tax rates for property income and a new mansion tax.
However, these changes will not come into effect until April 2027 and April 2028, respectively.
Get advice for the new year
With so many changes to prepare for, or non-changes in some cases, understanding your position early gives you more options as the new tax year approaches.
To get your affairs up to date, book your 2026/27 tax planning consultation.
For many businesses, short-term finance can provide an essential lifeline when cash flow becomes tight. Whether a business needs support covering a gap between paying suppliers and receiving customer payments, or managing seasonal demand, the right type of finance can keep a business moving during uncertain times. However, using short-term borrowing without a clear strategy can quickly become a slippery slope of missed payments and further injections of cash. Choosing the right type of finance for your business? Not all types of short-term finance are designed for the same purpose, so businesses need to choose the option that best matches their needs. An overdraft can provide a flexible cash buffer for day-to-day cash flow pressures, with interest usually charged only on the amount borrowed. Invoice finance can help unlock cash tied up in unpaid business invoices, while a short-term loan may be more suitable for funding a specific purchase or project. Problems can arise when businesses use one type of finance to solve an issue it was not intended to address. A short-term cash flow gap can turn into a long-term borrowing habit, causing interest costs and fees to build up over time and reduce profitability. How to avoid the interest trap? While short-term finance can be a valuable tool, it is important to understand the full cost of borrowing. Some forms of finance, such as certain credit cards, bridging loans and revolving credit facilities, can have higher interest rates and shorter repayment terms. Although these products can be useful in the right circumstances, they can place additional strain on businesses with unpredictable cash flow. Understanding the total cost of borrowing can help avoid unnecessary expense and ensure the finance remains affordable. Matching the right type of finance to the right business need can help businesses manage cash flow more effectively and avoid falling into an expensive cycle of debt. How can we help? Before you fall down the slippery slope of short-term finance, get in touch with an accountant. We understand that short-term finance can sometimes feel like the only option. Our team can help assess your cash flow needs, review your funding options and support you in choosing a solution that helps your business grow while keeping borrowing costs under control. For support with short-term finance options, get in touch with our team.
The rate of inflation has hit 2.9 per cent in July 2026, up from 2.6 per cent in June, according to the latest data that has been published by the Office for National Statistics (ONS). This is the first rise in the national rate of inflation since March 2026, with the increase in the energy price cap being partly to blame. Businesses need to understand how this hike will affect them and what they must do to mitigate the issues. How is inflation affecting businesses? Higher inflation can increase the cost of running a business. Energy-intensive businesses and manufacturers are likely to feel the greatest impact, as rising energy prices can lead to higher production, transport and operating costs. Many businesses are already dealing with tight profit margins and may find it difficult to absorb these additional costs. Passing increased costs on to customers is not always straightforward, as consumers remain cautious about spending and may look for cheaper alternatives if prices rise too much. Inflation can also affect employment costs. Employees may expect higher pay to help maintain their spending power, creating additional pressure on business finances. With employment costs already rising, some organisations may take a more cautious approach to recruitment or delay planned investments. What should businesses do to mitigate the impact of inflation? With inflation remaining uncertain, businesses should review their budgets regularly and keep a close eye on cash flow. Understanding where costs are rising most quickly can help businesses identify areas where savings or efficiencies can be made. Businesses should also assess their pricing strategies to ensure they remain competitive while protecting profitability. Investing in technology, improving efficiency and carefully managing expenditure may help reduce the impact of rising costs. Strong financial planning and regular monitoring of business performance can help organisations remain resilient if inflation continues in the months ahead. How can we help? While the rate of inflation increasing to 2.9 per cent may not seem like a huge change, businesses must consider the impact that it will have on wider spending. Our team can help you manage your cash flow by completing financial forecasting to ensure that your business stays resilient should inflation rates increase further. For support with cash flow, get in touch with our team.
For many people, giving financial support to family members is an important part of their financial planning. Whether it is helping children with pension contributions or providing ongoing assistance, gifting can play an important role in Inheritance Tax (IHT) planning. The normal expenditure out of income exemption under Section 21 of the Inheritance Tax Act 1984 allows for gifts to be made without being chargeable for IHT purposes, if specific conditions are met. What are the requirements? Under Section 21, gifts can be exempt from IHT if they are part of a person's normal spending habits, are paid from their income and leave them with enough income to maintain their usual standard of living. This exemption only applies to gifts made from surplus net income, not from capital or savings. For example, withdrawals from an investment bond or the capital part of a purchased life annuity payment would not qualify. The donor must also be able to cover their normal living costs from their remaining income and cannot give away income and then use capital to make up any shortfall. Why is record-keeping important? As the exemption is usually claimed after death, it is important to keep clear records of any gifts made under the normal expenditure out of income rules. HMRC form IHT403 includes a schedule that can be used to record these gifts as they are made and can help support a future claim. To work out whether gifts need to be reported, the donor must add together any gifts made under this exemption and any chargeable lifetime transfers made during the previous seven years. If the total is more than the available nil rate band, all gifts must be reported to HMRC using form IHT100. HMRC will then review whether the exemption applies and confirm its decision in writing. If the total remains within the nil rate band, the exemption is usually reviewed only after the donor's death, when the executors can claim the exemption using forms IHT400 and IHT403. How can we help? Planning for IHT helps to safeguard your family's future, as utilising vital allowances enables you to minimise your IHT contributions. Our team of accountants can support you with gifting out of income so that you can provide for your family's future. Get in touch with our team for support with Inheritance Tax planning.