10 April 2026
While each change to the rules on an array of taxes may look small on its own, together they can increase the tax you pay and reduce reliefs you may have been relying on. Here we detail the most significant changes and consider how they may affect you as an investor or saver.
One of the biggest changes from April 6 this year is a 2% rise in the tax paid on dividends. This affects most people with investments held outside an ISA and self-employed workers or company directors who take dividends from their business.
Although everyone still gets a £500 dividend allowance, beyond that threshold more dividend income is now taxed at higher rates. For basic-rate taxpayers, rates rise from 8.75% to 10.75%, and for higher-rate taxpayers from 33.75% to 35.75%. The additional-rate dividend tax, for those earning over £125,140, remains 39.35%.
The 2025 Autumn Budget announced the biggest changes to the UK Individual Savings Account (ISA) regime since its introduction in 1999. Currently, the annual £20,000 tax-free ISA allowance can be invested into a cash or stocks & shares ISA, or a combination of both. From April 2027, the cash ISA allowance will be reduced to £12,000 annually – except for those over 65, who will retain the £20,000 limit. This means that investors must put £8,000 into another type of ISA if they want to use their full tax-free allowance.
Given the annual allowance can’t be carried over into a new tax year, it’s ‘use it or lose it’, and the key point for this year is that if you have spare funds to save or invest, now is your last chance to benefit from the current limits before they change.
Increasing numbers of estates in the UK are becoming liable for inheritance tax, and changes to the regulations in the Autumn Budget likely mean more will be affected in future.
From April 6, relief on agricultural and business property is capped at £2.5 million per person, which is a significant change for farming families and business owners, with the importance of comprehensive estate planning becoming more important for those affected.
Additionally, shares listed on the Alternative Investment Market (AIM) lose their full inheritance tax relief, with relief halved from 100% to 50%, and there’s a tightening of inheritance tax relief on charitable legacies - gifts must be made directly to approved UK-registered charities or eligible amateur sports clubs to qualify.
Finally, in a change that is likely to impact many diligent long-term pension savers, from April 2027 pensions will no longer be exempt from inheritance tax, meaning that where funds are not paid to a spouse/civil partner or a charity, they will be included in a person’s estate when calculating any inheritance tax liability – a change that could affect many people’s long-term financial planning.
Everyone gets a £3,000 capital gains tax-free allowance each year. Above this, basic-rate taxpayers pay 18% tax, and higher or additional-rate taxpayers pay 24% tax.
Sole traders and company directors may benefit from Business Asset Disposal Relief (BADR), which reduces CGT on qualifying business disposals to 14%. From April 6, this rate rises to 18%. Note that investments (such as shares) can be transferred to a spouse or civil partner without it being classed as a disposal, allowing both people to use their own CGT allowance.
From April 6, Venture Capital Trusts (VCT) income tax relief drops from 30% to 20% for new investments (with the relief dependent on holding the shares for five years). VCTs can also offer tax-free dividends and capital gains, but they’re typically only suitable for experienced investors who can tolerate higher risk.
For those working in fund management, from April 6 2026, carried interest – the profit share earned by partners in a fund - will be treated as trading profit and taxed under income tax and national insurance rather than capital gains tax. Where it meets a minimum average holding period, it can qualify for a lower effective top rate of about 34% (including national insurance contributions), rather than up to 47%.
For this new tax year, the direction of travel is clear: higher tax on dividends, reduced reliefs for certain assets, and more pressure on tax-free allowances. If you receive dividends outside an ISA, are planning to sell a business, hold AIM shares, or expect to pass on farm or business assets, it’s worth reviewing your position, making sure you are aware of your personal allowances, and, where necessary, seeking professional advice so you can plan in advance for the increased tax burden on investments.
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