The new tax year starts on 6 April 2026, and there are several key financial changes set to come into effect.
While updates and reforms to taxes and financial legislation are normal, it’s important to build them into your financial plan to ensure your long-term goals remain on track.
A financial planner can help you adapt and adjust your plan to navigate any changes in the context of your goals, risk tolerance, and time horizon.
Read on to discover the key financial changes coming in 2026.
1. 100% Business Relief and Agricultural Relief will be capped at £2.5 million
Following the 2024 Autumn Budget, the government announced that the value of assets qualifying for 100% Business Relief (BR) and Agricultural Relief (AR) would be capped, with anything above the cap qualifying only for 50% relief.
When first introduced, the allowance was limited to £1 million per individual and could not be transferred.
However, this changed in the 2025 Autumn Budget, when the government confirmed that unused allowances could be transferred between spouses and civil partners. Shortly afterwards, the cap itself was increased to £2.5 million per person.
This is a significant change. With careful planning, you and your partner can now pass on up to £5 million of qualifying BR and AR assets free from IHT, provided the allowances are structured and used correctly.
So, if you had made adjustments in preparation for the old rules, now is a good time to review your estate plan.
A financial planner can assess the most appropriate BR and AR options for you to help ensure your wealth is transferred across generations in a tax-efficient way.
2. Dividend Tax rates will rise
From April 2026, Dividend Tax rates are set to rise by two percentage points for basic- and higher-rate taxpayers, bringing the new rates to:
- 10.75% for basic-rate taxpayers
- 35.75% for higher-rate taxpayers
- 39.35% for additional-rate taxpayers (unchanged)
If you receive dividend income, you could see your tax bill increase as a result. So, you may want to review your income sources, what you take, and from where.
A financial planner can help you assess whether your current structure remains appropriate and identify more tax-efficient alternatives where needed.
3. Venture Capital Trusts tax relief will reduce
From April 2026, the rate of Income Tax relief on Venture Capital Trust (VCT) investments will fall from 30% to 20%.
If you use VCTs as part of your tax planning, this change reduces the benefits and may affect the overall attractiveness of the scheme.
As such, it may be worth reviewing your VCTs to see what advantages they still offer your portfolio. As always, these investments carry higher risk and are not suitable for everyone.
A financial planner can help you assess whether VCTs remain appropriate for your circumstances. They can also ensure any investment decisions you make are aligned with your risk tolerance and long-term goals.
4. Statutory payments are set to increase
Statutory pay rates are reviewed each year, and another increase is due in April 2026. From 6 April 2026, the new hourly rates will be:
- £12.71for the National Living Wage
- £10.85for the National Minimum Wage
- £8.00for the apprentice rate
If you run a business and employ junior, entry-level, or lower-paid staff, these changes may have a noticeable impact on your costs. Reviewing staffing budgets early can help avoid pressure on cash flow once the new rates take effect.
A financial planner can help you understand how higher wage costs fit into your wider business finances and explore ways to manage the increase while keeping the business on track.
5. The State Pension will rise in line with average earnings
The State Pension increases each year under the triple lock, and in April 2026, it will rise by 4.8%, in line with average earnings.
As a result, weekly and annual payments will be:
- £241.30 a week (£12,547.60 a year) for those receiving the full new State Pension
- £184.90 a week (£9,614.80 a year) for those on the old State Pension
It’s worth bearing in mind that the full new State Pension will sit around £20 below the Personal Allowance. This leaves little room for additional income, meaning even modest increases from private pensions, savings, or investments could push more of your income into the tax net.
For many retirees, this makes careful income planning increasingly important to avoid unexpected tax bills.
Get in touch
We can help you build any upcoming legislative changes into your wider financial plan while ensuring your long-term goals remain on track.
To speak to a financial planner, get in touch.
Email us at hello@vwmwealth.com or call us on 0141 229 4004.
Please note
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The Financial Conduct Authority does not regulate estate planning.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
The Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs) are higher-risk investments. They are typically suitable for UK-resident taxpayers who are able to tolerate increased levels of risk and are looking to invest for five years or more. Historical or current yields should not be considered a reliable indicator of future returns as they cannot be guaranteed.
