HMRC moves to digital correspondence
March 2026

Email alerts will replace automatic postal letters, directing taxpayers to view new documents in their personal tax account or the HMRC app. The change is part of HMRC’s digital by default plan, which aims for 90% of interactions to be online by the 2029/30 tax year and is expected to save £50 million per year in print and postage costs.

Only taxpayers who are digitally excluded, or those who actively opt out, will continue to receive letters by post. HMRC confirmed that anyone already using the HMRC app or a personal tax account will be among the first to move to digital notifications. When logging in, they will be prompted to provide or confirm their email address or mobile number. These details will be used solely to alert users that new correspondence is available in their online account.

HMRC stressed that taxpayers who do not use digital services will continue to receive paper letters. Safeguards will be in place to ensure that the elderly and those with disabilities can rely on traditional communication if needed.

Legislation in the Finance Bill 2025/26 will give HMRC the power to require digital contact details from users of its online services. The rollout will begin in spring 2026 and expand gradually as systems are updated.

HMRC states that the change will free staff to support those who most need help, while enhancing the speed and reliability of communications. Paper versions will remain available and must meet the same clarity standards as digital formats.

Talk to us about your finances.

government increases IHT relief cap for key assets
March 2026

From 6 April 2026, a new allowance will cap how much qualifying agricultural and business property can receive 100% relief. The allowance will be £2.5 million per estate, up from the previously proposed £1m.

Individuals will have an allowance that refreshes every seven years, and trusts will have an allowance that refreshes every 10 years. Where the combined value of qualifying business and agricultural assets exceeds the allowance, the excess is expected to qualify for relief at 50%, rather than 100%.

The allowance is expected to be available to both individuals and trusts, and transferable between spouses and civil partners. This means couples may be able to apply up to £5m of 100% APR and BPR between them, in addition to other inheritance tax allowances such as the nil rate band.

The change will be introduced through an amendment to the Finance Bill 2025/26, which the Government said it expects to bring forward in January 2026. The Government also stated that the higher threshold would reduce the number of APR-claiming estates affected in 2026/27 from 375 to 185.

The policy has been revised several times since its initial announcement at the Autumn Budget 2024. Anyone with significant farming or business assets, including those using trusts, may wish to review succession and estate planning ahead of April 2026.

Talk to us about your taxes.

salary, dividends and pensions: your 2026 pay guide
April 2026

Paying yourself from your business sounds simple until you start weighing up salary, dividends and pensions, and how each one affects your take-home pay. The “best” answer also shifts depending on profits, cashflow and what else is going on at home, for example, child benefit, student loans or whether you are close to the higher-rate tax threshold.

This guide breaks down the main options for the 2025/26 tax year and explains the key thresholds that tend to shape decisions. It is designed as a practical reference you can come back to when you are planning the year ahead, topping up income, or thinking about longer-term savings. Where it helps, we flag the points that usually need a quick check before you act.

the 2025/26 numbers that drive most decisions
These are the figures that typically matter when deciding how to extract income.

Income tax bands and personal allowance for England, Wales and Northern Ireland in 2025/26

• Personal allowance: £12,570
• Basic rate: 20% on taxable income up to £50,270
• Higher rate: 40% on taxable income from £50,271 to £125,140
• Additional rate: 45% over £125,140

The personal allowance reduces by £1 for every £2 of income above £100,000.

If you pay Scottish income tax (on non-savings, non-dividend income), the bands and rates differ. HMRC publishes Scottish PAYE rates for 2025/26.

National Insurance (NI)
NI often makes salary decisions more sensitive than people expect.

Employees (Class 1 primary) in 2025/26 (category A, most common):

• 0% up to the primary threshold
• 8% on the main band
• 2% above the upper earnings limit.

Employers (Class 1 secondary) in 2025/26 (category A):

• 15% once earnings exceed the secondary threshold.

Key thresholds include:

• Primary threshold (employee NI starts): £12,570 per year
• Secondary threshold (employer NI starts): £5,000 per year
• Lower earnings limit (protects benefit entitlement even when no NI is due): £6,500 per year.

Dividends, allowance and tax rates
Dividends do not attract NI, but they do come with their own tax rules.

• Dividend allowance: £500 (taxed at 0%, it does not extend your tax bands)
• Dividend tax rates (2025/26):

• • 8.75% (basic rate band)
  • 33.75% (higher rate band)
  • 39.35% (additional rate band)

A useful reminder from HMRC’s published material: over 90% of UK taxpayers do not receive taxable dividend income, which is one reason dividend reporting rules catch people out when they start investing or running their own company.

Corporation tax reminder (because dividends come from post-tax profits)
If you run a limited company, dividends are paid from profits after corporation tax.

For company profits (nonring-fenced) the main published rates are:

• 19% small profits rate for profits under £50,000
• 25% main rate for profits over £250,000
• profits between £50,000 and £250,000 pay the main rate reduced by marginal relief.

This matters because “dividends are lower taxed than salary” is not always true once you include corporation tax.

what salary gives you and what it costs
Salary can still play a useful role even where dividends are available.

• It uses your personal allowance predictably.
• It creates “earned income”, which can matter for certain reliefs and for personal pension contribution limits.
• It helps build entitlement for state benefits, depending on levels and credits, and the lower earnings limit is the key figure for many people.
• It is a deductible business cost for corporation tax when paid wholly and exclusively for the trade (normal remuneration rules apply).

Employer NI now starts £5,000
The employer NI threshold for 2025/26 is £5,000 per year, and the employer rate (category A) is 15%. That means a salary set close to the personal allowance may create an employer NI cost unless another relief offsets it.

Employment allowance can offset employer NI
Employment allowance can reduce an eligible employer’s annual Class 1 NI bill by up to £10,500, but not everyone qualifies.

Two common points to be aware of are:

• a company with only one director must not have that director as the only employee liable for employer (secondary) NI if it wants to claim
• connected companies can only claim once across the group.

For some single-director companies, employer NI becomes a significant cost of running a salary strategy.

For directors and NI, timing can matter
Directors are subject to specific NI calculation rules (an annual earnings period), which means payroll timing can affect deductions. This is one area where it is worth modelling rather than relying on rules of thumb.

how dividends work and the practical limits
Dividends can be a tax-efficient tool, but only when you follow the underlying company law and tax rules.

Dividends are only available when the company has distributable reserves
A limited company can only pay dividends from distributable profits (after accounting for accumulated losses). If reserves are tight, salary or pension contributions may be the only practical routes.

Dividends are not deductible for corporation tax
Salary reduces taxable profits. Dividends do not. That is why dividend planning should always include a corporation tax view, not just your personal tax position.

Dividend allowance and reporting
In 2025/26, the dividend allowance is £500, and dividend tax rates depend on your income tax band. Dividends also feed into other calculations that are based on total taxable income, for example adjusted net income (see child benefit, below).

pensions are often the most tax efficient “pay yourself later” option
For many owner managers, pensions sit alongside salary and dividends, rather than competing with them.

Pension contributions can reduce tax in more than one place
Depending on how you fund them, pension contributions can:

• reduce personal income tax (personal contributions, subject to limits and relief method)
• reduce corporation tax (employer contributions, subject to normal deductibility rules)
• avoid NI when made as an employer contribution, which is often a key advantage versus extra salary.

Annual allowance in 2025/26
The annual allowance is £60,000 in 2025/26. High earners can face the tapered annual allowance. HMRC’s published thresholds for 2025/26 include:

• threshold income limit of £200,000
• adjusted income limit of £260,000
• minimum tapered annual allowance of £10,000.

If you have already flexibly accessed pension benefits, the money purchase annual allowance is £10,000 for 2025/26.

Personal contributions depend on relevant earnings, but dividends usually do not count
Tax relief on personal pension contributions is generally limited to 100% of relevant UK earnings.

If most of your income comes from dividends, that can restrict how much you can contribute personally with tax relief. Employer contributions from your company can often solve that issue, subject to the annual allowance and the company’s position.

For non-earners and low earners, small contributions still get relief
If you earn less than £3,600 a year, you can still get tax relief on contributions up to £2,880 net (grossed up to £3,600).

Pension participation remains high
The latest government figures show that around 89% of eligible employees in Great Britain saved into a workplace pension in 2024 (21.7m people). Overall participation across all employees was around 82% (23.3m people).

For business owners, the message is simple: pensions remain a mainstream, tax-advantaged way to build long-term assets.

common approaches by business type

Limited company owner-managers
Most extraction plans blend the three routes.

1. A base salary, often set with NI thresholds and benefit entitlement in mind.
2. Dividends as the flexible top-up, assuming reserves allow.
3. Employer pension contributions where cashflow supports longer-term saving.

What changes the answer quickly is:

• whether the company can claim employment allowance
• whether your total income approaches £50,270 (upper earnings limit for NI and higher rate tax entry point)
• whether your total income approaches £100,000, where the personal allowance starts tapering.

Why employer NI now matters
If a company pays a director a salary of £12,570 in 2025/26, then:

• employee NI is generally nil at that level (it starts above £12,570)
• employer NI may apply above £5,000 at 15% unless reliefs are available.

If the company cannot claim employment allowance, that employer NI cost can reduce or remove the historical advantage of “salary up to the personal allowance”. If the company can claim employment allowance, the cost may be fully offset.

This is exactly where a tailored comparison helps, because corporation tax, profits and cash extraction needs all interact.

Sole traders and partnerships
When you do not have dividends, you draw profits. In practice, “pay yourself” planning often focuses on:

• understanding profit levels early enough to avoid surprises in payments on account
• using pension contributions to reduce taxable income where appropriate.
• watching the same thresholds (higher rate entry, personal allowance taper, child benefit charge).

If incorporation is on the table, you should run a full comparison. The decision includes legal responsibilities, profit volatility and admin costs, not just tax.

household issues that can change the “best” answer

The high-income child benefit charge and dividends
The high-income child benefit charge (HICBC) applies when adjusted net income exceeds £60,000 (for tax years starting from 2024/25 onwards).

Adjusted net income includes dividends. The House of Commons Library explains that child benefit is fully withdrawn by £80,000 under the current taper design.

This means dividend planning can have a direct impact on whether your household keeps child benefit.

Student loan repayments
If you are self employed or complete self assessment for another reason, income can be assessed across the year. HMRC works out student loan repayments from your self assessment return, and repayments are based on your income for the whole year.

A practical example from the Low Incomes Tax Reform Group shows plan thresholds for 2025/26, including Plan 1 (£26,065) and Plan 2 (£28,470), and how self assessment can apply when income is spread across sources.

For company directors taking dividends, this is worth checking carefully. Payroll deductions may not be the full story if you also complete self assessment.

what has been announced for after 5 April 2026
This guide uses 2025/26 figures, but “pay yourself in 2026” often means decisions that fall into the next tax year. HMRC has published measures that would increase dividend tax rates from 6 April 2026, including raising the ordinary and upper dividend rates.

If you expect to pay dividends around the tax year end, it may be worth scheduling a short review before 5 April 2026 to confirm timing, reserves and the most current rules.

practical checklist for the rest of 2025/26
If you want to take action before 5 April 2026, these steps usually provide the most value.

1. Forecast your total personal income for the tax year, including salary, dividends, benefits, interest, rental income and any other taxable income.
2. Identify which thresholds you are near, especially £50,270, £60,000, £100,000 and £125,140.
3. Confirm whether your company can claim employment allowance, and if not, quantify employer NI when setting salary levels.
4. Check distributable reserves before declaring dividends, and document dividend decisions properly.
5. Review pension scope, including annual allowance position, taper risk and whether employer contributions make more sense than personal ones.
6. If child benefit applies, model adjusted net income and consider whether pension contributions could reduce exposure to the charge.
7. If you are in self assessment, include student loan considerations in the forecast, especially if income is split between payroll and other sources.

Before the end of the tax year, it is worth taking a step back and checking how your actual numbers compare with what you planned, especially if profits have moved, you have taken irregular dividends or your household income has changed. A simple forecast for the remainder of 2025/26 can show whether you are about to cross a key threshold, whether a pension contribution could reduce tax, or whether a different mix of salary and dividends would leave you better off while still protecting cashflow.

If you would like a sense check, we can run a few scenarios using your year-to-date figures and what you expect to draw between now and 5 April 2026, then set out clear next steps.

Discuss the intricacies of paying yourself with our experts.

spring statement
April 2026

Gain a clear, structured understanding of the UK’s latest economic and fiscal outlook. This in-depth analysis of the Spring Forecast 2026 breaks down what the updated projections mean for growth, inflation, public finances, and the rising tax burden without the noise of speculation.

Explore how modest economic growth, falling borrowing, and historically high but stabilising debt shape the financial landscape through to 2030. With insights grounded in the Office for Budget Responsibility’s latest data and the Chancellor’s statement, this guide highlights the key trends influencing households, businesses, and long-term planning.

From fiscal drag and tax pressures to interest rates, spending risks, and market sensitivities, discover the practical implications behind the numbers and what to watch as the economic outlook evolves.

Click here to view the spring statement.

e-commerce record-keeping and HMRC reporting
April 2026

Online selling can scale quickly. That’s good for revenue, but it puts pressure on records, VAT decisions and how you report to HMRC. It also changes how your transactions “look” on paper. Instead of one sales ledger and one bank account, you often have several moving parts at once – a storefront or marketplace, a payment processor, a fulfilment partner and sometimes multiple advertising platforms feeding demand. Each one produces its own reports, timelines and deductions, and those do not always line up neatly with what hits your bank.

The other change is visibility. Digital platforms and marketplaces now report seller details and income information to HMRC each year. HMRC can cross-check what platforms report against self assessment returns, corporation tax computations, VAT returns and the digital records you keep under Making Tax Digital (MTD). That doesn’t mean selling online creates a problem by default, but it does mean gaps show up more easily, and inconsistencies take longer to explain if your records are not structured and complete.

This guide is designed as a practical reference for UK businesses selling online. It focuses on what you should keep, how long you should keep it and the reporting rules that now apply to digital platforms. It also flags the most common problem areas we see for online sellers – such as mixing up net payouts with sales, losing track of refunds or treating platform fees inconsistently – and sets out straightforward controls that keep records clean without adding unnecessary admin.

why this matters most than it used to

Online shopping remains a large share of retail activity. In December 2025, the Office for National Statistics (ONS) reported that 28.3% of retail spending was online (up from 28.0% in November 2025), and online sales values were 11.1% higher than December 2024.

For businesses, that growth often comes with:

• more transactions (and more refunds and chargebacks)
• more intermediaries (platforms, payment processors, fulfilment providers)
• more cross-border sales and shipping, which can change VAT outcomes
• more data held by third parties that HMRC can compare to your filings.
  

The goal is simple: keep clean, consistent records so you can (1) run the business well, and (2) back up your tax position if HMRC ever asks.

what counts as “selling online” for record-keeping purposes

From a compliance point of view, it does not matter whether you sell:

• through your own website (for example, via Shopify)
• through marketplaces such as Amazon, eBay or Etsy
• through social commerce or app-based storefronts
• via card payments and wallets like PayPal or Stripe.
  

What changes is where the evidence lives (your own system vs someone else’s dashboards) and whether the platform has its own reporting obligations to HMRC.

the core principle: profit is taxed, but proof is what HMRC asks for

Your tax position normally flows from profit. For example: Sales income (turnover), less allowable costs, equals taxable profit. But HMRC will not “take your word for it” if they ever check. They expect records that show:

• what you sold
• when you sold it
• what you were paid (and what fees were deducted)
• what it cost you to supply
• any VAT you charged or reclaimed (if VAT-registered)
• how you calculated the figures that went into returns.
  

That means you need to capture gross activity, not just what lands in your bank.

what to keep: a practical e-commerce records list

1) Sales records  (gross, not yet payouts)

For each sales channel, keep evidence of:

• order date and order number
• customer location (UK, EU, rest of world)
• items sold, quantities and prices
• delivery/postage charged (if any)
• discounts and vouchers
• refunds and cancellations
• VAT charged (where relevant).

Common trap: Treating the platform payout as “sales”. Payouts are usually sales minus fees minus refunds/chargebacks. If you start from payouts, your bookkeeping will often understate turnover and overstate margins.

2) Platform statements and settlement reports

Download and retain:

• monthly statements
• transaction-level exports (orders, fees, refunds)
• settlement/payout reports
• any VAT invoices the platform issues to you (for fees/services).
  

These reports can change if the platform reprocesses refunds or disputes, so saving periodic exports helps you evidence the position at the time.

3) Payment processor records

Keep:

• processor payout reports (and timing differences)
• chargeback/dispute logs
• fees and currency conversion charges
• any rolling reserves held back.

4) Evidence for costs

Keep receipts/invoices for:

• stock purchases and import paperwork
• packaging and shipping
• fulfilment and warehouse charges
• website costs, apps, subscriptions
• advertising and marketing spend
• professional services (legal, bookkeeping, insurance)
• staff costs and subcontractors (plus contracts where relevant).

5) Bank records and reconciliations

Bank statements remain important, but you should also keep:

• reconciliation schedules showing how payouts map back to sales activity
• notes explaining unusual items (large refunds, one-off adjustments).
  

If you run multiple channels, separate bank accounts (or at least separate tracking) makes reconciliation far easier.

6) Stock records

Stock can become a problem quickly for online sellers, especially where returns and damaged items are common. Keep:

• stock received notes
• inventory movement reports (including write-offs)
• returns logs (resellable vs scrapped)
• periodic stock counts.
  

This is operationally useful and also supports cost of sales and profitability analysis.

how long to keep records

Different rules apply depending on your structure and taxes.

Self-assessment (sole traders/partnerships)

If you’re self-employed or in a partnership, you must keep your tax records for at least 5 years after the 31 January filing deadline for the relevant tax year.

VAT records

VAT record-keeping is usually at least six years. If you use the VAT One Stop Shop (OSS) scheme (or previously used MOSS), HMRC notes a 10-year requirement.

Limited companies

For limited companies, you must generally keep records for six years from the end of the last company financial year they relate to (and longer in some situations, such as late company tax returns or ongoing compliance checks).

In practice, many businesses keep a consistent “six years plus current year” archive (digital where possible) because it reduces the risk of deleting something you later need.

digital platform reporting rules: what platforms report to HMRC

From 1 January 2024, UK digital platform operators must collect and report seller details and income information to HMRC annually. If you sell through a UK platform, the platform reports the information collected for a calendar year by the following January (for example, 1 January 2024 to 31 December 2024 reported by 31 January 2025).

What details platforms can ask for

For individuals, platforms may request name, address, date of birth and a tax identifier (such as a national insurance number). For companies, they can request the legal name, business address and a tax identifier (such as a company registration number).

When platforms do not report (good sellers)

The gov.uk guidance says your details will not be reported if you make fewer than 30 sales of goods in a calendar year and receive less than 2,000 euros (about £1,700) for those sales.

What this means for businesses (practically)

1. Assume HMRC can see platform-level totals (income and activity indicators)
2. Expect questions if your tax return numbers do not align with platform data. That does not mean you have done anything wrong, but it makes good record-keeping more important.
3. Check your seller profile details (legal name, address, registration numbers). Mismatches create admin later
4. Keep copies of what platforms say they reported. Platforms must provide sellers with a copy of the information reported.

A simple control: Reconcile platform totals to your books

At least quarterly, reconcile:

• gross sales per platform statement
  – minus refunds
  – minus platform fees
  – equals net payouts (which should tie back to bank receipts, allowing for timing)
  

This control catches missing months, duplicated imports and miscategorised refunds early.

VAT issues that show up often for online sellers

VAT is where online selling can change outcomes quickly, especially when you sell cross-border or store stock in multiple locations.

VAT registration threshold (UK)

In the 2025/26 tax year, the UK VAT registration threshold is £90,000 taxable turnover (on a rolling 12-month basis). You can also register voluntarily below the threshold, which sometimes helps where you have VAT-bearing costs and sell to VAT-registered customers.

Marketplace and overseas goods rules (high level)

If you sell goods to UK customers and the goods are outside the UK at the point of sale, special rules can apply. The gov.uk website sets out rules where online marketplaces can become liable for VAT in certain scenarios, including where the consignment value is £135 or less and the goods are sold through an online marketplace. If you import goods, keep import documentation (including evidence of import VAT and duty where relevant). Missing import evidence is a common reason VAT reclaims get challenged.

VAT evidence: What HMRC expects

For VAT purposes, HMRC expects readable, complete records and they generally require VAT records to be kept for at least six years. This includes:

• VAT invoices issued and received
• a record of supplies made and received
• import/export documents where relevant
• digital records required under MTD (see below).
  

If you sell to customers outside the UK, the VAT position can depend on customer location, delivery terms and where the goods are at the point of sale. Treat overseas VAT as a prompt to get specific advice early, rather than trying to “patch it later”.

making tax digital: what changes for online sellers

MTD for VAT (already live)

All VAT-registered businesses must keep VAT records digitally and submit VAT returns using compatible software. (The rules became mandatory for all VAT-registered businesses regardless of turnover from April 2022.)

Separately, HMRC applies a points-based penalty system for late VAT returns, with a £200 penalty when you reach the relevant points threshold.

MTD for income tax (from 6 April 2026)

If you are a sole trader (or landlord) with total annual income from self-employment and property over £50,000 (for the 2024/25 tax year), HMRC says you must use MTD for income tax from 6 April 2026.

Even though this start date sits in the 2026/27 tax year, it affects what you should do now because MTD relies on clean digital records and a workable bookkeeping process.

HMRC also confirms that for those mandated from 6 April 2026, they will not apply penalty points for late quarterly updates for the first year (2026/27), although penalties can still apply for late tax returns or late payment.

What online sellers should do during 2025/26

• Make sure your bookkeeping captures gross sales, fees and refunds correctly (per channel).
• Confirm you can produce a quarterly view of income and costs without a year-end scramble.
• If you use spreadsheets, check whether you need bridging software or a move to accounting software.
• Clean up your chart of accounts so “platform fees”, “payment processing fees”, “refunds” and “sales” are clearly separated.

a compliance-friendly workflow

Monthly

• Import orders and fees from each platform.
• Reconcile payouts to bank receipts.
• Check that refunds and chargebacks are posted correctly.
• File purchase invoices and receipts (digitally, in a consistent folder structure).

Quarterly

• Review VAT position (if registered): sales by VAT rate, evidence and any unusual items.
• Run a management profit and loss (P&L) and compare margins by channel (platform fee changes often show up here first).
• Check platform-reported totals vs your bookkeeping totals (where available).

Annually

• Download full-year platform reports and keep a copy (even if you can access them online).
• Check year-end stock position and write-offs.
• Review whether turnover indicates VAT registration is needed (or whether voluntary registration still makes sense).
• Confirm that your business details are consistent across platforms (legal name, address, registration numbers).

common errors that cause tax and reporting problems

1) Mixing personal and business transactions

This makes reconciliations slower and increases the risk of missing income or claiming private costs. Even a basic separation (dedicated bank account and card) helps.

2) Treating “payouts” as turnover

If you only record what hits the bank, your accounts can miss:

• platform fees (which are costs, not a reduction of turnover for bookkeeping purposes in many set-ups)
• refund timing differences
• chargebacks and reserves.
  

It also makes VAT reporting harder because VAT normally starts from the taxable supply, not the payout.

3) Incomplete VAT evidence

Missing VAT invoices, unclear supplier details or lost import paperwork can all block VAT recovery.

4) Ignoring overseas and multi-location stock issues

If you store goods in different jurisdictions (including fulfilment networks), you can trigger registration and reporting obligations outside the UK. This is one of the areas where early advice saves time and cost.

5) Underestimating how often data changes

Refunds, partial refunds, replacements and disputes can adjust prior periods. Saving monthly exports gives you an audit trail.

practical next steps

Selling online can be operationally simple for customers, but it is rarely simple behind the scenes. The volume of transactions, the speed of refunds and disputes, and the number of third parties involved (marketplaces, payment processors, ad platforms, fulfilment partners) all make accurate reporting harder if your record-keeping is not set up for it. The biggest risk is not usually a dramatic error – it’s small inconsistencies that build up over time: missing a month of platform fees, recording payouts as turnover or letting stock adjustments and returns sit outside the bookkeeping. With the right set-up, though, it becomes very manageable.

Need further assistance? We are here to help.

tax card 2026/27 March 2026

year-end tax guide 2025/26 February 2026

Prepare for the end of the 2025/26 tax year with our practical UK Year-End Tax Guide. This guide outlines key tax allowances, reliefs, and planning opportunities to help you reduce your tax bill before 6 April.

Covering essential areas such as income tax, pensions, ISAs, capital gains tax, inheritance tax, and business tax planning, it highlights the most effective steps individuals and business owners can take now.

With tax thresholds frozen and rules continuing to change, early planning is crucial to avoid overpaying and to make the most of available reliefs.

Click here to read the full guide.

autumn budget 2025: facing the future                                                                                        November 2025

your complete guide to every key change

The Autumn Budget 2025 arrives at a critical moment for the UK economy. After years of inflationary pressure, rising borrowing costs, and ongoing demands on public services, the Chancellor’s message this year is one of caution, recalibration, and long-term restructuring.

Rather than offering headline-grabbing tax cuts, this Budget signals a shift toward a more sustainable and fair fiscal framework, one that seeks to raise revenue while supporting public investment and reshaping the way Britain taxes income, savings, and wealth.

economic and fiscal landscape
The government’s fiscal plans are anchored in expectations of modest but steady economic growth. Budget projections point to improving stability, supported by infrastructure investment and gradual productivity recovery.

At the same time, the Office for Budget Responsibility forecasts the UK tax burden will rise to around 38% of GDP by the end of this Parliament, a historic high that underlines the government’s revenue-raising approach while maintaining essential public spending.

The Chancellor also reaffirmed a commitment to reducing day-to-day borrowing and placing debt on a downward path. These fiscal rules explain the absence of major tax cuts in the short term.

personal taxation: the quiet squeeze continues
Income tax thresholds remain frozen, extending fiscal drag as wage growth pushes more earners into higher tax bands. National Insurance remains unchanged for now, though simplification remains on the government’s agenda.

Dividend tax thresholds also stay frozen, and the planned reduction of the Dividend Allowance from April 2026 is still on course, tightening the landscape for investors and owner-directors who rely on dividend income.

pensions and savings: a defining shift for higher earners
From 2029, a £2,000 cap will apply to salary-sacrifice pension contributions before National Insurance becomes payable. This marks a significant change for higher earners and is expected to raise £4.7 billion by 2029/30.

The 25% tax-free pension lump sum remains untouched for now, though pension reform continues to be an area under review.

While speculation surrounded potential ISA allowance cuts, the Budget confirmed instead a broader ISA review in 2026, signalling that changes may still lie ahead.

property, wealth, and capital taxes
A new surcharge on properties valued above £2 million was announced, with full details to follow. The direction is clear: a greater share of the tax burden is shifting toward wealth and high-value assets.

Capital Gains Tax rates remain unchanged, but allowances continue to reduce. Reliefs for second homes and property portfolios will also be reviewed, raising future costs for landlords and investors.

business and corporate taxation
Corporation Tax remains at 25%, with no increases signalled. Importantly, full expensing has now been made permanent, allowing businesses to deduct 100% of qualifying investment from taxable profits.

R&D incentives have been expanded, particularly for SMEs in science, technology, AI, and advanced manufacturing. A new Innovation Allowance will further support early-stage growth.

Business rates reform will introduce more frequent revaluations, while targeted support for retail and hospitality continues through 2025/26.

public services and infrastructure
Despite fiscal tightening, public investment remains central. Additional NHS funding will focus on digital modernisation, while transport, housing, energy networks, and green projects receive long-term backing.

cost of living measures
Benefits and Universal Credit will rise with inflation from April 2026. Energy support continues for vulnerable households, and the rollout of 30-hour free childcare expands further for working families.

a subtle but significant shift in the tax system
While not dramatic, this Budget represents a meaningful recalibration, tightening reliefs, taxing income and wealth more evenly, and prioritising long-term stability over short-term wins.

For individuals, investors, and business owners, forward planning has never been more important. Understanding these changes now is key to navigating the UK’s evolving tax landscape.

need help navigating the autumn budget 2025?
If you’re unsure how these changes affect your tax position, business strategy, or long-term planning, our expert advisors are here to help.

Speak to DAS Accounting & Partners for personalised tax planning, business advisory support, and strategic guidance.

Get in touch today to discuss how the Autumn Budget 2025 impacts you and how to stay ahead of the changes.

wealth transfer strategies for high-net-worth individuals                                                        January 2026

practical steps to pass on wealth tax-efficiently.

Intergenerational wealth planning is most effective when tax, investment, family governance, and timing work together. This guide sets out practical options using current UK rules and allowances. It explains how to combine annual exemptions and larger lifetime gifts, where trusts and family investment companies can help, and why pensions continue to be central after the lifetime allowance changes.

It also covers portfolio tactics for capital gains, opportunities for business and agricultural reliefs, and the role of structured philanthropy. For internationally mobile families, we highlight the shift to the new foreign income and gains regime and the move towards residence-based inheritance tax (IHT) exposure – so timing and residence decisions can be taken with eyes open.

set clear goals before you optimise tax
Start by writing down the outcomes you want over a 10–20 year horizon:

• Who should benefit, when, and with what guardrails?
• What income does the donor need to retain, now and in later life?
• Which assets are suitable for lifetime gifts, and which are better held until death?
• What level of administrative complexity, cost, and investment risk is acceptable?

Agree these principles with family members who will be involved. It reduces friction later and guides choices between gifts, trusts, pensions, companies, and philanthropy.

lifetime gifting: use exemptions first
Lifetime gifts reduce the taxable estate and can move growth to the next generation.

core exemptions – simple, repeatable

• Annual exemption: Give up to £3,000 each tax year (carry forward one year if unused). Small gifts up to £250 per recipient are separate. Wedding gifts are exempt up to £5,000 (child), £2,500 (grandchild) or £1,000 (others).
• Normal expenditure out of income: Unlimited gifts from surplus income are immediately IHT-exempt if they are part of a pattern, come from income (not capital), and do not reduce your standard of living. Keep clear records of income, spending, and regular gifts.

Potentially exempt transfers (PETs): Gifts to individuals are outside IHT if the donor survives seven years. If death occurs within seven years, taper relief can reduce tax on the gift after year three. PETs remain a mainstay for large transfers where control via trusts is not required.

practical tips

• Prioritise assets with strong growth prospects so future gains occur outside the estate.
• Consider capital gains on disposal; use the £3,000 capital gains tax (CGT) exemption each year and re-base asset costs across the family where appropriate.
• Document intent and keep a simple gift ledger; it speeds probate and reduces HMRC queries.

trusts: control, protection and targeted reliefs
Trusts can separate economic benefit from control, protect vulnerable beneficiaries, and support long-term governance. However, relevant property trusts face entry (20%), 10-yearly, and exit charges above available nil-rate band (NRB) and share the donor’s £325,000 NRB across related settlements.

Trusts remain powerful, but should align with clear purposes (education, housing, protection) and be sized for expected charges.

Residence nil-rate band (RNRB) planning: Watch estate values around £2m due to tapering of the RNRB. In some cases, lifetime gifts that bring the estate below £2m can restore some or all of the £175,000 RNRB on death.

Business and agricultural reliefs: Qualifying business property and certain AIM/unquoted shares can secure 100% or 50% IHT relief after a two-year holding period, subject to trading tests and excepted asset rules. Relief is generous but not automatic; due diligence on trading status and evidence of ownership periods is essential.

From 6 April 2026, a combined £1m allowance for the 100% rate of business and agricultural property relief applies per individual, with unused allowance transferable to a spouse or civil partner. Amounts above £1m get relief at 50%.

family investment companies: where do they fit?
Family investment companies (FICs) can help retain control, centralise investment management, and pass value via growth shares to heirs, with transfers taxed under CGT/IHT rather than income. They work best when:

• you plan to retain capital, not distribute heavily in the near term (to avoid double taxation)
• you have a clear share class design (for example, voting “founder” shares, non-voting growth shares for heirs)
• you accept ongoing company compliance and dividend extraction rules

FICs don’t attract specific IHT reliefs, but can sit alongside trusts (such as a trust holding growth shares) to combine control with protection. Obtain corporate, tax, and legal advice before implementation.

pensions: still central to intergenerational planning
Pensions continue to be a tax-efficient wrapper for growth and income, with added estate-planning features.

contributions and reliefs

• Contribute up to £60,000 (subject to earnings), with carry-forward available from the previous three years. Tapering applies from adjusted income £260,000, down to a £10,000 minimum. If you have flexibly accessed defined contribution (DC) benefits, the money purchase annual allowance (MPAA) caps DC contributions to £10,000.
• From April 2029, NIC relief on pension contributions made via salary sacrifice will be capped at £2,000 a year, which may reduce the appeal of very large sacrifice arrangements.

new allowances replacing the lifetime allowance

• Lump-sum allowance (LSA): £268,275 caps tax-free pension commencement lump sums across all schemes.
• Lump-sum and death-benefit allowance (LSDBA): £1,073,100 caps tax-free lump sums, including certain death benefits; amounts above these limits are taxable at the beneficiary’s marginal rate when taken as lump sums. Transitional protections may adjust these figures for some individuals.

death benefits

• Generally, where death occurs before age 75, beneficiary drawdown or lump sums are free of income tax; on/after 75, they are taxed at the recipient’s marginal rate. From 6 April 2027, most unused pension funds and certain death benefits will fall within the estate for IHT. Budget 2025 confirms new rules allowing executors to ask schemes to withhold up to 50% of taxable death benefits for up to 15 months to meet IHT, and to discharge executors from IHT on pension rights discovered after HMRC clearance. Review nominations and estate liquidity well before that date.

planning pointers

• High earners should test the affordability of maximising allowances in the years before retirement, using carry-forward where available.
• Coordinate pension withdrawals with ISA funding and broader gifting strategy.
• Keep your expression of wishes up to date so scheme administrators can pay benefits quickly and as intended.

charitable giving: efficient tools for impact
Philanthropy can advance family values and reduce tax.

• Relief is now focused on UK charities: Gift Aid and, from 2025/26, the main IHT charity exemptions apply to direct gifts to UK charities and qualifying clubs.
• Gifts of quoted shares, land or property to charity attract income tax relief at market value and no CGT, in addition to IHT relief for lifetime and death-bed gifts.
• Donor-advised funds (DAFs) provide a flexible alternative to setting up a charity, allowing an immediate tax deduction followed by staged grants over time under your family’s guidance.
• If you support non-UK charities or use cross-border structures, review your plans – IHT relief will generally be limited to direct gifts to UK charities from late 2025/early 2026.

Consider including charitable legacies in your will. Where 10% or more of the net estate passes to charity, the estate may qualify for the 36% reduced IHT rate.

entrepreneurial and growth-capital reliefs
High-net-worth individuals who back early-stage companies can combine succession aims with growth capital:

• SEIS: 50% income tax relief on up to £200,000 per year, partial CGT reinvestment relief, minimum three-year holding, high risk and strict qualifying rules.
• EIS: 30% income tax relief up to £1m (or £2m where at least £1m is in knowledge-intensive companies), CGT deferral or exemption may be available, minimum three-year holding.
• VCTs: Currently 30% income tax relief on new subscriptions up to £200,000 a year, scheduled to reduce to 20% for investments from 6 April 2026, with dividends and gains remaining tax-free if conditions are met and shares are held at least five years.

These vehicles are illiquid and higher risk; use them to complement, not replace, diversified core assets.

property and portfolio design for multi-generational aims
Property choices: Consider how much housing wealth you want embedded in the taxable estate. Downsizing, family co-ownership structures, or gifting deposits can align homes with succession goals. Where the RNRB applies, ensure the will passes a qualifying interest in the main residence to direct descendants and watch the £2m taper threshold.

From 2028, owners of English residential properties over £2m will face a High Value Council Tax Surcharge, which may influence decisions on holding or restructuring high-value homes.

Tax-aware portfolio withdrawals: Many high-net-worth households draw ISAs first (tax free), then pensions, then general investment accounts. For intergenerational aims, this order may flip: keeping pensions invested (subject to the 2027 IHT change) while using ISA and general investment account funds to support gifts or trust funding can sometimes improve the family-level outcome.

Revisit this annually. The Autumn Budget 2025 increases tax rates on dividends, savings income, and (from 2027) property income, which may tilt the balance further towards using pensions and ISAs as long-term wrappers.

CGT management: Use the £3,000 exemption each year; spread disposals across spouses/civil partners to use two allowances and two basic-rate bands where possible. Consider bed-and-ISA or bed-and-spouse tactics to re-base holdings and improve future flexibility.

cross-border families after the 2025 reforms
The new foreign income and gains (FIG) and residence-based IHT rules mean domicile is less relevant. Planning now focuses on:

• timing of UK residence and the first four-year window for FIG
• the long-term resident IHT test, which brings worldwide assets into scope after sustained UK residence
• the treatment of offshore trusts and whether historic structures still meet your objectives

Inbound or returning families should build a residence, remittance, and IHT roadmap at least a year before moving. Outbound families should understand the tail period for continued UK IHT exposure after departure.

Budget 2025 adds further offshore anti-avoidance rules, including for temporary non-residents and some historic excluded property trusts, so existing cross-border structures should be reviewed in detail.

wills, letters of wishes and family governance
Tax efficiency fails if legal documents do not reflect your intent. Review the following:

• Wills: Keep them current. Consider flexible provisions (such as discretionary trusts, powers of appointment).
• Letters of wishes: Provide guidance to trustees and executors; update after major life events.
• Powers of attorney: Ensure trusted people can act if capacity is lost.
• Executor preparedness: Maintain a secure asset and liability register, plus contact details for advisers.
  

A short annual review avoids the common problem of stale documents and missing paperwork.

practical checklist for the next 90 days

• Update your net worth schedule and cashflow, including expected gifts and bequests.
• Confirm beneficiary nominations on pensions and life assurance.
• Review use of IHT exemptions (annual £3,000, small gifts, marriage gifts) and set up regular gifts out of income with records.
• If your estate is near £2m, model the RNRB taper and consider gifts to restore relief.
• Re-check trust holdings against trading tests for business relief, and the new £1m APR/BPR allowance and transfer rules.
• Maximise pension funding within the £60,000 allowance (or tapered/MPAA limit), and align with the LSA/LSDBA framework.
• For cross-border families, map your status under the FIG regime and residence-based IHT.
• Align charitable giving with Gift Aid and, if useful, explore DAFs.
• Recent anti-avoidance changes tighten the IHT treatment of some offshore and agricultural structures and the way trust exit charges are calculated, so older arrangements should be reviewed.

bringing it together: a model pathway

Effective wealth transfer is rarely about a single tactic. Results come from a clear destination, steady use of annual allowances and selective use of structures where they add control or protection. Keep pensions, ISAs and general investments working together; use gifting to move future growth outside the estate; and revisit your plan each year as rules, markets and family needs evolve. For cross-border families, plan residence and timing early so UK tax outcomes reflect choice, not chance.

If you would like help prioritising the next actions for 2026, we can model options against your objectives, test sensitivities and prepare a simple plan that sets out what to do this quarter, what to defer and what to monitor for future opportunities.

If you want practical, tailored guidance, reach out to us.

preparing for a UK business exit                                                                                                               August 2025

Selling or passing on your business is one of the biggest financial events you will ever face. The decision to step away from a company you have built carries significant cash, tax and lifestyle consequences. With the right groundwork, you can structure the deal to meet your goals, move funds into vehicles that match your risk appetite and leave enough liquidity for life after work.

Early preparation also gives you time to resolve any compliance issues, strengthen your accounts and present a track record that attracts the highest possible price. By modelling different deal options now, you can see how each one affects your net proceeds, pension limits and inheritance-tax position. Planning ahead lets you use reliefs that are still available – such as business asset disposal relief and the frozen income tax thresholds before any future Budget changes them. It also allows your family to understand the financial shape of the transaction and to update wills, trusts and insurance where needed.

This guide explains the practical steps to follow, from setting objectives to investing the proceeds, and highlights the tax rates, allowances and valuation trends that apply in the 2025/26 UK tax year. We hope it gives you a clear starting point and prompts the conversations that will lead to a smooth, profitable exit.

how to ensure financial success

set clear objectives long before you market the company

Most owners think first about headline price, but three other factors deserve equal weight.

• Deal structure: Will you accept staged payments, an earn-out or a loan-note element? Earn-outs featured in more than 60% of UK small or medium-sized enterprise (SME) transactions reported by BDO during 2024, mainly to bridge price expectations in a volatile market. Staged payments shift risk: you may pay less tax up front, but you rely on the buyer’s future performance.
• Post-sale income: Draw up a personal cashflow forecast that covers at least 20 years. Include inflation and remember that the full new state pension is £230.25 a week in 2025/26.
• Legacy: Decide whether you want the business to remain independent, merge with a larger group or become employee-owned. More than 2,250 UK companies are now employee-owned, up from fewer than 150 in 2014, showing the model’s growing appeal.

Putting these goals on paper early gives your advisers a clear brief and avoids late-stage disagreements among shareholders.

understand how buyers will value you

Private-company acquirers usually apply an earnings multiple-most often applied to EBITDA (earnings before interest, taxes, depreciation and amortisation)-adjusted for non-recurring items. The median EBITDA multiple for UK SMEs rose to 5.4 × in 2024, up from 5.0 × the year before, reflecting stronger buyer confidence. A robust valuation exercise should:

• normalise earnings (for example, remove one-off Covid grants or founder salaries above market rate)
• highlight growth drivers, such as recurring revenue or protected intellectual property
• benchmark the resulting profit against sector peers so that buyers focus on performance, not perception.

In certain instances where EBITDA is not deemed the most appropriate metric, turnover or discounted future cashflows may instead be used.

put your records in order and pre-empt due diligence questions

Buyers usually ask for five years of data. Common stumbling blocks include deferred VAT, undocumented research and development (R&D) claims and missing employment contracts. Tackling these in advance avoids price chips later and signals professionalism.

area-typical buyer question-pre-sale action we recommend

• Revenue recognition – Are sales booked when performance obligations are met? – Align policies with IFRS 15 or FRS 102 and document cut-off procedures.
• Tax compliance – Are all HMRC returns filed and liabilities paid? – Download the latest statements for corporation tax, VAT and PAYE from HMRC’s online services at least six months before marketing. Having PDFs that show nil or fully reconciled balances reassures buyers that all filings and payments are up to date.
• Share options – Do unexercised options dilute value? – Verify that all EMI options remain qualifying and fully compliant: check that the original grant was notified to HMRC on time, that the annual ERS returns up to the most recent 6 July have been filed, and confirm no disqualifying events have arisen. Where a past notification was missed, use HMRC’s late-registration procedure or consider granting fresh qualifying options.

A written “data-room index” that lists every file, folder and version helps keep the sales process on track and reduces professional-fee overruns.

know your personal tax bands and allowances for 2025/26

Note: Different figures apply for Scotland.

All thresholds are frozen until at least April 2026, which means fiscal drag is pushing more income into the 40% and 45% bands each year. If you expect part of the sale consideration to be paid across two tax years, you may be able to use two sets of allowances.

capital gains tax on a share sale

From 6 April 2025 the CGT rates on most assets are 18% within the basic-rate band and 24% above it. Residential property sales attract the same rates.

business asset disposal relief (BADR)

• Lifetime limit: £1m
• Rate: 14% for disposals on or after 6 April 2025
• Qualifying period: two years of 5% shareholding and voting rights.

If you expect to make several qualifying disposals, consider whether accelerating one or more completions before 6 April 2026 could save tax. Gains that complete up to 5 April 2026 are taxed at 14%; from 6 April 2026 the Business Asset Disposal Relief rate on qualifying gains within your £1 million lifetime allowance is scheduled to rise from 14% to 18%. Gains that exceed the £1 million limit will instead be taxed at the standard CGT rates (currently 18%/24%). If you expect to realise more than £1 million of qualifying gains, consider whether accelerating part of the sale before 6 April 2026 could reduce the tax on the first £1 million.

corporation tax steps before you advertise the sale

The main corporation tax rate is 25% for profits above £250,000. Companies with profits of £50,000 or less still pay 19%, with marginal relief in between. Practical ways to reduce the effective rate include the following.

• Full expensing: A £500,000 qualifying plant purchase made now saves £125,000 in tax at 25%. The cash benefit shows up in headline EBITDA and, by extension, in the deal multiple.
• Pension contributions: Company payments cut profits and are exempt from employer national insurance contributions (NICs). A £60,000 contribution costs the company £45,000 net after tax, but credits your pension with the full amount.

Watch associated-company rules if you have more than one trading or property subsidiary; grouped profits can push you into the 25% bracket earlier than expected.

optimise remuneration and pensions in the past two trading years

• Annual allowance: The allowance is £60,000. A taper starts at adjusted income of £260,000 and can reduce the allowance to £10,000.
• Lump-sum allowance: You can normally take up to £268,275 tax free after the lifetime allowance was abolished in April 2024.

bonus or dividend?

• Corporation tax rate: A bonus reduces taxable profits, saving corporation tax at up to 25% – but it also incurs employer National Insurance at 15%.
• Personal tax band: Above the £50,270 upper-earnings limit, employee NIC falls to 2%; below it, the 8% rate often tips the balance in favour of dividends.
• Dividend allowance: The first £500 of dividends in 2025/26 is tax-free, slightly improving the dividend outcome.
• Cashflow needs and pension strategy: Salary can be sacrificed into pensions NIC-free; dividends cannot.

consider a holding company or a family investment company

A UK holding company can receive the sale proceeds free of CGT under the substantial shareholding exemption if it has held at least 10% of the trading subsidiary for one year. You then control the pace at which cash comes out – either as dividends over several years or as a capital reduction subject to CGT at your marginal rate. The structure is also helpful if you want to reinvest part of the proceeds in a new venture without paying tax twice.

A family investment company (FIC) lets you:

• gift non-voting shares to adult children while keeping control of voting shares
• ring-fence growth outside your estate for inheritance tax (IHT)
• pool family wealth in a single, professionally managed portfolio.

IHT after the sale: manage the proceeds safely and efficiently

1. Bank security: The Financial Services Compensation Scheme covers £85,000 per person per banking licence. Split large balances across several institutions and consider National Savings & Investments for further protection.
2. Quick diversification: Move surplus cash into short-dated gilt funds or Treasury bills while you design a long-term portfolio. Gains on gilts are CGT-free for individuals.
3. Tax shelters: Fund ISAs (£20,000 each per tax year) and top up pensions if you still have annual allowance space.

business property relief (BPR) at 100% applies to shares in an unquoted trading company held for two years, but it falls away once you hold cash. To reinstate protection you can:

• buy AIM shares that qualify for BPR (higher risk)
• invest in enterprise investment scheme (EIS) shares or a venture capital trust (VCT)
• settle cash into a discretionary trust and survive seven years.

The Autumn Budget 2024 confirmed that from 6 April 2026 the 100% rate of BPR will be limited to the first £1m of combined business and agricultural property. Anything above that limit will qualify for relief at 50%. If your estate includes trading shares or other qualifying assets worth more than £1m, consider completing transfers or restructuring before 5 April 2026 while full relief is still available.

keep an eye on market activity

• The Office for National Statistics recorded 316,000 business births and 309,000 deaths in 2023, the slowest net creation since 2010.
• Buy-side appetite remains strong for established, profitable firms, reflected in the 5.4 × median EBITDA multiple noted earlier.

Fewer startups and the higher cost of new debt mean strategic buyers often prefer to acquire rather than build, which supports pricing for well-run companies.

exit timetable: suggested milestones

next steps

An exit is not just a transaction; it is the point at which years of effort turn into capital that must support the next stage of your life. By starting the process two to three years out, you give yourself time to optimise tax reliefs, improve valuation metrics and build a post-sale investment plan that matches your goals. If you are even thinking about a sale within that horizon, please contact us for an exit-readiness review. We will map out key dates and make sure every pound of value ends up where you want it – working for you and the people who matter to you.

DAS Accounting Services UK
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