Urgent Tax Warning: Eight Key Checks for Brits Before April 6
Households across the UK are being urged to take immediate action on their pensions, savings, and investments ahead of the tax year end on April 6. Wealth management firm Evelyn Partners has issued a stark warning, highlighting that frozen thresholds and upcoming changes to inheritance tax (IHT) could lead to significantly larger tax bills for many families.
Emma Sterland, chief financial planning officer at Evelyn Partners, emphasised the importance of proactive financial planning. "As the 2025/26 tax year draws to a close, it's critical to assess whether you're fully utilising current allowances and reliefs," she stated. "Moreover, with taxation changes looming in both this and next April, ensuring your wealth strategy remains fit for purpose is essential."
Critical Financial Points to Address
Below are the eight key danger points and opportunities that Brits must consider before the tax deadline:
- IHT Gifting Rules Tighten: From April 6, a £2.5 million cap will apply to 100% business and agricultural property relief. Additionally, unused pension pots will be included in estates for IHT purposes from April 2027. Sterland advised, "Gifting assets during your lifetime is a straightforward way to benefit loved ones." The annual gifting allowance of £3,000 (£6,000 for couples) can be carried forward one year if unused, allowing up to £12,000 per couple to be transferred tax-free before April 5.
- Watch the Higher-Rate Tax Cliff: Many retirees accessing private pensions risk being pushed into the 40% higher-rate bracket at £50,270, or even the severe 60% effective rate above £100,000 where the personal allowance disappears. Sterland cautioned that savers must balance immediate income tax costs against potential future inheritance tax bills.
- The 60% Tax Trap: Individuals earning between £100,000 and £125,140 face an effective marginal tax rate of up to 60–62%. To reduce taxable income, options include pension contributions, salary sacrifice, charitable donations under Gift Aid, or transferring income-generating assets between spouses.
- Use Your £60,000 Pension Allowance: The annual pension allowance is currently £60,000, though high earners may see it reduced to as low as £10,000. Sterland warned, "There's no guarantee that higher allowances or carry-forward provisions will remain, so prioritising pension saving is key." Unused allowances from the past three years may be accessible through carry-forward rules.
- Couples Should Split Savings Smartly: Basic-rate taxpayers can receive £1,000 annually in savings interest tax-free, while higher-rate taxpayers get £500, and additional-rate taxpayers receive none. Only £500 of dividend income is tax-free per person. Sterland advised that assets should be owned by the partner with the lower tax rate, noting that cash savings may be unrewarding unless protected in a cash ISA.
- Make the Most of Your £3,000 CGT Allowance: The annual capital gains tax exemption has been reduced to £3,000. With CGT rates at 18% and 24% on most assets, investors might consider crystallising gains before April 5 to use the allowance or realising losses to offset gains. Assets can be transferred between spouses tax-free to double exemptions.
- ISA Deadline Approaching: The £20,000 annual ISA allowance cannot be carried forward. From April 2027, the cash ISA allowance for those under 65 will drop to £12,000, while the overall £20,000 cap remains frozen until 2030/31. Junior ISAs allow up to £9,000 a year to be invested tax-free for children.
- Business Owners Confront IHT Shake-up: From April 6, the 100% rate of business and agricultural relief will only apply to the first £2.5 million of qualifying assets. Sterland warned, "An unexpectedly large IHT bill could jeopardise a firm's future and jobs if liquid assets are insufficient." She urged affected owners to review wills and succession plans urgently.
In summary, with the overall tax burden increasing due to frozen allowances and reliefs, all families are encouraged to maximise their earnings, savings, and investments. Taking these steps before April 6 can help mitigate financial risks and capitalise on available opportunities.
