Will your taxes rise with the tide from April 2026?

Some are relatively small on their own, but taken together they mean many individuals and businesses may find themselves facing a tax squeeze and a need for more complex succession planning.

Individuals

Dividend Tax Increase

From 6 April 2026, dividend tax rates rise by 2 percentage points. The basic rate is now 10.75%, and the higher rate 35.75%, making income from shares outside tax-efficient wrappers more expensive.

Tax Thresholds Remain Frozen

Income tax thresholds are still frozen, which means more people may see some ‘fiscal drag’ where they gradually move into higher tax bands as their earnings rise.

Some investment incentives have been reduced

For example, the upfront income tax relief on Venture Capital Trusts (VCTs) has been cut from 30% to 20%, which may affect higher-risk investment planning.

Business Owners

Capital Gains Tax relief on business sales has increased

The rate for Business Asset Disposal Relief has risen from 14% to 18%, increasing the tax liability for business owners wanting to sell up.

Capital allowances have been reduced

The main rate writing-down allowance has dropped from 18% to 14%. This effectively slows the rate at which businesses can ‘write off’ the cost of plant and machinery.

Changes to inheritance tax relief for businesses and farms

From April 2026, full inheritance tax relief on business and agricultural assets is effectively capped, with different treatment for assets above certain thresholds. This marks a significant shift for succession planning.

The information contained is for guidance only and does not constitute financial advice. It is based on our understanding of UK legislation, whether proposed or in force, and market practice at the time of writing.
Levels, bases and reliefs from taxation may be subject to change. Accordingly, no responsibility can be assumed by Lycetts, its officers or employees, for any loss in connection with the content hereof and any such action or inaction.