Prepare to prepare
As the tax year comes to a close, it’s a good opportunity to review your personal finances and tax position.
For taxpayers with UK connections
In particular, taxpayers with UK connections should not lose sight of upcoming UK tax reforms announced in the UK Autumn Budgets in 2024 and 2025:
- Basic and higher dividend tax rates are set to increase by 2% from 6 April 2026. Additionally, property and savings income tax rates will increase by 2%, from 6 April 2027.
- The Making Tax Digital (MTD) regime is being introduced from 6 April 2026 for self-employed individuals and landlords with income over £50,000, requiring them to keep digital accounting records, and submit quarterly income updates to HMRC using approved software and a final declaration annually.
- From 6 April 2026, individuals (and trusts) will qualify for 100% Agricultural Property Relief or Business Property Relief up to a combined limit of £2.5m, with any excess above this threshold qualifying for relief at 50%.
- Under existing rules, all UK residential property is subject to inheritance tax, even where it is held indirectly by a non-long-term UK resident through a non-UK entity. From 6 April 2026, these rules will be extended so that UK agricultural land will also be subject to inheritance tax, regardless of the method of ownership.
- From 6 April 2027, most UK pension death benefits and unused UK pension funds will be brought within the deceased’s estate for UK inheritance tax purposes. Unless an exemption applies, these amounts will be aggregated with the rest of the estate and will potentially be subject to inheritance tax at the 40% rate. Individuals with significant UK pension funds should consider how these reforms may impact their estate planning.
For Isle of Man taxpayers
From an Isle of Man perspective, other than increases to the personal allowance, national insurance thresholds and certain tax relief limits, there were few notable tax changes in the recent Budget. However, there are still several points to consider prior to 5 April to ensure your affairs are ordered as efficiently as possible.
- Ensure all available allowances and reliefs are being utilised. The Isle of Man permits married couples and civil partners to be jointly assessed, allowing personal allowances and tax rate bands to be shared. This can be beneficial where one spouse/civil partner has lower income levels.
- For those with disposable income and capital, consider topping up your pension. Pension contributions (including employee and employer contributions and any contributions made on your behalf) up to a maximum of £50,000 per year, to an Isle of Man approved scheme, qualify for tax relief.
Whether an Isle of Man or UK taxpayer, now is the time to gather relevant paperwork – for example, details of rental income and expenses, certificates of interest, investment portfolio tax packs and any evidence needed for relief claims, such as mortgage interest certificates – so that you can ensure a smooth filing process and avoid any last minute stress in the run up to filing deadlines.
Learn more
Equiom Tax Services Limited provides UK and Isle of Man tax consultancy and compliance services. If you believe you may be impacted by any of the above tax issues, we would be happy to discuss your circumstances and requirements with you. Learn more about Jenny, and Equiom Tax Services Limited here.
Warnings
This article is for general information purposes only and does not constitute professional advice. It should not be relied upon as a substitute for specific advice tailored to your circumstances. No responsibility or liability is accepted by Equiom Group, its partners, employees or agents for any loss arising from reliance on this article or any decisions based on it.
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