Article last updated 12 June 2026.
A number of significant reforms come into effect from 6 April 2026, affecting dividends, inheritance tax reliefs and pensions.
From April 2026, dividend tax rates for both basic‑ and higher‑rate taxpayers increase by 2 percentage points, raising the importance of tax‑efficient portfolio structuring for income‑focused clients. At the same time, the rate of Capital Gains Tax for Business Asset Disposal Relief (BADR) rises from 14% to 18%, increasing the cost of disposals for business owners and entrepreneurs considering exits.
Business Relief (BR) and Agricultural Property Relief (APR) are restricted from April 2026:
• A £2.5 million allowance applies to 100% relief
• Assets above this threshold attract 50% relief
• The allowance can be transferred between spouses or civil partners, creating a potential combined allowance of £5 million
• Shares quoted on markets designated as “not listed”, such as AIM, no longer qualify for full relief
These changes significantly alter the role of business and AIM holdings in IHT mitigation strategies.
The State Pension age begins its phased increase to 67 for those born between 6 April 1960 and 5 April 1961, reinforcing the need to revisit retirement timelines and income‑bridging strategies.
| Phase | Who this applies to | State Pension age | When this happens | What this means |
| Change begins | People born between 6 April 1960 and 5 April 1961 | Gradually increasing to 67 | From 6 April 2026 | The age starts to increase. Your exact pension age depends on your date of birth |
| Transition period | People born within this date range | Between 66 and 67 | From April 2026 onwards | The increase is gradual, not immediate. People will reach pension age at different times |
Further changes take effect from 6 April 2027, many of which directly affect pension planning and intergenerational advice.
Unused pension pots will now form part of an individual’s estate for IHT purposes, marking a fundamental shift in how pensions are treated on death.
For advisers, this represents one of the most material changes in recent years:
• Pension wealth planning must be fully integrated into estate planning
• Death‑benefit and beneficiary strategies will need reassessment
• Clients previously relying on pensions as an IHT shelter may need alternative solutions
New eligibility and contribution rules are introduced:
• A mandatory National Insurance number is required (unless ineligible)
• A £12,000 Cash ISA limit applies for savers under age 65
Savings and property income tax rates increase by 2%, while personal allowances must be allocated first against non‑savings income, limiting tax‑planning flexibility.
Changes effective from 6 April 2028 affect both retirement access and broader wealth planning.
The minimum pension access age rises from 55 to 57, reinforcing the importance of early retirement planning and alternative funding strategies for clients intending to retire before State Pension age.
The temporary freezes on the dividend allowance, personal savings allowance and CGT annual exempt amount come to an end, potentially increasing tax liabilities for many clients.
A new high‑value council tax surcharge is introduced:
• Starting at £2,500 annually on properties valued at £2 million
• Rising to £7,500+ on properties over £5 million
This may influence decisions around property ownership structures and succession planning.
From 6 April 2029, the long‑standing exemption from National Insurance on pension salary sacrifice contributions is partially withdrawn.
• Only the first £2,000 of salary‑sacrificed contributions remain NI‑free
• Contributions above this are subject to employer and employee NI
This change alters the attractiveness of salary sacrifice for higher earners and may affect employer pension arrangements.
By 6 April 2030, several temporary freezes come to an end:
• Income tax bands and personal allowances
• Inheritance tax nil‑rate bands
• National Insurance thresholds
While future Budgets may adjust these measures, advisers should be prepared for a materially different tax environment compared with the post‑freeze period.
The staggered implementation of Budget measures creates both risk and opportunity:
• Clients may underestimate how future changes alter long‑term outcomes
• Planning windows still exist for pensions, estate planning and business‑owner strategies
• Ongoing reviews will be essential as each phase takes effect
Above all, advisers will need to demonstrate forward‑looking advice, showing not just today’s suitability but how strategies remain appropriate as legislation evolves.
1 min
Pension drawdown gives clients flexibility over how and when they take income, while keeping their capital invested for the long term. For advisers, the challenge is balancing clients’ income needs today with income sustainability tomorrow.
