What tax changes are high‑net‑worth individuals facing in 2026?
The main tax changes affecting high‑net‑worth individuals include:
- A new cap on Business Property Relief and Agricultural Relief
- Inheritance tax exposure for pension death benefits from 2027
- Higher tax rates on dividends, savings and property income
- Reduced income tax relief for Venture Capital Trusts
- Continued frozen thresholds, pushing people into higher tax brackets by increasing ‘fiscal drag’
Inheritance tax changes: Business Relief and Agricultural Relief
From 6 April 2026, Business Property Relief (BPR) and Agricultural Property Relief will be capped for the first time. Historically, both provided unlimited 100% relief on qualifying assets.
The new rules introduce:
- A £2.5 million per person cap for assets qualifying at 100% relief
- 50% relief on qualifying assets above this threshold
- 50% relief for unlisted shares, including those listed on the Alternative Investment Market (AIM)
These changes may materially increase inheritance tax (IHT) exposure for individuals and families with agricultural assets, private company shares, or large business interests. Unused allowances can be transferred between spouses and civil partners.
Planning considerations
- Transferring assets into trust before 6 April 2026 may secure current relief levels.
- Reviewing ownership structures now can help people manage future IHT liabilities.
Pensions and inheritance tax: What changes in 2027?
Pension death benefits have historically been outside the IHT net. But from 6 April 2027, the payments and entitlements that can be made from the pension scheme will be included within estates.
For many high‑net‑worth individuals, pensions have primarily been used as a long‑term, tax‑efficient way to pass on wealth. The new rules may change this.
Planning considerations
- Review your pension beneficiaries
- Reassess decumulation strategies (how you’ll take an income from your pot as you need it)
- Consider how pensions fit into your broader estate‑planning goals
Pensions remain an important tax‑efficient savings tool, but their role in legacy planning may need further consideration.
Dividend, savings and property income tax increases
Several income‑tax rates are rising in April 2026 and April 2027.
Dividend tax (from 6 April 2026)
Savings and property income (from April 2027)
- New tax rates: 22%, 42% and 47%, up from 20%, 40% and 45% respectively.
These changes affect not only shareholders and business owners, but also landlords and people with larger cash and fixed‑income portfolios.
Planning considerations
- Make full use of allowances across family members
- Consider wrappers and company structures for tax‑efficient income generation
- Explore solutions such as offshore insurance bonds, where appropriate
Higher rates on dividend and savings income will apply in Scotland as they do across the UK. However, property income is treated differently, as Scotland sets its own income tax rates and thresholds. While the UK Government plans to increase property income tax rates by 2% from April 2027, no similar rise was announced in Scotland.
Family Investment Companies (FICs) may also become more relevant. They offer flexibility, by separating control and economic benefit while enabling long‑term estate planning. Founders also retain control through voting rights.
Venture Capital Trusts: Reduced relief from April 2026
Income tax relief on Venture Capital Trust (VCT) investments fall from 30% to 20% in April 2026. For high‑net‑worth individuals who’ve already put the maximum amount possible into Individual Savings Accounts (ISAs) and pensions, VCTs have been a valuable option for tax‑efficient investing.
There’s still some time to access the current 30% relief on up to £200,000 of investment, before the change.
VCTs are high-risk investments and may not be right for every client. Your capital is at risk and you could lose all your money.
Are further tax changes likely for high‑net‑worth individuals?
Although nothing has been confirmed, potential future reforms being discussed include:
- Possible “exit taxes”
- Further changes to capital gains tax
- A wider overhaul of the IHT system
Given this uncertainty, maintaining flexible plans and reviewing your strategy regularly will help you adapt to future changes. Working with a financial planner can help.
How high‑net‑worth individuals can prepare for tax changes
High‑net‑worth individuals can prepare by:
Ready to review your plan?
2026 and 2027 will bring some of the most significant tax changes in recent years for high‑net‑worth individuals. Understanding how these reforms interact – and acting early – can help protect wealth and provide greater flexibility for the future.
A professional financial planner can work with you to maximise your tax efficiency, helping you grow, protect, and pass on more of your wealth. If you’re ready to review your financial plan, email your usual Rathbones contact or fill out our enquiry form below.
