Posted on: 04/02/2025

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As 2025 gets under way, it is once again the time of year to start considering your tax year-end planning.

The early months of the year are the time to undertake year-end tax planning. Unsurprisingly, the traditional drivers have been the tax year-end (Saturday 5 April 2025) and the Spring Budget. On this occasion, after last October’s blockbuster, there is no Spring Budget, although Rachel Reeves will deliver a Spring Forecast in late March. In the wake of that Autumn Budget, there is plenty to consider:

Pension contributions: The Budget announcement that pensions will fall within the scope of inheritance tax (IHT) from 2027/28 significantly changes the approach to reviewing pension contributions compared to previous years. It is strongly recommended that you explore your options early to take full advantage of alternative strategies available to you and your company. Your age and health are key factors to consider in this planning process.

Capital gains tax (CGT): Capital gains tax rates increased in the Budget to 18% for basic rates and 24% for higher and additional rate taxpayers. Additionally, the 10% tax rate on gains qualifying for Business Asset Disposal Relief (BADR) will rise to 14% on 6 April 2025 and further to 18% on 6 April 2026.

IHT: The nil-rate band (£325,000) and the residence nil-rate band (£175,000) are frozen until 5 April 2030. From 6 April 2027, unused pension funds and death benefits will be included in the estate for inheritance tax purposes. There are major changes coming to Agricultural Property Relief (APR) and Business Property Relief (BPR), which require consideration and suitable planning.

Other major changes: There are several changes being introduced, including alterations to the following areas, which may impact your year-end tax planning:

• Furnished holiday lettings
• Stamp Duty Land Tax
• High Income Child Benefit Charge
• Non-domicile reforms
• Employers’ NIC

There are, as mentioned above, many changes and numerous potential options to consider. It is crucial to get it right, as mistakes can be costly and difficult to rectify. Contact us today for expert advice from our qualified tax professionals!

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