A lot has happened since the 2024 Autumn Budget. The 2025 Spring Statement, for one, not to mention a torrent of tariffs from the White House and a potential political shift at home, signalled by recent local election results.
Some of the changes announced at the dispatch box by Rachel Reeves won’t come into force for some time, but others have already been in effect for months, their ramifications far-reaching.
Frozen Inheritance Tax (IHT) allowances – coupled with prospective changes to the IHT treatment of pensions – will influence your estate planning from this point on. Reduced thresholds and tax rate hikes to Capital Gains Tax (CGT), meanwhile, could see your bill rise this year.
As a high net worth individual (HNWI), even small changes to tax rules can have a significant impact. Thankfully, there are some simple mitigation strategies you can adopt.
Keep reading for just five of them.
1. Maximise your pension’s tax efficiency
Your pensions are incredibly tax-efficient, with contributions benefiting from tax relief at 45% as an additional-rate taxpayer (although you’ll need to claim some of this through self-assessment).
You can usually contribute up to the Annual Allowance without facing an additional tax charge. For 2025/26, the Annual Allowance stands at £60,000 (or 100% of your earnings, if lower).
It’s worth noting, though, that your allowance reduces if your income exceeds certain thresholds, or you have already flexibly accessed your pension.
As a business owner, you might find that it’s most tax-efficient to make contributions through your company. As an “allowable expense”, your contributions could lower the amount of Corporation Tax you pay, currently charged at 25%.
We can help you decide if this is the right option for you, so get in touch.
2. Make ISA contributions for you and your family
ISAs remain an important way to maximise tax-efficient savings, albeit up to certain limits.
There’s no tax to pay on interest from a Cash ISA, while profits from a Stocks and Shares ISA are free of CGT and Income Tax. The ISA Allowance for 2025/26 is just £20,000, though, which could be exhausted quickly.
Once you’ve reached your ISA subscription limit, consider transferring funds to allow your partner to maximise their tax efficiency or help your children through a Junior ISA (JISA) or Lifetime ISA (LISA).
3. Understand the tax challenges specific to higher earners
According to Unbiased, the number of high-earning Brits caught in the so-called “60% tax trap” has risen by 45% in the last two years.
The effective marginal rate applies for those with income between £100,000 and £125,140. The latter figure is the amount at which the additional (45%) rate of Income Tax becomes payable.
However, once your earnings exceed £100,000, your Personal Allowance reduces by £2 for every £1 above this amount. When your adjusted net income reaches £125,140, your whole Personal Allowance is gone.
You might consider using salary sacrifice to lower your income while boosting your retirement savings, helping to keep you below the relevant threshold.
These calculations can be difficult, especially if your income fluctuates, so contact us if you’d like the reassurance of professional help.
4. Share tax allowances with your partner
Tax allowances and thresholds are generally individual to you and might be quickly used up. There are, though, simple ways to use your wealth to help others benefit from these allowances.
Take IHT, for example. Transfers to a spouse or civil partner are IHT-exempt. On first death, the surviving partner also inherits their loved one’s nil-rate bands. This could allow for assets totalling £1 million to be passed on IHT-free.
Likewise, the main rates of CGT increased on the day of the Autumn Budget, from 20% to 24% for higher-rate taxpayers.
If you pay a higher rate of Income Tax than your partner, consider transferring assets to them before a disposal to reduce the rate of CGT payable. The rate of CGT for basic-rate taxpayers is just 18% (up from 10%).
5. Consider “giving while living”
Gifting a living inheritance has several tax benefits.
The gifts you give are generally IHT-free if you survive for seven years after the date it is made, but certain HMRC exemptions mean some gifts are IHT-free from the outset.
Your annual exemption stands at £3,000 for the 2025/26 tax year, and this can be carried forward for up to one year.
You might also consider charitable donations. Not only are these IHT-free but donate 10% of the net value of your estate to charity, and your IHT rate drops from the usual 40% to just 36%.
Get in touch
Expert advice can be a vital tool in tax-efficient planning over the long term, so please get in touch to find out how we can help you.
Contact us online or call 020 7400 4700.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance. The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
The Financial Conduct Authority does not regulate estate planning or tax planning.
