Oldbury tax firm Crowe urges entrepreneurs to plan for inheritance tax changes and tax rises that could hit earnings
Tax returns should be on everyone’s mind this new year, tax specialists at national audit, tax, advisory and consulting firm Crowe are reminding as they urged entrepreneurs to plan for inheritance tax changes and tax rises that could hit earnings.
Nick Latimer, tax partner at Crowe, said: “Every year thousands of people fail to file their tax returns on time. For the 2023-2024 tax year, an estimated 1.1 million people in the UK failed to file their Self-Assessment tax returns by the January 31 2025 deadline.”
Latimer added: “It is important to make sure you have paid the right amount, first time, each year, as obtaining a refund from HMRC can be both time consuming and extremely frustrating, and interest on late paid tax is charged at four per cent above the base rate i.e. 7.75 per cent.”
And once the tax return is done, he is recommending they make a start on pre-year end tax planning and finalising any inheritance tax plans following the introduction of the £2.5m cap on business and agricultural property relief from April 6 2026.
He said: “In the Budget, the Chancellor increased the tax rates on dividend income, property income and savings income, and these changes will be phased in over two years.”
On dividend income, from April 6 2026, basic rate income tax on dividends will increase to 10.75 per cent and the higher rate will rise to 35.75 per cent. The additional rate remains unchanged at 39.35 per cent.
There are further changes scheduled for 6 April 2027, when income tax on property rental income will increase to 22 per cent at the basic rate, 42 per cent at the higher rate and 47 per cent at the additional rate, with many being moved into quarterly reporting via “making tax digital” commencing from April 2026. The same rates will apply to savings interest.
Latimer said: “Coupled with the freeze on income tax thresholds until 2030/31, this provides plenty to discuss with your tax adviser.”
For business owners, he pointed out that the dividend tax increase would open discussions on how best to remunerate themselves.
Finally, the announcement before Christmas that the cap on inheritance tax reliefs would increase from £1m to £2.5m was welcome news, but for those with bigger businesses and farms still impacted, there is a limited time to consider establishing a trust as a potential option without immediate inheritance tax charges.
Crowe has offices in Birmingham, Oldbury and Cheltenham covering the Midlands and South West.
