Managing your wealth in 2026: What you need to know for the new year

Are you one of the 4% of Brits who, according to a recent YouGov poll, have vowed to improve their financial management in 2026?

The turn of the year always offers an opportunity to pause, recalibrate, and look ahead.

As you plan a year full of resolutions, now might be the time to do the same for the new financial year and its fresh set of tax rules.

To help you on the path towards successful financial management in 2026, here are some of the main changes taking place in the 2026/27 tax year and beyond.

The Cash ISA allowance is shrinking for under-65s from 2027

One major change due to come into effect from April 2027 is a reduction to the subscription limit for Cash ISAs, specifically for those under the age of 65.

The ISA allowance will remain at £20,000. But, starting in the 2027/28 tax year, the maximum that under-65s will be able to contribute to a Cash ISA will fall from £20,000 to £12,000. The remaining £8,000 will be exclusively set aside for invested ISA wealth; you’ll still be able to pay the full £20,000 into an investment account, such as a Stocks and Shares ISA.

Crucially, if you are over 65, this change won’t affect you, and you’ll still be able to contribute the full £20,000 into a cash account.

ISAs are tax-efficient. You don’t pay tax on the interest you earn in a Cash ISA, while any gains made in a Stocks and Shares ISA are free of Income Tax and Capital Gains Tax (CGT).

2026/27 is the last financial year in which everyone can use the full £20,000 ISA allowance to contribute to a cash account before the new £12,000 limit comes into effect in April 2027. So, if you’re under 65 and planned to use your full ISA allowance on cash accounts, you may want to do so in both the 2025/26 and 2026/27 tax years before the change comes into place.

Note that the Lifetime ISA (LISA) allowance remains at £4,000 and continues to count towards the overall £20,000 limit.

We can help you think about how this change might affect your ISA wealth.

Changes to agricultural and business property relief may affect your estate and legacy planning

In 2025/26, individuals can claim up to 100% relief from Inheritance Tax (IHT) on all qualifying agricultural property – including land or pasture that is used to grow crops or to rear animals – and all qualifying business property – including property, buildings, unlisted shares, and machinery.

This relief is set to change in 2026.

In her 2024 Autumn Budget, Rachel Reeves outlined that, from 6 April 2026, agricultural and business property relief could only be claimed up to the value of £1 million. If your property and assets were valued above £1 million, then the excess would only benefit from 50% relief – an effective IHT rate of 20% (half of the standard IHT rate).

However, the government recently backtracked on these rules. Now, the 100% relief threshold – which comes into effect from 6 April 2026 – has been raised from £1 million to £2.5 million.

The threshold applies per person, meaning that if you have a spouse or civil partner, you can jointly hold £5 million of qualifying agricultural and business property assets before IHT becomes payable. Any amount above this threshold will be subject to 50% relief.

If you own agricultural or business assets, it’s worth thinking about strategies to make your wealth more tax-efficient before this change comes into place.

Dividend Tax is increasing by 2% at the ordinary and upper rates – the additional rate is staying put

If you own shares in a company and receive dividends from its profits, be aware that the basic and higher rates of Dividend Tax are increasing by 2% from April 2026:

• The basic rate is increasing from 8.75% to 10.75%.
• The higher rate is increasing from 33.75% to 35.75%.
• The additional rate is staying at 39.35%.

The Dividend Allowance, meanwhile, will remain at £500 for the 2026/27 tax year.

If your income exceeds the Personal Allowance (£12,570 for 2026/27) and you pay tax at the basic or higher rate, dividend income that exceeds the Dividend Allowance will be subject to Dividend Tax at these increased rates from April 2026.

So, if you own a business and extract part of your income via dividends, or own dividend-paying shares at all, you could see your Dividend Tax bill rise from April 2026. Note that dividends generated by investments held within an ISA are exempt from tax.

The government is also increasing the rate of tax on property and savings income by 2% on all tax bands:

• The basic rate is increasing from 20% to 22%.
• The higher rate is increasing from 40% to 42%.
• The additional rate is increasing from 45% to 47%.

These changes won’t come into effect until April 2027.

The State Pension is increasing by 4.8% from April 2026 in line with average wage growth

Rachel Reeves used her 2025 Autumn Budget to reaffirm the government’s commitment to the State Pension triple lock, which will see the State Pension increase by 4.8% from 6 April 2026.

The triple lock is used to decide the rate by which the State Pension increases in April each year. It rises by the highest of:

• Average wage growth between May and July of the previous year
• The rate of inflation as measured by the previous September’s Consumer Prices Index (CPI)
• 2.5%.

Average wage growth stood at 4.8% between May and July 2025 (higher than the CPI in the 12 months to July at 3.8%), meaning that the State Pension will increase by this amount in 2026.

The new full State Pension will be £241.30 a week in 2026/27 (or £12,547.60 a year).

Caliber Financial Management can help you manage your wealth tax-efficiently in 2026

2026 brings fresh opportunities to maximise your tax-efficient wealth, but there are potential tax pitfalls to be aware of, too.

If you want help harnessing these opportunities to map out your financial future, get in touch with Caliber Financial Management today.

Contact us at contact@caliberfm.co.uk or call 01525 375286 to speak to one of our advisers.

Please note

This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

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.

The Financial Conduct Authority does not regulate tax planning.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.