The 2025 to 2026 tax year comes to an end on April 5th. We’ve got you covered with end of tax year planning support and our range of tax-efficient investments.
As we approach tax year end, you’ll no doubt be working hard to make sure your clients have made the most of their available tax-free allowances and reliefs.
Following the Autumn Budget, the expansion of VCT limits creates an even greater opportunity for your clients this tax year. The 2025/26 tax year is the final opportunity for your clients to benefit from the 30% income tax relief before it reduces to 20% in April 2026.
To make your job easier at this busy time, we’ve prepared this handy checklist for you. Not only should it be a useful tax planning guide, but it could also help you spot new business opportunities.
Let’s start with the standard tax year end planning scenarios
Have your clients:
Used their £20,000 ISA allowance?
Made the most of their annual allowance for pension contributions?
Remember, they might be able to carry forward any of their allowance they haven’t used from the three previous tax years.
Used their annual capital gains tax exemption of £3,000?
Do they wish to crystalise gains to make the most of the allowance? Or, perhaps, they expect to crystalise gains in excess of the allowance?
Used their annual dividend allowance of £500 but expect investment income to exceed this?
Made the most of their gifting allowance of £3,000 to help plan for inheritance tax?
Helpful reminder: your clients can carry any unused annual exemption forward to the next tax year (but only for one tax year).
Moving onto ‘outside the box’ tax year end planning:
At this time of year, it pays to think about broader tax scenarios. At Octopus Investments, we speak to financial advisers every day who recommend tax-efficient investments to support their clients’ tax planning. This is where you can really add value by providing additional advice to suitable clients.
So, let’s look at some specific scenarios where your clients could benefit from a specialist tax-efficient investment.
Has your client had a good bonus?
If the answer’s ‘yes’, significant income tax will likely be due, so it’s time to ask if they wish to use some or all their bonus to invest for their future. There are several ways they can invest their bonus tax-efficiently. This includes contributing to their pension.
But has your client maxed out their pension this year?
Though the annual pension allowance is £60,000, this is tapered for high earners. It could, in fact, be as little as £10,000. So, if your client is suitable, why not explore additional options that can help your client invest tax-efficiently for retirement? This might include Venture Capital Trusts (VCTs) which offer a way to invest for the future tax efficiently.
Is your client trying to take money out of their business tax efficiently?
The tax treatment of dividends has become tougher. The dividend allowance is small at £500 and the highest dividend tax rate is 39.35% for amounts over this.
From 6 April 2026, dividend tax rates on the basic and higher rate band go up by 2%. Reaching 10.75% for basic rate taxpayers and 35.75% for higher rate taxpayers. Increasing the overall tax burden on investors. Additional rate tax payers will still pay dividend tax at 39.35%.
If you have clients who own a business and want to take a dividend, there might be an opportunity to make an investment and offset the tax due. For example, with a VCT, 30% upfront income tax relief can be claimed against dividends until the end of the 25/26 tax year, before it decreases to to 20% in April 2026.
Does your client want an inheritance tax-efficient ISA?
As you’ll know, it’s common for clients to build up large ISAs. But is inheritance tax an issue for your client? Do they want to use their ISA allowance to plan for inheritance tax, or use part of their existing ISA pot to plan for an inheritance tax liability? If the answer’s ‘yes’, you might want to look at Business Relief (BR). You’ll find more on this below.
And now onto your tax-efficient investments checklist:
Have you considered Venture Capital Trusts?
A VCT is a listed company that buys small stakes in a large number of early-stage companies. VCTs offer attractive benefits to compensate investors for some of the risk involved. This includes income tax relief of up to 30% as well as tax-free dividends (typically targeting a 5% dividend yield each year). VCTs can be an attractive way to start to add unquoted investments to a portfolio, and to grow a tax efficient income through annual investment.
Have you considered Business Relief?
BR is an established relief from inheritance tax available for shares in qualifying unquoted companies and those listed on the Alternative Investment Market (AIM). Compared to gifting, BR offers a faster inheritance tax solution to inheritance tax. It also allows investors to retain access to their capital and keep control of their wealth, provided an investor is happy to accept the risks of investing in BR-qualifying companies.
An overview of specialist tax-efficient investments
What is Business Relief?
Business Relief (BR) is an established relief that gives people an incentive to invest their money into trading businesses. Shares in a BR-qualifying business can be left to beneficiaries with relief from inheritance tax, provided they have been held for at least two years at the time of death.
What are the reasons to invest?
Fast inheritance tax exemption
BR-qualifying investments can qualify for relief from inheritance tax after just two years.
Access and control
Investors retain access to their wealth and can request to sell their shares at any time.
Growth
BR-qualifying investments give investors the opportunity to grow their capital, with a range of products available to suit different appetites.
What are Venture Capital Trusts?
Venture Capital Trusts invest in a diversified portfolio of early-stage companies. Investors benefit from the VCT owning small stakes in a large number of companies across different sectors.
What are the reasons to invest?
Income tax relief
Investors can claim upfront income tax relief equal to 30% (up until the end of the 2025/26 tax year, when it will reduce to 20% in April) of their investment up to the first £200,000 invested each tax year.
Tax-free dividends
The tax-free dividends paid by a VCT can create an additional income.
Diversification
VCTs give investors access to smaller companies they may not otherwise hold.
A reminder of the risks:
It’s important to understand that the value of these investments, and any income from them, can fall as well as rise. Investors may not get back the full amount they invest.
Tax treatment depends on individual circumstances and tax rules may change in the future. Tax relief depends on portfolio companies and VCTs maintaining their qualifying status.
VCT shares and the shares of smaller companies are by their nature high risk, their share price may be volatile, and they may be hard to sell.
Ready to bring tax-efficient investments into your tax year end planning?
Lots of advisers recommend our tax-efficient investments to support their clients’ tax planning. So why not get in touch today to find out more about them?
Related resources
Venture Capital Trusts Explained
Learn how VCTs function, the types of early-stage companies they invest in, and the tax benefits and risks involved.
How to claim VCT tax relief
Learn how to claim up to 30% income tax relief on Venture Capital Trust (VCT) investments and enhance your understanding to support your clients’ investment decisions.
VCT FAQs
Our easy-to-read guide answers common questions about Venture Capital Trusts (VCTs), designed to help you understand VCTs better and assist your clients with confidence.
