High-net-worth tax planning involves structuring income, gains and assets to maximise your tax efficiency while meeting all compliance obligations. It matters now because allowances are tight, rates remain elevated in key areas and the freeze on many thresholds continues. Inflation has also eroded the real value of allowances, which intensifies the drag on higher earners. The latest Consumer Prices Index shows annual inflation of 3.8% in September 2025 (Office for National Statistics (ONS), 2025). Against this backdrop, a disciplined plan can improve cashflow, reduce risk and create optionality for future decisions.
In this article, we set out the building blocks of high-net-worth tax planning for the 2025/26 tax year, covering current allowances, timing of income and gains, pensions and ISAs, trusts and inheritance tax, business relief, AIM shares, Enterprise Investment Scheme (EIS), Seed Enterprise Investment Scheme (SEIS) and venture capital trusts (VCTs), philanthropy, residency and UK property, and exit planning. We include practical examples and a short checklist to help you take the next step with confidence.
2025/26 allowances and bands – what you can still use
The core framework has not shifted dramatically this year, but it still offers planning opportunities if you act early.
Personal allowance: £12,570 for most UK taxpayers. The allowance tapers away by £1 for every £2 of adjusted net income over £100,000, disappearing entirely at £125,140.
Dividend allowance: £500 in 2025/26. Dividend tax rates remain 8.75%, 33.75%, and 39.35% across the basic, higher and additional bands respectively (HMRC, 2025).
Capital gains annual exempt amount: £3,000 for individuals in 2025/26 (HMRC, 2025).
Capital gains tax (CGT) rates: For most assets, 10% within the basic rate band and 18% for residential property; 18% and 24% where gains fall into higher/additional rate bands, with 24% applying to residential property gains.
ISA allowance: £20,000 for 2025/26 across cash, stocks and shares, and innovative finance ISAs.
Pension allowances: Broadly, an annual allowance of up to £60,000 for contributions subject to income and taper rules. The lifetime allowance has been replaced with a lump sum allowance of £268,275 for tax-free cash in most cases (HMRC, 2025).
Example: A higher-rate shareholder-director expecting £80,000 of dividends in 2025/26 could save income tax by rebalancing remuneration towards pension contributions within the annual allowance, using the £500 dividend allowance, and maximising ISA subscriptions for future dividends outside the tax net.
Timing matters: Income, bonuses and investment disposals
High-net-worth tax planning is often won or lost on timing. Small moves can shift income or gains into lower rates or make use of remaining allowances.
Bonuses and dividends: Align company and personal cash requirements. Bringing forward a bonus can accelerate a tapering of personal allowance; deferral might restore it if you expect lower income next year. Dividends can be staged across tax years to re-use the £500 allowance each year.
Capital gains: Where feasible, stagger disposals to use the £3,000 exemption this year and again next year. Bed-and-ISA or bed-and-spouse strategies can move assets into tax-advantaged or lower-tax hands.
Business Asset Disposal Relief (BADR): Plan ahead for a qualifying 10% rate on eligible share sales. Confirm shareholding, officer status and trading conditions well in advance of a transaction.
Example: An investor planning to sell £150,000 of listed shares with a £50,000 gain could sell £25,000 before 5 April 2026 to use the £3,000 exemption and basic rate headroom, then realise the remainder in the next tax year to repeat the process.
Pensions, ISAs and liquidity – building a resilient core
We favour a layered approach: pensions for long-term compounding, ISAs for medium-term flexibility and a cash reserve for opportunistic moves.
Pensions: Maximise contributions within your annual allowance and consider carry-forward from the previous three years. Keep the lump sum allowance of £268,275 in view when planning withdrawals (HMRC, 2025).
ISAs: Use the full £20,000 allowance to shelter dividends and gains permanently. Flexible ISAs can help with short-term liquidity without losing allowance.
Liquidity: Maintain a high-quality cash reserve, particularly if you have concentrated business or property exposure. Liquidity reduces forced sales that crystallise unnecessary tax.
Example: A couple each using full ISA allowances and contributing £40,000 to pensions could shelter £120,000 in a single tax year, reducing ongoing dividend and CGT exposure while preserving access through ISAs.
Trusts, gifting and inheritance tax – control and protection
Estate planning is not only about tax; it is also about control, governance and family outcomes.
Gifting strategy: Use the £3,000 annual exemption and small gifts where appropriate. Larger gifts fall out of the estate after seven years if they are potentially exempt transfers.
Trusts: Discretionary or bare trusts can help with education funding, asset protection and rate-band management.
Residence nil-rate band: Consider how property passes to direct descendants to utilise the residence nil-rate band in addition to the £325,000 nil-rate band.
Business relief: Shares in unlisted trading companies and certain AIM shares can qualify for 100% relief after two years of ownership, offering powerful planning potential for entrepreneurs and long-term investors.
Example: An entrepreneur moving surplus company cash into qualifying AIM business relief portfolios can retain growth potential and, after two years, potentially achieve inheritance tax relief while keeping assets accessible on death for beneficiaries.
High-risk, tax-efficient investment – EIS, SEIS and VCTs
For suitable investors, these structures can reduce income tax and, in some cases, CGT, while supporting early-stage companies. They are not substitutes for a diversified core.
EIS: Income tax relief at 30% on up to £1,000,000 a year, or £2,000,000 where at least £1,000,000 is invested in knowledge-intensive companies. CGT deferral relief may apply.
SEIS: Income tax relief at 50% on up to £200,000 a year, plus CGT reinvestment relief.
VCTs: Income tax relief at 30% on up to £200,000 a year, with tax-free dividends and no CGT on disposal.
Risk and liquidity: Losses can be significant, exit timelines uncertain and manager quality varies. Allocation size should reflect your capacity for loss and overall plan.
Example: A high earner facing a large bonus may invest £100,000 into a diversified EIS portfolio for £30,000 of income tax relief, alongside pensions and ISAs, to avoid over-concentration.
Property, residency and domicile – UK and overseas considerations
Property remains a common anchor of wealth and risk. The 24% higher-rate CGT on residential property gains and the 60-day reporting rules continue to apply. Consider ownership structures early, especially if you may relocate.
Non-UK considerations: UK tax residence status and domicile drive exposure to UK tax. Pre-arrival planning can ring-fence non-UK income and gains. If you expect to leave the UK, time disposals and bonus payments with residence changes, and review double tax treaties.
Example: A returning UK resident may accelerate overseas asset sales before UK residence resumes, while retaining records for future remittance considerations.
High-net-worth tax planning – how to approach it
A coherent plan ties allowances, ownership and timing together. We recommend a simple playbook.
- Foundations: Maximise pensions and ISAs each year; maintain adequate liquidity.
- Ownership: Hold income assets in ISAs and pensions where possible; consider spouse sharing to use both allowances.
- Realisation: Stage gains to reuse annual exemptions; pre-clear BADR eligibility well before a sale.
- Estate: Deploy gifts and trusts where appropriate; consider business relief and the residence nil-rate band.
- Selective risk: Use EIS, SEIS and VCTs as satellites, not the core.
- Governance: Keep clear documentation and maintain an annual file of reliefs used, elections made and deadlines.
A short checklist for immediate action
- Pensions: Confirm annual allowance position, taper impact and carry-forward.
- ISAs: Fully fund ISAs early in the tax year to maximise market time.
- Dividends: Model different mixes of salary, bonus and dividends for 2025/26.
- Capital gains: Identify assets to rebalance and plan disposals around tax year end.
- Estate: Review wills, letters of wishes and trust deeds; map business relief candidates.
- Records: Document elections and maintain evidence for HMRC.
The UK tax system remains demanding for affluent families. However, a measured approach can materially improve outcomes. Inflation is still above target, so frozen thresholds bite harder and small planning wins compound over time.
We recommend a structured review now, followed by quarterly check-ins to adjust for market moves and legislative changes. If you would like tailored high-net-worth tax planning advice, please speak to our specialists. Contact our team to book a confidential review.
