Tax returns should be on everyone’s mind as the New Year kicks in, tax specialists at national audit, tax, advisory and consulting firm Crowe are reminding.

Nick Latimer, tax partner in the Cheltenham office of 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 31 January 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 4% above the base rate ie. 7.75%.”

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 6 April 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 6 April 2026, basic rate income tax on dividends will increase to 10.75% and the higher rate will rise to 35.75%. The additional rate remains unchanged at 39.35%.

There are further changes scheduled for 6 April 2027, when income tax on property rental income will increase to 22% at the basic rate, 42% at the higher rate and 47% 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 again 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.