KEY GUIDE | Month 20XX | Folio Title Folio Title Folio Title Folio Title 3 Personal tax SPECIAL REPORT | January 2026 | Y ar End Tax Planning If you or your partner have little or no earnings or pension income, you might also benefit from a 0% tax rate on up to a further £5,000 of savings income. Again, shifting assets between you can help minimise tax on your savings income. A £1,000 tax-free allowance is available for income from property, such as where a parking space is let out, so joint ownership could result in a modest tax saving. What do I need to do if my family is liable for the high income child benefit charge? Where either partner has income of £60,000 or more then child benefit is in effect withdrawn. The withdrawal is total How can my partner and I make the most of our income tax reliefs? Everyone should make sure they use their personal allowance (a maximum of £12,570 in 2025/26, and frozen at this level until 2030/31). For couples, if either spouse or a civil partner will not be able to use their personal allowance for 2025/26, then claiming the marriage allowance will save the other spouse or civil partner up to £252 in tax. However, a claim can only be made if the recipient does not pay tax above the basic rate. Claims can be backdated for four tax years, so the advantage of making a claim by 5 April 2025 is the inclusion of 2021/22. Also, try to minimise any higher- and additional- (top-) rate tax. ● Income over £125,140 is currently taxed at 45%, or 48% for non-savings, non-dividend income in Scotland. ● The personal allowance is withdrawn where income (less certain deductions) is more than £100,000. ● You might be able to reorganise both your financial affairs to avoid exceeding one of these limits. However, capital gains tax (CGT) may be payable on switching ownership of an investment if you are not married or in a civil partnership. You can each receive £500 of dividends tax free in 2025/26 regardless of your tax status. Reorganising your shareholdings between you may make better use of this limit this year and in 2026/27. You can also receive £1,000 of savings income tax free if you are a basic-rate taxpayer, and £500 if paying tax at the higher rate. Credit: Unitone Vector\shutterstock.com EXAMPLE Toby, a higher-rate taxpayer, earns £2,000 in dividend income and £1,500 in savings interest. His wife, Kat, a basic-rate taxpayer, earns £400 in dividends and £500 in savings interest. By transferring investments, Toby reduces his dividend income to £500 and his savings interest to £500, matching his allowances. Kat now receives an additional £1,500 in dividends and uses her £500 dividend allowance, paying just 8.75% tax on the remaining £1,400 – a significant saving compared to Toby’s 33.75% rate. Kat also takes on an additional £1,000 in savings interest, bringing her total to £1,500. The first £1,000 is tax free under her personal savings allowance, while the remaining £500 is taxed at 20% (compared to Toby’s 40% rate).
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