Millions of individuals are set to face higher tax payments by 2026, with strategies available to reduce the burden. Sarah Coles, head of personal finance at Hargreaves Lansdown, highlights key insights on coping with frozen tax thresholds and council tax escalations.
According to Coles, it is possible to mitigate the impact of impending tax hikes through early planning. She emphasizes the importance of taking proactive steps to minimize the potential tax challenges expected in 2026.
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The personal allowance, currently set at £12,570 until 2031, remains static, potentially leading to individuals being pushed into higher tax brackets as their earnings increase. Additionally, the dividend tax rate is slated to rise in April 2026, affecting both basic and higher rate taxpayers.
Inheritance tax thresholds, council tax rates, fuel duties, alcohol duties, and tobacco duties are all subject to changes in the coming years. Coles suggests various legal methods to reduce tax liabilities in 2026, including utilizing ISA saving accounts, maximizing pension contributions, considering salary sacrifice schemes, and leveraging tax advantages for spouses.
By implementing these tax-saving strategies, individuals can navigate the upcoming tax changes more effectively and potentially lower their overall tax obligations.