
Tax planning for high-net-worth individuals (HNWIs) in 2025 requires sharper focus as thresholds tighten and new changes take effect after announcements in the Budget.
Staying ahead of these developments will help you maximise allowances, minimise exposure, and protect your wealth.
Here are some key areas to consider.
Capital Gains Tax allowances are lower than ever
The annual Capital Gains Tax (CGT) exemption has already fallen to £3,000 for the 2024-25 tax year, meaning more of your gains are now taxable.
With October’s Budget pushing the higher rates to 24 per cent, careful planning is a must.
Phasing the sale of assets over multiple tax years will allow you to make the most of the limited exemptions still available.
If you are married, transferring assets to your spouse remains a valuable strategy to maximise tax-free gains.
Inheritance Tax demands careful attention
Inheritance Tax (IHT) remains a concern for HNWIs, with estates valued over £325,000 subject to a 40 per cent tax rate.
Looking ahead, caps on Agricultural and Business Property Relief will take effect from 2026, so planning now will help those with substantial business or agricultural assets.
Taking advantage of tax-free gifting rules, such as the £3,000 annual allowance, is a simple way to reduce the size of your taxable estate.
Larger gifts can also fall outside your estate after seven years, offering long-term benefits.
For more complex estates, tools like trusts and family investment companies remain valuable options, provided they are structured correctly.
Be aware of the 60 per cent Income Tax trap
If your income exceeds £100,000, the gradual withdrawal of the personal allowance creates an effective 60 per cent tax rate on earnings between £100,000 and £125,140.
This “tax trap” affects more people every year and demands proactive planning.
Pension contributions are one of the most effective ways to reduce taxable income while securing tax relief.
Charitable donations made under Gift Aid can also help bring your income below the threshold while supporting causes you care about.
Changes to pensions require action
Pensions remain a highly tax-efficient way to save, but changes on the horizon require careful thought.
From 2027, pension pots will be included in your estate for IHT purposes, potentially increasing the tax burden for your beneficiaries.
Reviewing your strategy now could save your loved ones large amounts in tax.
Tools such as life insurance policies written in trust can help offset future IHT liabilities, while other tax-efficient estate planning solutions may also be worth exploring.
Property taxes are under pressure
If you hold property as part of your investment portfolio, rising tax rates on rental income and gains demand a review of your position.
Holding properties in a limited company can offer better tax efficiency for landlords with large portfolios, as Corporation Tax is often more favourable than personal Income Tax on rental profits.
If you are thinking about selling assets, timing is everything.
Spreading sales across different tax years can help you take full advantage of the annual CGT allowance and keep your tax bill as low as possible.
Tax-efficient investments can make a difference
ISAs remain a straightforward way to invest up to £20,000 annually, offering tax-free growth and withdrawals.
While this may seem modest for HNWIs, it remains a useful part of a diversified tax strategy.
For those looking for greater tax relief, schemes such as the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs) provide attractive options.
These allow you to benefit from Income Tax relief and exemptions on capital gains while supporting UK businesses.
Taking a close look at your tax position now will help you make the most of allowances, cut down on unnecessary tax bills, and protect your wealth for the future.