When it comes to tax-efficient financial planning, paying attention to what the very wealthy do can reap rewards.
Those with complicated tax affairs and financial advisers on hand know how to maximise their tax allowances and make use of valuable loopholes.
These strategies will become even more important next year as new levies are introduced, existing allowances are reduced and growing numbers of taxpayers see their bills rise thanks to frozen thresholds. Millions are likely to see the amount they take home every month reduced unless they act.
Alex Pugh, a chartered financial planner at wealth manager Saltus, says: ‘We are seeing a clear shift in behaviour among high-net-worth families. They are becoming more proactive and taking steps earlier.’
Here are seven things the rich will be doing with their wealth in 2026 – and what you can learn from their strategies, however much you have.
Maxing out pensions
Those who pay into a workplace pension through salary sacrifice will be badly hit by changes made in last month’s Budget – but have three years to squirrel away as much as possible before the new rules come into effect in April 2029.
‘This gives people time to think around their options,’ says Brian Dennehy, managing director of Dennehy Wealth.
And David Little, of wealth manager Evelyn Partners, has seen a spike in enquiries about ‘carry-forward’ rules, which allow savers to contribute to their pension any unused allowance (up to £60,000) from the previous three tax years.
Those with complicated tax affairs and financial advisers on hand – that is, the wealthy – know how to maximise their tax allowances and make use of valuable loopholes
Investing
Chancellor Rachel Reeves and the City will be on a drive to get Britain investing in 2026. Some 4.1million stocks and shares Isas were opened last year, according to the Office for National Statistics, with some £3.1 billion invested in the accounts – about 11 per cent more than the previous year.
But wealthy savers are already well aware that investing in the stock market has historically been a far more effective way to grow their money than leaving it in cash. Investment platform Interactive Investor says Isa millionaires (those with at least £1million in an Isa) invest on average 41 per cent of their money in investment trusts, 35 per cent in equities and 13 per cent in funds. They have on average just 5 per cent in cash.
This combination is not necessarily the key to success for all investors, however. Having a range of investments tends to make sense for most, so you don’t have all of your eggs in one basket.
Among the most held investments are Scottish Mortgage – the trust known for backing early stage tech firms – and the shares of oil giant Shell, pharma business GSK and Lloyds Banking Group.
Utilising start-ups
Alex Pugh of Saltus says high-net-worth families are taking steps earlier
The Government has historically rewarded investors willing to take the extra risk of backing fledgling businesses with hefty tax breaks, but these are getting less generous.
Investors can put up to £200,000 a year in a Venture Capital Trust (VCT) – a specialist type of investment fund which supports selected early stage companies – and get 30 per cent tax relief on their investment, as well as tax-free gains and dividends.
From April 2026, the remit of VCTs and Enterprise Investment Schemes (EIS) – a similar scheme where you instead invest directly into individual companies – will widen, allowing more to be invested in growing companies.
The tax relief on VCT investments will be slashed from 30 per cent to 20 per cent in April, however, making them less appealing.
Following expected bumper investments into VCTs, Alex Davies, of Wealth Club, thinks the focus will shift to Seed Enterprise Investment Schemes (SEIS).
‘They offers up to 50 per cent income tax relief,’ he explains. ‘These are high-risk investments, however, and should only be considered by those who can afford to lose the capital they put in.’
Gifting
Bereaved families are expected to pay a record level of inheritance tax in 2026. The amount hit a new high of £8.2 billion in 2024-25.
Estate planning is now a top priority for anyone whose wealth exceeds the threshold at which an estate becomes liable (£325,000 for an individual, with an additional £175,000 for a main residence passed to a direct descendent).
Expert Brian Dennehy says the tendency for parents to make lifetime gifts will only grow
‘The tendency for parents to make lifetime gifts is now likely to accelerate,’ says Dennehy. ‘The Bank of Mum and Dad will be emptying the vaults.’
It is possible to give away £3,000 a year without it being liable for inheritance tax, and larger sums can be given at certain occasions – £5,000 for a child’s wedding, for instance. Planning early means you can hand out more.
Under the seven-year rule, gifts of any size are not liable for IHT so long as you live for seven years after making it.
Michelle Holgate, of financial advisers RBC Brewin Dolphin, says: ‘It can be significantly more tax efficient to gift money while you are still alive.
‘Plus, you get the added bonus of seeing your loved ones benefit from your generosity.’
Giving away surplus
There is a lesser-used gifting rule where you can give away excess income and immediately make it exempt from IHT – so long as it does not impact your standard of living.
The money cannot come from savings, but must be generated from regular income sources such as employment, rent, pensions or dividends.
Only 430 families claimed this exemption in 2022/23, but it is gaining popularity.
Analysis by TWM Solicitors shows the value of surplus income gifts jumped by 177pc to £144 million in 2023/24. It is likely to increase further next year.
Inheritance insurance
Those not able to make substantial gifts now are planning how to maximise what they leave behind, says Shaz Bishop of RBC Brewin Dolphin.
And Pugh adds that about a third of clients are actively looking at ways to protect their pensions from inheritance tax.
It is possible to arrange an insurance policy that pays out at death enough to cover an estate’s IHT liability, but the rules can be complicated so be sure to get sound advice. ‘Bear in mind this option is potentially not available to those who are in ill health or uninsured due to other factors such as age,’ explains Bishop.
Sharing assets
Couples can reduce their tax liability by sharing assets or transferring them to the lower-earning partner.
This will become an increasingly valuable strategy for anyone with a buy-to-let as the rate of income tax on earnings from property will rise from April 2027 by 2 percentage points to 22 per cent for basic-rate taxpayers, 42 per cent for higher-rate payers and 47 per cent for additional-rate payers.
Interspousal transfer rules mean investments and cash can be shifted between spouses without a tax bill being incurred.
Jason Hollands, managing director at wealth manager Evelyn Partners, explains: ‘Even where tax cannot be completely eliminated, moving savings and investments to a spouse who is subject to a lower tax band can still help reduce overall family levies.’
