Our 2026/27 tax cards are now available to download, providing a clear snapshot of the key UK tax rates and allowances for the year ahead.
While the new tax year does not bring widespread reform, there are a number of measured but important changes when compared with 2025/26— particularly for investors, business owners and employers. Just as significantly, the continued freezing of many thresholds continues to increase effective tax costs for many taxpayers.
Income tax and allowances: freezes continue into2026/27
For 2026/27, income tax bands and rates remain unchanged from 2025/26. The basic rate band still runs to £37,700, with higher and additional rates applying above this. The personal allowance also remains frozen at £12,570, with the taper continuing once income exceeds £100,000.
While this represents no headline change year‑on‑year,the ongoing freeze (now several years running) means that, in real terms, moreindividuals are paying higher rates of tax as earnings increase. Compared with2025/26, the rules are technically the same — but theimpact is felt more sharply.
Dividend taxation is one area where there is a clearchange. Although the dividend allowance remains at £500 (unchanged from2025/26), the ordinary and upper dividend tax rates increase:
· Ordinary rate rises from 8.75% to 10.75%
· Upper rate rises from 33.75% to 35.75%
This further increases the tax cost of dividendextraction for owner‑managed businesses versus last year.
National Insurance: rates unchanged, pressuremaintained
National Insurance rates for both employees and employersremain unchanged from 2025/26, with employee NIC charged at 8% up to the upperearnings limit and 2% above, and employer NIC staying at 15% on earnings abovethe secondary threshold.
For the self‑employed, Class 2 NIC remainsabolished, as it was in 2025/26, with optional voluntary contributions stillavailable. Class 4 NIC rates are also unchanged.
Again, while there is no movement compared to last year,rising wages mean NIC remains a growing cost for both individuals andemployers.
Capital gains tax: allowances static, reliefs lessgenerous
The annual CGT exemption remains at £3,000, unchangedfrom 2025/26. However, this figure is now significantly lower than historiclevels, making CGT planning far more relevant than in previous years.
For business owners, there is a notable change toBusiness Asset Disposal Relief. In 2025/26, qualifying gains within the £1mlifetime limit were taxed at 14%. From 2026/27, this increases to 18%, aligningmuch more closely with standard CGT rates and reducing the value of the relief.
This shift may materially affect exit planning forshareholders who were expecting to dispose of businesses under the old rate.
Corporation tax and capital investment
Corporation tax rates remain unchanged from 2025/26,with:
· Small profits rate at 19%
· Main rate at 25%
· Marginal rate applying between £50,001 and£250,000
On the capital allowances side, generous reliefs broadly continue, but with some tightening. While full expensing at 100% remains available, the writing down allowance on main pool assets reduces from the transitional rate to 14% from April 2026, compared with higher relief in earlier periods. This subtly changes the tax profile of longer‑term capital expenditure when compared with last year.
Employment costs and benefits
The National Living Wage increases from April 2026,rising above its 2025/26 level. This represents a real year on year cost increase for employers, particularly in labour intensive sectors.
Car and fuel benefit charges increase in line with emissions bands when compared with prior years, continuing the longer‑term trend of tightening tax treatment on company vehicles.
VAT, pensions and other allowances
VAT thresholds remain frozen at £90,000, unchanged from2025/26, continuing to bring more growing businesses within the scope of VAT earlier than would historically have been the case.
Pension allowances — including the £60,000 annual allowance and lump sum limits — remain unchanged from last year, giving relative stability in this area for longer‑term planning.
You can download our full 2026/27 tax cards here for a detailed breakdown of rates and allowances. While many figures look familiar compared with 2025/26, the cumulative effect of frozen thresholds and selective rate increases means that proactive planning remains as important as ever.
If you’d like to talk through what these changes mean for you or your business, please get in touch.