6th April The New Tax Year
The UK Tax Year Starts on April 6th 2026
The UK Tax Year Starts on April 6th 2026 The UK tax year runs from 6 April to 5 April the following year. With the start of the 2026/27 tax year on 6 April 2026, several updates and changes will take effect, building on previous reforms.
The Autumn Budget introduced targeted increases in dividend and capital allowances, alongside ongoing threshold freezes and digital reporting requirements. These aim to boost revenue while supporting growth, with a focus on businesses through corporation tax caps and employment allowances. Individuals and businesses should review their tax affairs to prepare, especially for new digital obligations.
Key Tax Changes in the 2026/27 Tax Year
Whether you're an employee, self-employed, or a business owner, staying informed about these changes is crucial to understand their potential impact on your finances.
Additional Rate Threshold
The additional rate threshold remains at £125,140 (after the personal allowance taper), income above this is taxed at 45%. No changes were announced for 2026/27.
It dropped from £150,000 to £125,140 in 2023, which meant that anyone earning above this amount will pay 45% income tax.
Beware an income between £125,140 and £150,000 the marginal rate of tax can be over 60%.
Capital Gains Tax
Capital Gains TaxThe annual exempt amount (allowance) stays at £3,000, unchanged from recent years. Gains above this are taxable at 18% (basic rate) and 24% (higher rate) for most assets, following the 2024 increase. No further adjustments for 2026/27.
The capital gains tax allowance was reduced from £6,000 to just £3,000 from April 2024. This means that if you make a profit from selling an asset, such as a property or shares, you will only be able to exempt up to £3,000 of the gain from Capital Gains Tax before being required to pay tax on the remaining amount.
Corporation Tax
The main corporation tax rate remains 25% for profits over £250,000, with the small profits rate at 19% for profits up to £50,000 (marginal relief in between). The rate is capped at 25% for the parliament's duration.
A key change: The main Writing Down Allowance (WDA) for plant and machinery reduces from 18% to 14% from 1 April 2026, affecting capital allowances claims.
If a company in the UK makes a profit of over £250,000, they will now have to pay more tax, as the corporation tax rate has increased to 25%. However, small companies that make profits of up to £50,000 will still only pay 19% corporation tax. This means that larger companies will have to pay a higher percentage of their profits to the government, while smaller companies will continue to pay a lower rate.
Divided Tax Allowance
The Dividend Tax Allowance remains £500, as reduced in prior years. However, tax rates on dividends above this increase: The ordinary rate rises to 10.75% (from 8.75%), the upper rate to 35.75% (from 33.75%), and the additional rate stays at 39.35%. This applies from 6 April 2026, impacting investors and company owners.
The Dividend Tax allowance has been reduced from £1,000 to £500, which means that those who receive dividends above this threshold may pay more tax, depending on your total income..
National Insurance Contributions (NICs)
National Insurance Contributions (NICs) Rates remain steady following 2024 cuts:Employee Class 1: 8% on earnings between £12,570 and £50,270, then 2% above.
Self-employed Class 4: 6% on profits between £12,570 and £50,270, then 2% above.
No mandatory Class 2 for self-employed with profits above £12,570 (voluntary for benefit access).
Employer rate is 15% above £5,000 per employee, with Employment Allowance up to £10,500. No new rate changes for 2026/27, but thresholds frozen.
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Pensions Annual Allowance
The standard annual allowance remains £60,000, allowing higher tax-relieved contributions. The lifetime allowance stays abolished, with no cap on pension accumulation without charges. State pension rises by 4.8% under the triple lock, taking the full new state pension to approximately £12,020 annually (or £231.15 weekly), though exact figures depend on individual entitlement. No major structural changes for private pensions in 2026/27, but note upcoming inheritance tax inclusion from 2027.
Personal Allowance
Personal Allowance. The tax-free personal allowance stays frozen at £12,570 for most individuals, continuing until at least 2028. This, combined with frozen bands (£37,700 basic rate limit, £50,270 higher rate threshold).
National Minimum Wage
The National Living Wage for those aged 21 and over increases to £12.71 per hour (a 4.1% rise). Other rates: £10.85 (18-20), £8.00 (16-17 and apprentices). This affects payroll and low-wage sectors from April 2026.
Additional Key Changes for 2026/27
Making Tax Digital (MTD) for Income Tax: Mandatory from 6 April 2026 for self-employed, freelancers, and landlords with gross income over £50,000 (expands to £30,000 in 2027). Requires quarterly digital updates via software, with an annual declaration. .
Don't let the new tax year catch you off guard!
These changes highlight the importance of staying up-to-date with tax laws and regulations, as they can have a significant impact on your finances.
Keep a close eye on changes to taxes, pensions, energy costs, and household bills that could impact your finances. Being aware of these updates is the first step to staying financially savvy.
It's always a good idea to seek professional advice if you're unsure about how these changes affect you.
