2026/27 TAX CHANGES
YOUR GUIDE TO HOW THE LATEST TAX CHANGES MAY AFFECT YOU
MARCH 2026
Key Tax Allowance
& Threshold Changes
Personal Allowance
Remains frozen at £12,570 for both 2025/26 and 2026/27.
Higher Rate Threshold
Remains at £50,270 (basic rate limit of £37,700) for 2025/26 and 2026/27.
Income Limit for Personal Allowance
Remains frozen, with the allowance reducing by £1 for every £2 earned over £100,000, disappearing completely at £125,140.
Capital Gains Tax (CGT) Annual Exemption
Remains at £3,000 for 2025/26 and 2026/27.
Dividend Allowance
Remains at £500 for both 2025/26 and 2026/27.
Marriage Allowance
Remains at £1,260 for both years.
ISA Allowance
The overall ISA limit remains £20,000 for 2025/26 and 2026/27, but from April 2027, the Cash ISA limit for those under 65 is reduced to £12,000.
High Income Child Benefit Charge (HICBC)
The threshold remains at £60,000 for both 2025/26 and 2026/27.
CHANGES IN THE 2026/27 TAX YEAR
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Dividend Tax Rates: Basic-rate dividend tax rises from 8.75% to 10.75%; higher-rate rises from 33.75% to 35.75%.
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Employment Expenses: From 6 April 2026, tax relief for non-reimbursed home-working expenses is removed.
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Employee Benefits: From 6 April 2026, reimbursement by employers for flu vaccines, eye tests, and home-working equipment becomes tax-free.
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Inheritance Tax (IHT): From 6 April 2026, 100% Agricultural and Business Relief is capped at £2.5 million per individual; a 50% rate applies above this.
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Capital Gains Tax on Business Disposal: The rate for Business Asset Disposal Relief increases to 18% in 2026/27.
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Capital Allowances: A new 40% first-year allowance for special rate expenditure applies from 1 April 2026 (Corporation Tax) or 6 April 2026 (Income Tax).
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Making Tax Digital (MTD): From 6 April 2026, MTD for Income Tax applies to those with qualifying income over £50,000.
SUMMARY OF FUTURE CHANGES
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Savings and Property Tax (April 2027): Rates on savings and property income are set to rise by 2% (basic to 22%, higher to 42%, additional to 47%).
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Inheritance Tax on Pensions (April 2027): Unused pension funds will be brought into an estate for IHT purposes.
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MTD Extension (April 2027): MTD for Income Tax will expand to include those with income over £30,000.
USE THEM
OR LOSE THEM
key changes for savers & investors:
Key Changes: 2026/27 Tax Year (Starts April 6, 2026)
-
Dividend Tax Rates Increase: Tax on dividends outside an ISA will rise by 2 percentage points. The ordinary rate rises to 10.75% (from 8.75%) and the upper rate to 35.75% (from 33.75%).
-
Dividend Allowance: Remains at £500.
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ISA Limits: The overall ISA limit remains at £20,000.
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Two-Child Benefit Cap: Scrapped from April 2026.
Key Changes: 2027/28 Tax Year (Starts April 6, 2027)
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Savings Tax Rates Increase: Tax rates on savings interest (outside of ISAs) will increase by 2 percentage points across all bands:
-
Basic rate: Rises to 22% (from 20%).
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Higher rate: Rises to 42% (from 40%).
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Additional rate: Rises to 47% (from 45%).
-
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Cash ISA Limit Reduction: The amount that can be paid into cash ISAs will drop to £12,000 for those under 65, though the overall £20,000 limit remains.
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Property Income Tax: A separate, higher tax rate for property income will be introduced (22%, 42%, 47% depending on rate).
Summary of Allowances (2025/26 - 2026/27)
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Personal Savings Allowance (PSA): Remains unchanged. £1,000 for basic rate, £500 for higher rate, £0 for additional rate taxpayers.
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Starting Rate for Savings: Remains at £5,000 (0% tax for low earners).
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Capital Gains Tax (CGT) Exemption: Remains at £3,000.
