UK Tax Changes: 2026/27 Update
Explore the latest UK tax changes for 2026/27, including dividends, CGT, Inheritance Tax, MTD and business tax updates.
The UK tax changes applying in 2026/27 do not affect every taxpayer in the same way. Some measures increase tax rates, while others change specialist reliefs, introduce digital reporting obligations or confirm that existing thresholds will remain frozen.
It is important to distinguish between rules already in force and measures scheduled for later tax years. A Budget can announce a policy, but its final wording, legal status and commencement date may depend on subsequent legislation and HMRC guidance.
This guide summarises the principal changes current as of 19 July 2026. It focuses on what has changed, when each measure applies and who may be affected, with links to detailed guidance and calculators where further explanation is needed.
What Are the Latest Tax Changes?
The most significant 2026/27 tax changes affect dividends, qualifying business disposals, agricultural and business inheritance relief, capital allowances and digital reporting for certain sole traders and landlords.
| Change | Effective date | Who may be affected | Key point |
|---|---|---|---|
| Dividend tax rates | 6 April 2026 | Shareholders with taxable dividends | Ordinary and upper rates increased to 10.75% and 35.75% |
| Business Asset Disposal Relief | 6 April 2026 | People making qualifying business disposals | The qualifying CGT rate increased from 14% to 18% |
| Carried interest | 6 April 2026 | Affected investment-management professionals | Moved from the CGT regime into an Income Tax and National Insurance framework |
| Agricultural and Business Relief | 6 April 2026 | Estates containing qualifying agricultural or business property | 100% relief is generally limited to a combined £2.5 million allowance |
| Making Tax Digital for Income Tax | 6 April 2026 | Qualifying sole traders and landlords | The first mandatory group entered digital record-keeping and quarterly reporting |
| Capital allowances | From January, April or 6 April 2026 | Businesses buying qualifying plant and machinery | A 40% first-year allowance was introduced and the main writing-down rate reduced to 14% |
| National Insurance uprating | 6 April 2026 | Low earners and people paying voluntary contributions | Certain lower thresholds and voluntary contribution rates increased |
Not every figure published for 2026/27 represents a new policy. Several headline rates remain unchanged but have been republished for the current tax year. The sections below identify genuine changes and clarify where existing rules simply continue.
How Budget Announcements Become Tax Law
A Budget announces government policy, a Finance Bill contains proposed legislation, a Finance Act enacts approved provisions and HMRC guidance explains their practical application.
A Budget measure does not necessarily apply from the day of the announcement. Its intended start date may be months or years later, and the proposal can be amended before Parliament approves it. Some measures also require regulations or further HMRC guidance before their administrative requirements are complete.
The Finance Act 2026 contains provisions with different commencement dates. A measure enacted in 2026 can therefore take effect in April 2026, April 2027 or a later year. The announcement date, enactment date and effective date should always be checked separately.
Income Tax Changes
The principal Income Tax rates and thresholds remain unchanged for 2026/27, although dividend rates increased and longer-term threshold freezes were extended.
For 2026/27, the standard Personal Allowance remains £12,570. For most non-savings, non-dividend income in England, Wales and Northern Ireland, the basic rate remains 20%, the higher rate 40% and the additional rate 45%. Scotland continues to apply different rates and bands to most non-savings, non-dividend income.
According to GOV.UK’s current Income Tax guidance, the Personal Allowance is reduced by £1 for every £2 of adjusted net income above £100,000 and is normally removed at £125,140. The taper is not new, but frozen thresholds can result in a larger proportion of rising income becoming taxable.
Budget 2025 extended the freeze of the £12,570 Personal Allowance and £50,270 higher-rate threshold from April 2028 to April 2031. This extension does not change the numerical thresholds for 2026/27 because those amounts were already scheduled to remain in place. Use the Income Tax calculator to estimate the effect of current rates and allowances.
National Insurance Changes
The main employee, employer and Class 4 National Insurance percentage rates remain broadly unchanged, but lower limits and voluntary contribution rates were uprated for 2026/27.
For most employees, Class 1 National Insurance remains 8% between the Primary Threshold and Upper Earnings Limit and 2% above it. The annual Primary Threshold remains £12,570 and the Upper Earnings Limit remains £50,270. Most employers continue to pay 15% above the applicable £5,000 annual Secondary Threshold.
The Lower Earnings Limit increased from £125 to £129 per week. For self-employed people, the Small Profits Threshold increased to £7,105, while the voluntary Class 2 rate increased to £3.65 per week. The Class 3 voluntary contribution rate is £18.40 per week.
HMRC confirms these figures in its 2026/27 National Insurance rates. The National Insurance calculator can estimate contributions using the relevant employment or self-employment figures.
Capital Gains Tax Changes
Standard individual CGT rates remain 18% and 24%, but the rate for qualifying Business Asset Disposal Relief gains increased to 18% from April 2026.
The individual Capital Gains Tax annual exempt amount remains £3,000 for 2026/27. Taxable gains within an individual’s available basic-rate band are generally charged at 18%, with gains above that band generally charged at 24%. Reliefs, losses and the type of asset can change the calculation.
According to GOV.UK guidance, qualifying Business Asset Disposal Relief gains arising from disposals on or after 6 April 2026 are charged at 18%. This compares with 14% for qualifying disposals from 6 April 2025 to 5 April 2026. Eligibility conditions and the lifetime limit continue to apply.
Carried interest also moved out of the Capital Gains Tax framework from 6 April 2026 and into a revised Income Tax and National Insurance regime. This specialist change does not apply to ordinary investment gains. General disposals can be estimated using the Capital Gains Tax calculator.
Dividend Tax Changes
From 6 April 2026, the ordinary dividend rate increased to 10.75% and the upper rate increased to 35.75%, while the additional rate remained 39.35%.
The ordinary and upper dividend rates increased by two percentage points from their 2025/26 levels of 8.75% and 33.75%. The change applies UK-wide to taxable dividends received from 6 April 2026. The additional dividend rate remains unchanged.
The Dividend Allowance remains £500. It is a zero-rate allowance rather than an amount removed from total income, so dividends covered by it can still influence the tax band applying to other dividends. Income and gains held within an ISA follow the separate ISA rules.
The government confirms the new rates in its official dividend tax update. Shareholders can estimate the effect with the dividend tax calculator.
Inheritance Tax Changes
From 6 April 2026, 100% Agricultural and Business Relief is generally restricted to a combined £2.5 million allowance, with qualifying value above it receiving 50% relief.
The ordinary Inheritance Tax nil-rate band remains £325,000, while the residence nil-rate band remains £175,000 where its conditions are met. These thresholds are not new for 2026/27 and are scheduled to remain fixed through April 2031.
According to updated HMRC Business Relief guidance, the new £2.5 million allowance applies to qualifying agricultural and business property for deaths on or after 6 April 2026. An unused allowance can potentially transfer from a deceased spouse or civil partner, allowing up to £5 million where the conditions are satisfied.
A separate reform takes effect from 6 April 2027, when most unused pension funds and pension death benefits will enter the deceased person’s estate for Inheritance Tax purposes, subject to specified exclusions. The dedicated guide to Inheritance Tax changes from 2027 explains that future pension measure.
Property Tax Changes
No new general SDLT rate change began in 2026, but existing higher rates continue and separate property-income tax rates are scheduled for April 2027.
The SDLT thresholds and higher rates applying in England and Northern Ireland began before the 2026/27 tax year. The ordinary residential nil-rate threshold remains £125,000, while qualifying first-time buyers may use a £300,000 threshold for a property costing no more than £500,000. Scotland uses Land and Buildings Transaction Tax, and Wales uses Land Transaction Tax.
Buyers of additional residential properties in England or Northern Ireland generally pay five percentage points above the standard residential SDLT rates, subject to detailed ownership and replacement-main-residence rules. A current transaction can be estimated with the Stamp Duty calculator.
Separate property-income rates of 22%, 42% and 47% are scheduled from 6 April 2027 for England, Wales and Northern Ireland, subject to the legislation’s territorial provisions. They do not apply to 2026/27 rental income. Landlords can estimate the current position with the rental income tax calculator.
Business Tax Changes
Corporation Tax and VAT headline rates remain unchanged, while Making Tax Digital and capital allowance reforms create significant changes for affected businesses.
The Corporation Tax main rate remains 25%, while qualifying companies with profits of £50,000 or less may use the 19% small profits rate. Marginal Relief may apply between £50,000 and £250,000. Associated companies and short accounting periods can reduce those thresholds.
A new 40% first-year capital allowance became available for qualifying plant and machinery expenditure incurred from 1 January 2026. The main writing-down allowance rate was reduced from 18% to 14% from 1 April 2026 for Corporation Tax and 6 April 2026 for Income Tax. HMRC explains the change in its capital allowance policy paper.
Making Tax Digital for Income Tax became mandatory from 6 April 2026 for qualifying sole traders and landlords whose 2024/25 qualifying income exceeded £50,000. The threshold is scheduled to fall to more than £30,000 from April 2027 and more than £20,000 from April 2028. Exemptions and the definition of qualifying income can affect whether a person must join.
The standard VAT registration threshold remains £90,000 and the standard VAT rate remains 20%; neither is a new 2026/27 change. Companies can estimate their current liability with the Corporation Tax calculator, while the business tax planning guide covers wider forecasting and compliance decisions.
Important Tax Changes After 2026/27
Future measures include higher property and savings tax rates from April 2027, pension assets entering Inheritance Tax and National Insurance restrictions on pension salary sacrifice from April 2029.
| Future measure | Scheduled start | Current position |
|---|---|---|
| Property-income rates of 22%, 42% and 47% | 6 April 2027 | Not applicable to 2026/27 property income |
| Savings rates of 22%, 42% and 47% | 6 April 2027 | 2026/27 savings rates remain 20%, 40% and 45% |
| Most unused pension funds included in estates for IHT | 6 April 2027 | Future rule with specified exclusions |
| Cash ISA limit of £12,000 for most people under 65 | 6 April 2027 | The overall annual ISA limit remains £20,000 |
| MTD Income Tax threshold above £30,000 | 6 April 2027 | Based on qualifying income reported for 2025/26 |
| National Insurance on pension salary sacrifice above £2,000 annually | 6 April 2029 | Does not apply during 2026/27 |
Future measures should not be used when calculating a 2026/27 liability. Their implementation guidance may continue to develop before commencement, so the position should be checked again closer to the relevant start date.
What Do These Tax Changes Mean for You?
The effect depends on your income, investments, assets and business activities; many taxpayers will be directly affected by only one or none of the headline changes.
- Employees without dividends, disposals or business income may see little direct rate change in 2026/27.
- Company shareholders may pay more tax on dividends above the £500 allowance.
- Qualifying business disposals are now subject to the 18% Business Asset Disposal Relief rate.
- Farm and business owners may need to review succession plans under the revised inheritance relief allowance.
- Sole traders and landlords within the first MTD group must maintain digital records and submit the required updates.
- Businesses purchasing qualifying assets should review the available capital allowances.
- Landlords and savers should prepare for separate rate increases scheduled from April 2027.
A tax change does not automatically make an immediate transaction beneficial. Selling an asset, changing a dividend date or transferring wealth in response to a headline can create additional tax, legal and financial consequences. Decisions should use the complete circumstances and correct effective date.
How to Prepare for Tax Changes
Prepare by identifying the changes relevant to you, updating calculations and checking the effective date before altering a transaction or tax return.
- List your income sources, investments, property and business interests.
- Separate rules already effective from changes beginning in a future tax year.
- Update dividend, disposal, payroll and business tax forecasts.
- Check whether Making Tax Digital applies using the correct qualifying-income year.
- Review estate plans where agricultural, business or pension assets are material.
- Confirm capital allowance treatment before purchasing substantial business assets.
- Keep evidence supporting reliefs, valuations, expenses and disposal dates.
- Check GOV.UK after a Budget, Finance Act or major HMRC update.
Businesses should incorporate legislative updates into regular forecasting rather than waiting until a return deadline. Individuals should review their position when income, investments, property ownership or family circumstances change. Professional advice may be appropriate before restructuring ownership or accelerating a significant transaction.
Common Tax Change Misconceptions
The most common misconception is that every Budget announcement applies immediately to everyone, even though measures can have different commencement dates and narrowly defined affected groups.
A frozen threshold is different from a rate increase. The percentage rate may remain unchanged while earnings growth causes more income to fall above the fixed threshold. The individual effect depends on how income and allowances change.
“Announced”, “legislated” and “effective” are also not interchangeable. A measure can be announced in one Budget, enacted in a later Finance Act and begin in a subsequent tax year. All three stages should be checked before applying a new rule.
This guide summarises selected UK tax changes and future measures using information available on 19 July 2026. Tax rules, commencement dates and HMRC guidance can change, and devolved taxes may differ in Scotland and Wales. For personalised advice, consult a qualified tax adviser or accountant and verify the latest position on GOV.UK before making tax, investment, property or estate-planning decisions.
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