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Tax year 2026/27 Last reviewed: 20 October 2026
UK tax news and updates 2026/27: what has changed and what is coming
This page lists UK tax changes that we confirmed on GOV.UK or legislation.gov.uk on 20 October 2026, each with its date. In force for 2026/27: dividend rates of 10.75%, 35.75% and 39.35%, a National Living Wage of £12.71 and Making Tax Digital for Income Tax above £50,000. Dated changes follow from 6 April 2027 to April 2029.
The tax year 2026/27 runs from 6 April 2026 to 5 April 2027. A change appears here only if it is on GOV.UK or legislation.gov.uk. Proposals and consultations are labelled as such.
Key takeaways
- Income Tax: for 2026/27 the Personal Allowance is £12,570 and the basic rate limit is £37,700. Both are fixed in law for every tax year to 2030/31.
- Dividends: from 6 April 2026 the rates are 10.75% (basic), 35.75% (higher) and 39.35% (additional), with a £500 allowance. In 2025/26 the basic and higher rates were 8.75% and 33.75%.
- Minimum wage: from 1 April 2026 the National Living Wage is £12.71 an hour for workers aged 21 and over. The rate is £10.85 for ages 18 to 20 and £8.00 under 18 and for apprentices.
- Making Tax Digital for Income Tax: it applies from 6 April 2026 if your qualifying income for 2024/25 was over £50,000. The threshold is £30,000 from 6 April 2027 and £20,000 from 6 April 2028. There are no penalty points for late quarterly updates in 2026/27.
- Inheritance Tax: for deaths on or after 6 April 2026, 100% Business Relief and Agricultural Relief is capped at £2.5 million. Value above the cap gets 50% relief.
- Business tax: a 40% first-year allowance applies to qualifying plant and machinery bought on or after 1 January 2026. The main writing down allowance fell from 18% to 14% in April 2026. Employee Ownership Trust relief fell from 100% to 50% for disposals on or after 26 November 2025.
- From 6 April 2027: the cash ISA limit is £12,000 if you are 64 or under at the end of the tax year, savings and property income rates for 2027/28 are 22%, 42% and 47%, and most unused pension funds count towards the estate for Inheritance Tax.
- Later: Electric Vehicle Excise Duty from 1 April 2028, the High Value Council Tax Surcharge from April 2028, and Self Assessment payments through PAYE from April 2029 (under consultation).
Which Income Tax figures are fixed until 2030/31?
The Personal Allowance (£12,570) and the basic rate limit (£37,700) are fixed in law for every tax year up to and including 2030/31. For 2026/27 in England, Wales and Northern Ireland, the higher rate applies above £50,270 and the additional rate above £125,140. Scotland has its own rates and bands.
| Item | 2026/27 | Position |
|---|---|---|
| Personal Allowance | £12,570 | Fixed for every tax year to 2030/31 |
| Basic rate, 20% | On the first £37,700 of income above the allowance | Basic rate limit fixed for every tax year to 2030/31 |
| Higher rate, 40% | Above £50,270, up to £125,140 | £12,570 plus £37,700 |
| Additional rate, 45% | Above £125,140 | Rate for 2026/27 |
| Allowance taper | £1 lost for every £2 of income above £100,000 | The allowance is nil at £125,140 |
Sources: Income Tax rates and allowances, Finance Act 2021 section 5 and Finance Act 2026 section 10. Section 5 covers the earlier years and section 10 adds 2028/29, 2029/30 and 2030/31.
What the fixed figures mean
When pay rises and these figures stay the same, more of your income falls in the 40% band or above. Pay above £50,270 is taxed at 40% in England, Wales and Northern Ireland. Scotland sets its own rates, with six bands above the allowance in 2026/27.
For the full band rules, see the Income Tax guide.
What are the minimum wage rates from April 2026?
From 1 April 2026 the National Living Wage is £12.71 an hour for workers aged 21 and over, up 50p or 4.1%. The rate for ages 18 to 20 is £10.85, and for under 18s and apprentices it is £8.00. The government announced the 2026 rates on 26 November 2025.
| Category | Hourly rate from April 2026 | Increase |
|---|---|---|
| National Living Wage, 21 and over | £12.71 | 50p (4.1%) |
| 18 to 20 | £10.85 | 85p (8.5%) |
| Under 18 | £8.00 | 45p (6.0%) |
| Apprentice | £8.00 | 45p (6.0%) |
Source: National Minimum Wage and National Living Wage rates. The rates change on 1 April every year.
What a full-time National Living Wage job costs an employer
This is our own arithmetic from the figures above, using 37.5 hours a week as an example. Employer National Insurance is 15% on pay above £5,000 a year. Pension contributions and other costs are not included.
| Line | Working | Amount |
|---|---|---|
| Gross pay | £12.71 × 37.5 hours × 52 weeks | £24,784.50 |
| Employer National Insurance | 15% of £19,784.50 (pay above £5,000) | £2,967.68 |
| Pay plus employer National Insurance | Sum of the two lines above | £27,752.18 |
Source for the rates: employer rates and thresholds for 2026 to 2027.
How have Dividend Tax and savings tax changed?
Dividend Tax rates rose on 6 April 2026 to 10.75% (basic), 35.75% (higher) and 39.35% (additional), with a £500 allowance. From 6 April 2027 the savings and property income rates for 2027/28 are 22%, 42% and 47%, and the cash ISA limit changes for people aged 64 or under.
| Band | 2025/26 | From 6 April 2026 | Change |
|---|---|---|---|
| Basic rate | 8.75% | 10.75% | Up 2 percentage points |
| Higher rate | 33.75% | 35.75% | Up 2 percentage points |
| Additional rate | 39.35% | 39.35% | No change |
Sources: Tax on dividends and Income Tax rates and allowances for current and previous tax years. The government announced the change at Budget 2025 (26 November 2025). The Dividend Allowance is £500.
£50,000 of dividends above the allowance, taxed at the higher rate, costs £1,000 more in 2026/27 than in 2025/26. That is 2 percentage points of £50,000.
From 6 April 2027: savings and property income rates
| Income | Basic | Higher | Additional | Where it applies |
|---|---|---|---|---|
| Savings | 22% | 42% | 47% | Across the UK |
| Property | 22% | 42% | 47% | England, Wales and Northern Ireland |
These are the rates for 2027/28 (Finance Act 2026 sections 5 and 7). GOV.UK gives no property rates for Scotland. The £5,000 starting rate for savings and the Personal Savings Allowance are not part of this change. Sources: GOV.UK policy paper, section 5 and section 7.
From 6 April 2027: ISA changes
The Individual Savings Account (Amendment) (No. 2) Regulations 2026 (SI 2026/1018) were made on 10 September 2026 and come into force on 6 April 2027. Until 5 April 2027 the whole £20,000 ISA allowance can go into cash ISAs.
- From 6 April 2027, if you are 64 or under at the end of the tax year, you can pay up to £12,000 of your £20,000 ISA allowance into cash ISAs. If you are 65 or over at the end of the tax year, the cash ISA limit stays at £20,000.
- From 6 April 2027, interest paid on cash held in a stocks and shares ISA or an innovative finance ISA is charged at the savings basic rate, which is 22% for 2027/28. Your ISA provider pays it to HMRC.
- From 6 April 2027, you cannot transfer money from a stocks and shares ISA or an innovative finance ISA into a cash ISA unless you are 65 or over at the end of the year. You can still transfer from a cash ISA to a stocks and shares ISA.
- From 6 April 2027, the investments in a stocks and shares ISA, apart from cash, cannot be 100% money market funds.
Sources: SI 2026/1018 and the HMRC factsheet on ISA reform, published on 23 June 2026. See our Cash ISAs guide for the detail.
What changed for Inheritance Tax and business assets?
For deaths on or after 6 April 2026, 100% Business Relief and Agricultural Relief is capped at £2.5 million of qualifying property in total. Value above that gets 50% relief. A spouse or civil partner can pass on unused allowance, up to £5 million together. From 6 April 2027, most unused pension funds count towards the estate.
| Qualifying property | Relief |
|---|---|
| First £2.5 million, business and agricultural property combined | 100% |
| Value above £2.5 million | 50% |
Sources: Business Relief for Inheritance Tax and Agricultural Relief. Property held in trust counts towards the £2.5 million.
A spouse or civil partner can transfer unused allowance, which can make the total up to £5 million. If the first death was before 6 April 2026, the full £2.5 million can be transferred.
Pensions and Inheritance Tax from 6 April 2027
The government announced at Autumn Budget 2024 that most unused pension funds and death benefits come into scope of Inheritance Tax from 6 April 2027. Death in service benefits from a registered pension scheme are excluded. Personal representatives are responsible for reporting and paying any tax due. Source: GOV.UK factsheet, published on 26 November 2025.
For gifting and other estate planning, see our Planning and strategies guide.
Who must use Making Tax Digital for Income Tax?
Making Tax Digital for Income Tax applies from 6 April 2026 to sole traders and landlords registered for Self Assessment whose 2024/25 qualifying income was over £50,000. The threshold falls to £30,000 from 6 April 2027 and £20,000 from 6 April 2028. There are no penalty points for late quarterly updates in 2026/27.
| Start date | Qualifying income over | Tax year tested |
|---|---|---|
| 6 April 2026 | £50,000 | 2024/25 |
| 6 April 2027 | £30,000 | 2025/26 |
| 6 April 2028 | £20,000 | 2026/27 |
Source: Find out if and when you need to use Making Tax Digital for Income Tax. Partnerships will start later; GOV.UK has not yet set the dates.
Qualifying income is your self-employment and property income before expenses. Employment income does not count. HMRC writes to people it identifies, but it is still your responsibility to check if and when you need to use the service. You must keep digital records, use compatible software and still submit a tax return. The deadline for the 2026/27 tax return is 31 January 2028.
Quarterly update deadlines for 2026/27
| Period covered | Update due |
|---|---|
| 6 April to 5 July 2026 | 7 August 2026 |
| 6 July to 5 October 2026 | 7 November 2026 |
| 6 October 2026 to 5 January 2027 | 7 February 2027 |
| 6 January to 5 April 2027 | 7 May 2027 |
Source: Send quarterly updates. As at 20 October 2026, the next deadline is 7 November 2026.
Penalties
There are no penalties for missing a quarterly update deadline for the 2026/27 tax year. For tax years after 2026/27, each missed quarterly update or tax return deadline earns one penalty point. At 4 points you get a £200 penalty, and another £200 for each further missed deadline. Points below the threshold are removed after 24 months. Source: Penalties for Making Tax Digital for Income Tax.
For the full rules, see the HMRC rules and compliance guide.
What changed for business tax?
Three business tax changes are in force. The 40% first-year allowance applies to qualifying plant and machinery bought on or after 1 January 2026. The main writing down allowance rate fell from 18% to 14% in April 2026. Employee Ownership Trust relief fell from 100% to 50% for disposals on or after 26 November 2025.
40% first-year allowance
If you buy plant or machinery that qualifies, you can deduct 40% of the cost from your profits before tax. In the next accounting period you can claim writing down allowances on the remaining 60%. To qualify, the item must have been bought on or after 1 January 2026, be new and unused, qualify for the main rate of writing down allowance and not be a car. Source: Claim capital allowances.
Writing down allowance cut to 14%
The main pool rate is 14% from April 2026 and was 18% before. The special rate pool stays at 6%. The change took effect on 1 April 2026 for Corporation Tax and on 6 April 2026 for Income Tax. If an accounting period includes the day the rate changed, you work out a hybrid rate. Source: Work out your writing down allowances.
Employee Ownership Trust relief halved
The government announced at Budget 2025 that Capital Gains Tax relief on qualifying disposals to an Employee Ownership Trust falls from 100% to 50%. It applies to disposals on or after 26 November 2025: only 50% of the gain is chargeable, and Business Asset Disposal Relief and Investors' Relief are not available on that disposal. The 18% and 24% rates apply to the chargeable part. Sources: GOV.UK and Finance Act 2026 section 35. See the Capital Gains Tax guide.
What is coming after 2026/27?
Dated changes after 2026/27 start on 6 April 2027 with the cash ISA limit, savings and property income rates, and pensions in the estate. Electric Vehicle Excise Duty follows on 1 April 2028 and the High Value Council Tax Surcharge in April 2028. Self Assessment payments through PAYE are planned for April 2029 and are under consultation.
| Date | Change | Status |
|---|---|---|
| 6 April 2027 | Cash ISA limit of £12,000 for people aged 64 or under at the end of the tax year | In SI 2026/1018, made 10 September 2026 |
| 6 April 2027 | Savings and property income rates of 22%, 42% and 47% for 2027/28 | In Finance Act 2026 |
| 6 April 2027 | Most unused pension funds and death benefits come into scope of Inheritance Tax | Announced at Autumn Budget 2024 |
| 6 April 2027 | Making Tax Digital for Income Tax for qualifying income over £30,000 | GOV.UK guidance |
| 1 April 2028 | Electric Vehicle Excise Duty, an extension of Vehicle Excise Duty | GOV.UK factsheet published 13 July 2026 |
| 6 April 2028 | Making Tax Digital for Income Tax for qualifying income over £20,000 | GOV.UK guidance |
| April 2028 | High Value Council Tax Surcharge on properties valued at over £2 million | GOV.UK factsheet published 26 November 2025 |
| April 2029 | Self Assessment payments through PAYE for people with PAYE income | Announced at Budget 2025; in consultation |
Sources: Electric Vehicle Excise Duty, High Value Council Tax Surcharge and Timely payments in Income Tax Self Assessment.
High Value Council Tax Surcharge
From April 2028, owners of properties valued at over £2 million will pay a recurring annual charge on top of Council Tax. Local authorities will collect it. The government estimates it will raise £0.4 billion in 2029-30. The factsheet does not give the charge amounts, so we do not state any.
Self Assessment payments through PAYE
From April 2029, people who file a Self Assessment return and also have PAYE income will pay towards their Self Assessment bill through their regular PAYE payments, where they have enough income. HMRC says no one will pay more tax and only the timing changes. The government is consulting on how to deliver it.
Proposals under consultation
On 23 June 2026 HMRC published factsheets on online marketplace liability, ISA reform, lower value tax debts and timely Self Assessment payments. They say the measures are subject to consultation and details may change. The lower value tax debts proposal would extend existing debt recovery powers to people who can afford to pay but do not engage. Source: Fiscal Events 2026 factsheets.
Frequently asked questions about UK tax news
What is the National Living Wage in 2026/27?
From 1 April 2026 the National Living Wage is £12.71 an hour for workers aged 21 and over, up 50p or 4.1%. The rate is £10.85 for ages 18 to 20 and £8.00 for under 18s and apprentices. The rates change on 1 April every year.
What are the Dividend Tax rates for 2026/27?
From 6 April 2026 the Dividend Tax rates are 10.75% for the basic rate, 35.75% for the higher rate and 39.35% for the additional rate. In 2025/26 the basic and higher rates were 8.75% and 33.75%. The Dividend Allowance is £500, and dividends in an ISA are not taxed.
Are Income Tax thresholds fixed until 2031?
The Personal Allowance of £12,570 and the basic rate limit of £37,700 are fixed in law for every tax year up to and including 2030/31, which ends on 5 April 2031. The higher rate starts above £50,270 in England, Wales and Northern Ireland. Scotland sets its own bands.
Do I have to use Making Tax Digital for Income Tax now?
You do if you are a sole trader or landlord registered for Self Assessment and your qualifying income for 2024/25 was over £50,000. The start date for you was 6 April 2026. If your income was over £30,000 in 2025/26, you start on 6 April 2027. Check GOV.UK if you are unsure.
Are there penalty points for late quarterly updates in 2026/27?
No. GOV.UK says there are no penalties for missing a quarterly update deadline for the 2026/27 tax year. You still need to keep digital records and send the updates. For later tax years each missed quarterly update or tax return deadline earns a point, and 4 points bring a £200 penalty.
What changes for cash ISAs on 6 April 2027?
If you are 64 or under at the end of the tax year, you can pay up to £12,000 of your £20,000 ISA allowance into cash ISAs. If you are 65 or over, the cash ISA limit stays at £20,000. Until 5 April 2027 the whole £20,000 can go into cash ISAs.
How much Business Relief is there on Inheritance Tax?
For deaths on or after 6 April 2026, 100% Business Relief and Agricultural Relief is capped at £2.5 million of qualifying property in total. Value above the cap gets 50% relief. A spouse or civil partner can transfer unused allowance, which can make the total up to £5 million.
What happened to Employee Ownership Trust relief?
Capital Gains Tax relief on qualifying disposals to an Employee Ownership Trust fell from 100% to 50% for disposals on or after 26 November 2025. Only 50% of the gain is chargeable, and Business Asset Disposal Relief and Investors' Relief are not available on that disposal.
Where can you read more?
UK Tax hub
Every UK tax topic in one place, with the 2026/27 rates and thresholds.
Income Tax
Bands, the Personal Allowance and how the taper works.
Capital Gains Tax
Rates, the annual allowance and reliefs, including Employee Ownership Trusts.
HMRC rules and compliance
Making Tax Digital, deadlines and penalties.
Planning and strategies
Ways to plan around the rules covered in this tracker.
Calculators and tools
Work out your own tax for 2026/27.
Cash ISAs
The cash ISA rules, including the changes from 6 April 2027.
Primary sources
- GOV.UK: Income Tax rates and allowances
- GOV.UK: National Minimum Wage and National Living Wage rates
- GOV.UK: Tax on dividends
- GOV.UK: Business Relief for Inheritance Tax
- GOV.UK: Find out if and when you need to use Making Tax Digital for Income Tax
- GOV.UK: Penalties for Making Tax Digital for Income Tax
- GOV.UK: Claim capital allowances
- GOV.UK: Fiscal Events 2026 factsheets
- legislation.gov.uk: Individual Savings Account (Amendment) (No. 2) Regulations 2026
- legislation.gov.uk: Finance Act 2026
What should you check this year?
Which of these changes affect you depends on your age, your income and whether you employ staff or run a business. The checks below use only the figures and dates on this page, as at 20 October 2026. For your own numbers, use the calculators or ask a qualified professional.
Employers: check that every worker has been paid at least the rate for their age since 1 April 2026. For workers aged 21 and over that is £12.71 an hour.
Company directors: check how much of your pay is dividends. The basic and higher rates went up on 6 April 2026.
Sole traders and landlords: check whether your 2024/25 qualifying income was over £50,000. If it was, Making Tax Digital applies now and the next quarterly update is due on 7 November 2026.
Savers: until 5 April 2027 the whole £20,000 ISA allowance can go into cash ISAs. From 6 April 2027 a £12,000 cash limit applies if you are 64 or under at the end of the tax year.
Business owners and farmers: check whether qualifying property could pass £2.5 million, because relief above that is 50%.
TaxYZ provides educational information only and is not regulated by the FCA or ICAEW. All rates, thresholds, wage floors, and legislative announcements reflect information published by HMRC and HM Treasury as at 20 October 2026. Future changes are presented as announced by the government and are subject to legislative confirmation. This page does not constitute tax, legal, or financial advice. Consult a qualified professional before acting on any information contained here.