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Tax year 2026/27 Last reviewed: 25 October 2026
Tax planning and strategies for 2026/27
For 2026/27, your Personal Allowance falls by £1 for every £2 of adjusted net income over £100,000, which makes an effective rate of 60% up to £125,140 in England, Wales and Northern Ireland. Pension payments and Gift Aid donations lower adjusted net income. Figures are as at 25 October 2026.
Tax year figures are for 2026/27, which runs from 6 April 2026 to 5 April 2027. Examples use the rates for England, Wales and Northern Ireland unless they say otherwise, and they are our own arithmetic from the published rules. To check your own pay, use our salary after tax calculator and read the Income Tax guide.
Main points
- Between £100,000 and £125,140 of adjusted net income, each extra £1 costs 60% in Income Tax in England, Wales and Northern Ireland and 67.5% in Scotland. At a salary of £110,000, a £10,000 pension payment through salary sacrifice saves £6,000 of Income Tax.
- For every £1 you pay into a pension where your provider adds basic rate relief, or give through Gift Aid, take £1.25 off your net income when you work out adjusted net income.
- The pension annual allowance is £60,000 for most people. If you use all of this year's allowance, you may be able to carry forward unused allowance from the previous 3 tax years.
- The government has announced that from 6 April 2029 only the first £2,000 a year of employee pension contributions through salary sacrifice will be exempt from National Insurance. The measure has not yet become law.
- You can save £20,000 in ISAs in 2026/27. From 6 April 2027, if you are 64 or under at the end of the tax year, no more than £12,000 of that can go into cash ISAs.
- Transfers between spouses and civil partners who live together are at no gain, no loss for Capital Gains Tax. Only the part of a gain inside the basic rate band is taxed at 18%, so moving an asset to a basic rate partner does not save 6 percentage points on the whole gain.
- Marriage Allowance can cut a partner's tax by up to £252 in 2026/27, and you can backdate a claim to 6 April 2022.
- For deaths on or after 6 April 2026, Business Relief and Agricultural Relief give 100% relief on qualifying property up to £2.5 million combined, and 50% above that.
- The Inheritance Tax nil-rate band of £325,000, the residence nil-rate band and its £2 million taper threshold are fixed in law until 5 April 2031.
What is the 60% tax rate between £100,000 and £125,140?
Your Personal Allowance falls by £1 for every £2 of adjusted net income above £100,000, and is nil at £125,140. In England, Wales and Northern Ireland that makes an effective rate of 60% on each extra pound in that band, because the lost allowance is taxed at 40%. In Scotland the effective rate is 67.5%.
The £100,000 figure and the reduction by half of the excess are in Income Tax Act 2007 section 35. The Personal Allowance of £12,570 and the basic rate limit of £37,700 are fixed in law for every tax year from 2022/23 to 2030/31.
| Income | Rate |
|---|---|
| Up to £12,570 | 0% (Personal Allowance) |
| £12,571 to £50,270 | 20% (basic rate) |
| £50,271 to £100,000 | 40% (higher rate) |
| £100,001 to £125,140 | 60% effective (40% plus the lost allowance) |
| Over £125,140 | 45% (additional rate) |
Our table from GOV.UK Income Tax rates. National Insurance and student loan repayments are not included.
How much Personal Allowance do you keep?
| Adjusted net income | Personal Allowance |
|---|---|
| £100,000 | £12,570 |
| £105,000 | £10,070 |
| £110,000 | £7,570 |
| £120,000 | £2,570 |
| £125,140 or more | £0 |
The allowance is £12,570 less half of the income over £100,000. At £125,140 half of the £25,140 excess is £12,570, so nothing is left.
Adjusted net income is your total taxable income before Personal Allowances, less certain reliefs such as pension contributions and Gift Aid donations. For every £1 you pay into a pension where your provider has already added basic rate relief, or give through Gift Aid, take £1.25 off your net income. Adjusted net income also decides the High Income Child Benefit Charge, which starts at £60,000: see our Family and marriage tax guide. Source: GOV.UK, adjusted net income.
What does £1,000 of extra pay cost at £100,000?
At adjusted net income of £100,000, a further £1,000 is taxed at 40%, which is £400. It also removes £500 of Personal Allowance, and that £500 is then taxed at 40%, which is £200. The extra Income Tax is £600, which is 60% of the £1,000. An employee also pays 2% National Insurance, and a Plan 2 student loan takes 9%, so the total can reach 71% and leave £290 of the £1,000.
How much does a pension payment save at a salary of £110,000?
Your Personal Allowance is £7,570 and your Income Tax is £33,432. You ask your employer to sacrifice £10,000 of salary, and your employer pays the same amount into your pension. Your pay is then £100,000, your allowance is back to £12,570 and your Income Tax is £27,432.
| Item | Before | After |
|---|---|---|
| Pay | £110,000 | £100,000 |
| Personal Allowance | £7,570 | £12,570 |
| Taxable income | £102,430 | £87,430 |
| Income Tax | £33,432 | £27,432 |
Our calculation from the 2026/27 rates: £37,700 at 20% is £7,540, and the rest is taxed at 40%. Second route: 40% of £10,000 is £4,000, plus 40% of the £5,000 of allowance you get back is £2,000, which makes £6,000.
The tax saved is £6,000, which is 60% of £10,000. Employee National Insurance falls by 2% of £10,000, which is £200. Your take-home pay falls by £3,800 (£10,000 less £6,000 less £200) and £10,000 goes into your pension.
If you pay into a personal pension instead, you pay £8,000 and the provider claims £2,000 of basic rate relief, which makes £10,000. Your adjusted net income is £100,000, because each £1 you pay counts as £1.25. Your Income Tax falls from £33,432 to £29,432, so you can claim £4,000 through Self Assessment. That claim is £2,000 of extra relief at 20% on the £10,000, plus £2,000 for the £5,000 of allowance you get back at 40%. Your net cost is £4,000 (£8,000 paid less £4,000 claimed), the same as salary sacrifice before National Insurance.
GOV.UK explains the extra relief with an example from 2024 to 2025: someone earning £60,270 pays £12,000 into a relief at source scheme and claims an extra 20% on £10,000 only, the part of their income taxed at 40%. Source: GOV.UK, tax on your private pension contributions.
Can Gift Aid do the same?
Gift Aid donations lower adjusted net income by the grossed-up amount. Say your income is £101,000 and you give £800 through Gift Aid, which the charity claims up to £1,000. Your adjusted net income becomes £100,000, your allowance rises from £12,070 to £12,570 and your Income Tax falls from £28,032 to £27,632. You paid £800 and saved £400, so the donation costs you £400 and the charity receives £1,000.
Check: a higher rate taxpayer can claim back 20% of the £1,000 gross gift, which is £200, as in GOV.UK's example of a £100 donation that becomes £125. The £500 of allowance you get back is taxed at 40%, which is another £200. Source: GOV.UK, tax relief when you donate to a charity.
How much can you pay into a pension each year?
Most people can have up to £60,000 a year paid into all their private pensions before the annual allowance charge applies. Tax relief is limited to 100% of your annual earnings. If you use all of this year's allowance, you may carry forward unused allowance from the previous 3 tax years.
- Tax relief on your contributions is available up to 100% of your annual earnings. With relief at source, your provider claims 20% and adds it to your pot. If you have no earnings you can still get relief on payments of up to £2,880 a year, which the provider tops up to £3,600.
- If you pay Income Tax above 20% in England, Wales or Northern Ireland, you can claim extra relief on your Self Assessment return: 20% on income that was taxed at 40% and 25% on income that was taxed at 45%.
- The annual allowance covers all your private pensions, including your employer's contributions and any increase in a defined benefit scheme. If you go over it, you or your pension provider must pay a tax charge, which you report on your Self Assessment return.
- The tapered annual allowance applies if your threshold income is over £200,000 and your adjusted income is over £260,000. The allowance falls by £1 for every £2 of adjusted income over £260,000, down to a minimum of £10,000. For example, adjusted income of £360,000 is £100,000 over, so the allowance falls by £50,000 to £10,000.
- The money purchase annual allowance applies if you flexibly access a defined contribution pension, for example by taking cash from flexi-access drawdown. Your annual allowance for money purchase savings then falls to £10,000.
- Allowances are worked out for each tax year, which runs from 6 April to 5 April.
How does salary sacrifice work, and what changes in 2029?
With salary sacrifice you agree to reduce your gross salary or bonus, and your employer pays the same amount into your pension. The government has announced that from 6 April 2029 only the first £2,000 a year of employee pension contributions made this way will be exempt from National Insurance. It is announced, not yet law.
What does salary sacrifice save?
| Your income | Income Tax | Employee National Insurance | Total |
|---|---|---|---|
| £12,571 to £50,270 | 20% | 8% | 28% |
| £50,271 to £100,000 | 40% | 2% | 42% |
| £100,001 to £125,140 (England, Wales and Northern Ireland) | 60% | 2% | 62% |
| Over £125,140 | 45% | 2% | 47% |
Our table from the 2026/27 Income Tax rates and the Class 1 rates for category A employees. Employee National Insurance is 8% between £12,570 and £50,270 and 2% above. Employer National Insurance is 15% on pay above £5,000 a year. We do not assume that an employer passes any of its saving on.
For example, someone on £60,000 who sacrifices £5,000 saves £2,000 of Income Tax and £100 of employee National Insurance, so take-home pay falls by £2,900 and £5,000 goes into the pension. Second route: £5,000 times 58% is £2,900. Someone on £40,000 who sacrifices £5,000 saves £1,000 and £400, so take-home pay falls by £3,600. The employer's National Insurance on £5,000 would be £750.
What does GOV.UK say about the arrangement?
- An employer sets up a salary sacrifice arrangement by changing the terms of the employee's employment contract, and the employee has to agree.
- A salary sacrifice arrangement must not reduce cash earnings below the National Minimum Wage.
- If an employee can swap between cash and benefits whenever they like, the expected tax and National Insurance advantages will not apply.
- Employer payments into pension schemes are among the benefits that do not have to be valued or reported to HMRC for a salary sacrifice arrangement. The exemptions on most other benefits in kind do not apply to salary sacrifice.
- To be satisfied that the change took effect at the right time and was not applied retrospectively, HMRC says it would need to see evidence of the variation of terms and conditions and payslips from before and after the variation.
Source: GOV.UK, salary sacrifice and the effects on PAYE.
What has been announced for 6 April 2029?
- Only the first £2,000 a year of employee pension contributions through salary sacrifice will be exempt from National Insurance. Above that, employer and employee National Insurance will apply.
- Income Tax relief on salary sacrifice contributions stays, subject to the usual limits, and all employer pension contributions outside salary sacrifice stay free of National Insurance.
- The measure was announced at Autumn Budget 2025. HMRC's policy paper says primary legislation will be introduced and the design will be set out in secondary legislation. As at 25 October 2026 it has not been legislated.
- HMRC estimates that 56% of employees who now make typical pension contributions through salary sacrifice will be unaffected.
- Salary sacrifice lowers adjusted net income, which matters for Tax-Free Childcare and the Personal Allowance taper. HMRC says the measure does not change that effect.
The rates for 2029/30 are not set, so this example uses 2026/27 rates. If you sacrifice £10,000 in a year, none of it is charged National Insurance today. With the announced cap, £8,000 would be, which is £160 of employee National Insurance at 2% and £1,200 of employer National Insurance at 15%. Without the cap the saving would be £200 and £1,500, and the first £2,000 still saves £40 and £300.
Source: GOV.UK, changes to salary sacrifice for pensions from April 2029 and HMRC, salary sacrifice reform for pension contributions.
How do ISAs fit into tax planning for 2026/27?
You can save up to £20,000 across all ISAs in 2026/27, with no tax on interest, income or gains. From 6 April 2027, if you are 64 or under at the end of the tax year, no more than £12,000 of that can go into cash ISAs. 2026/27 is the last tax year before the separate cash limit starts.
What changes on 6 April 2027?
- Cash limit: 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.
- The £12,000 sits inside the £20,000. The other £8,000 can go into stocks and shares ISAs or innovative finance ISAs, or stay unused.
- Age test: your age on 5 April decides. Turning 65 on 1 March 2028 means you are 65 at the end of 2027/28, so the cash limit is £20,000. Turning 65 on 10 April 2028 means you are 64 at the end of 2027/28, so the limit is £12,000.
- Charge: 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.
- Transfers: 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.
- Money market funds: from 6 April 2027, the investments in a stocks and shares ISA, apart from cash, cannot be 100% money market funds.
- Until 5 April 2027 there is no separate cash limit, so the whole £20,000 can go into cash ISAs.
Source: Individual Savings Account (Amendment) (No. 2) Regulations 2026, which come into force on 6 April 2027, and GOV.UK, Individual Savings Accounts. The government has said the ISA limits stay at their current levels until 5 April 2031.
How is interest taxed outside an ISA?
There is no tax on interest on cash in an ISA, or on income or capital gains from investments in an ISA, and nothing to declare on a tax return. Outside an ISA, savings interest is covered by the Personal Savings Allowance: £1,000 for a basic rate taxpayer, £500 for a higher rate taxpayer and £0 for an additional rate taxpayer. Interest above the allowance is taxed at your usual rate.
| Taxpayer | Personal Savings Allowance | Interest taxed | Tax |
|---|---|---|---|
| Basic rate | £1,000 | £1,000 | £200 |
| Higher rate | £500 | £1,500 | £600 |
| Additional rate | £0 | £2,000 | £900 |
| Any rate, inside an ISA | Not needed | £0 | £0 |
Our calculation, ignoring the starting rate for savings, which applies if your other income is under £17,570. For 2027/28 the savings rates are 22%, 42% and 47%, and the allowances do not change. Source: GOV.UK, tax-free interest on savings.
How does Bed and ISA work?
You cannot transfer shares you already own into an ISA, apart from shares from an employee share scheme. Bed and ISA means selling the shares, paying the cash into a stocks and shares ISA and buying back inside the ISA. The £3,000 annual exempt amount for Capital Gains Tax covers a gain of that size on the sale. Income and gains inside the ISA are then not taxed.
| Item | Holding A | Holding B |
|---|---|---|
| Sale proceeds | £20,000 | £20,000 |
| Cost | £17,000 | £12,000 |
| Gain | £3,000 | £8,000 |
| Less annual exempt amount | £3,000 | £3,000 |
| Taxable gain | £0 | £5,000 |
| Tax if all of it is inside the 18% band | £0 | £900 |
| Tax if all of it is at 24% | £0 | £1,200 |
| Paid into the ISA | £20,000 | £20,000 |
Our calculation. The 18% rate applies to the part of your gains inside your unused basic rate band and 24% to the rest. The example ignores dealing costs. Paying in £20,000 uses all of the 2026/27 ISA limit.
If you buy the same shares back outside an ISA within 30 days, HMRC matches the sale with the new purchase. This normally reduces or removes the gain or loss that the sale would have produced. The rule applies to shares of the same class in the same company acquired by the same person in the same capacity. We found no HMRC statement on how the 30 day rule applies to a purchase made inside an ISA. Source: HMRC Capital Gains Manual, CG51560.
Can you move money between ISA types?
You can transfer all or part of an ISA from one provider to another at any time, to the same or a different type, including savings from earlier years. Use the new provider's ISA transfer form. If you withdraw the money yourself, you cannot put that part back in tax-free. Providers can set restrictions and charges.
Which tax rules apply between spouses and civil partners?
Each of you has your own £12,570 Personal Allowance and your own £3,000 Capital Gains Tax annual exempt amount. The rules that link you are Marriage Allowance, worth up to £252 a year, the no gain, no loss rule for transfers between spouses and civil partners, and the settlements rules that decide who is taxed on income from a gift.
What is Marriage Allowance?
Marriage Allowance lets you transfer £1,260 of your Personal Allowance to your husband, wife or civil partner. It reduces their tax by up to £252 in the tax year. You must be married or in a civil partnership, you must not pay Income Tax or your income must be below your Personal Allowance, which is usually £12,570, and your partner must pay Income Tax at the basic rate, which usually means income of £12,571 to £50,270. In Scotland your partner must pay the starter, basic or intermediate rate, which usually means income of £12,571 to £43,662.
You can backdate a claim to 6 April 2022 for any year you were eligible. GOV.UK's example: one partner has income of £11,500 and the other £20,000. After the claim the couple pay Income Tax on £6,360 instead of £7,430, which saves £214. GOV.UK says to call the Income Tax helpline if either of you has other income, such as dividends or savings. Source: GOV.UK, Marriage Allowance.
How do transfers between spouses work for Capital Gains Tax?
A disposal between spouses or civil partners who are married or in a civil partnership and living together is treated as giving neither a gain nor a loss. After you stop living together this still applies until the earlier of the end of the third tax year after the one in which you stopped and the day a court grants a divorce, annulment, dissolution or separation order. Each of you has your own £3,000 annual exempt amount. Capital Gains Tax is 18% on the part of your gains inside your unused basic rate band and 24% above it. The unused band is £37,700 less your taxable income, and a Personal Allowance you have not used cannot be set against gains.
| Who sells | Capital Gains Tax |
|---|---|
| Higher rate taxpayer, alone | £6,480.00 |
| Gain split 50:50 with a partner who has no other income | £5,040.00 |
| Gain split 50:50 with a partner on other income of £40,000 | £5,143.80 |
| Whole asset first given to that partner on £40,000 | £5,863.80 |
| Whole asset first given to a partner with no other income | £4,860.00 |
Our calculation. Alone: £30,000 less £3,000 is £27,000, at 24%. Split with no other income: each has £12,000 taxable, so £2,880 for the higher rate partner and £2,160 for the partner, who has the full £37,700 band at 18%. A partner on £40,000 has taxable income of £27,430, so £10,270 of band is left: £10,270 at 18% plus £1,730 at 24% is £2,263.80 on a £12,000 share. Sources: GOV.UK, Capital Gains Tax, HMRC Capital Gains Manual, CG21204 and TCGA 1992 section 58.
A flat 6 percentage points off a taxable gain of £27,000 would be £1,620. If the partner has other income of £40,000 the saving is £616.20, because only £10,270 of the gain falls inside their basic rate band.
Who is taxed on income from jointly owned property?
If you live with your spouse or civil partner and own property jointly, the income is treated as shared equally. If you own it in unequal shares you can make a joint declaration of your actual shares, with evidence, on HMRC Form 17. You must give notice to HMRC within 60 days of the declaration. It applies to income arising on or after the date of the declaration and continues until your beneficial interests change. The equal shares rule does not apply to a distribution from shares in a close company. Source: Income Tax Act 2007 section 836.
Who is taxed on income from shares you give your spouse?
HMRC says the settlements rules do not apply to an outright gift by one spouse or civil partner to the other, unless the gift does not carry a right to the whole of the income or the property given is wholly or substantially a right to income. A gift is not outright if it is subject to conditions, or if the property could be paid or applied back to the giver.
- HMRC's example of a gift that fails: two husbands each give their wife non-voting B shares that carry no assets on a winding up. HMRC treats the dividends on those shares as the husbands' income.
- HMRC's example of a gift that works: a consultant gives all the ordinary shares in his company to his wife. The shares carry rights to capital, so HMRC would not treat the dividend as his income.
Dividends above the £500 dividend allowance are taxed at 10.75% for a basic rate taxpayer, 35.75% for a higher rate taxpayer and 39.35% for an additional rate taxpayer. £10,000 of dividends gives £3,396.25 of tax for a higher rate taxpayer and £1,021.25 for a basic rate taxpayer whose dividends fall inside the basic rate band, a difference of £2,375. The figures show the rates only. Whether a gift of shares works for tax depends on the conditions above. Sources: HMRC Trusts, Settlements and Estates Manual, TSEM4205 and GOV.UK, tax on dividends.
How do Business Relief, Agricultural Relief and gifts affect Inheritance Tax?
Inheritance Tax is 40% on the part of an estate above the £325,000 threshold. For deaths on or after 6 April 2026, Business Relief and Agricultural Relief give 100% relief on qualifying property up to £2.5 million combined, and 50% above that. A spouse or civil partner's unused allowance can be transferred, which can make it up to £5 million.
| Item | Figure |
|---|---|
| Nil-rate band | £325,000 |
| Residence nil-rate band | Up to £175,000, reduced by £1 for every £2 the estate is worth over £2 million |
| 100% Business Relief and Agricultural Relief allowance | £2.5 million combined, for deaths on or after 6 April 2026 |
| Qualifying property above the allowance | 50% relief |
| Standard rate above the threshold | 40% |
The nil-rate band, residence nil-rate band and taper threshold are fixed in law until 5 April 2031. Sources: GOV.UK, Inheritance Tax and GOV.UK, residence nil-rate band.
What does the £2.5 million allowance mean for a farm?
A farm worth £3,500,000 is the whole estate and passes to a child, with no gifts in the last 7 years. The first £2,500,000 gets 100% relief. The other £1,000,000 gets 50% relief, which leaves £500,000 charged. The nil-rate band of £325,000 covers the first part of that, so £175,000 is taxed at 40%, which is £70,000.
The residence nil-rate band is nil here. The taper looks at the estate before reliefs, and £3,500,000 is £1,500,000 over £2,000,000, so the band falls by £750,000, which is more than £175,000. If other assets had already used the nil-rate band, the same £1,000,000 excess would add £200,000, which is 50% of £1,000,000 taxed at 40%.
- A spouse or civil partner's unused allowance can be transferred, which can make the allowance up to £5 million. If the first death was before 6 April 2026, the full £2.5 million can be transferred. The claim is due by the later of 4 years after the death and 6 months after the executor started.
- The deceased must have owned the business or asset for at least 2 years before death. Business Relief is not available if the business mainly deals in securities, stocks or shares, land or buildings, or in making or holding investments.
- Shares traded on markets that are not 'listed' for HMRC's definition, such as the Alternative Investment Market, get 50% relief.
- Before working out Agricultural Relief you must deduct any outstanding mortgage or other secured liability on the property.
Two nil-rate bands of £325,000 and two allowances of £2.5 million come to £5,650,000. That total does not include the residence nil-rate band, which the taper can remove, and it assumes the other conditions are met. Sources: GOV.UK, Business Relief and GOV.UK, Agricultural Relief.
How do gifts fit in?
- There is no Inheritance Tax to pay on gifts between spouses or civil partners, in any amount, if the recipient lives in the UK permanently and you are legally married or in a civil partnership.
- You can give away £3,000 a year without it being added to your estate. You can carry forward an unused annual exemption for one tax year only. You can give gifts of up to £250 per person, wedding gifts of £5,000 to a child, £2,500 to a grandchild or great-grandchild and £1,000 to anyone else, and regular gifts from your normal income if you can afford them.
- No Inheritance Tax is due on other gifts if you live for 7 years after giving them. Gifts in the 3 years before death are taxed at 40%. Gifts made 3 to 7 years before death are taxed on a sliding scale.
- The £2.5 million allowance counts qualifying property given away on or after 30 October 2024 if the gift was made within seven years of death.
- Giving away an asset that has gone up in value can also create a Capital Gains Tax bill. A gift to anyone other than your spouse, civil partner or a charity is a disposal at market value.
- If someone gives away business property, the recipient must keep it as a going concern until the donor's death to keep the relief, and the donor must have owned it for at least 2 years before the gift.
| Years between gift and death | Rate |
|---|---|
| Less than 3 | 40% |
| 3 to 4 | 32% |
| 4 to 5 | 24% |
| 5 to 6 | 16% |
| 6 to 7 | 8% |
| 7 or more | 0% |
Taper relief applies only if the total gifts in the 7 years before death are over the £325,000 threshold, and it reduces the tax on the gift, not its value. GOV.UK's example: a £100,000 gift made 3 years before death, above the threshold, is taxed at 32%, which is £32,000. Source: GOV.UK, Inheritance Tax.
What about trusts?
Most property held in trusts counts as relevant property. Inheritance Tax may be due when assets leave a trust, as an exit charge of up to 6%, and at each 10 year anniversary. For most types of trust, tax is due when transfers total more than £325,000, adding chargeable gifts made in the previous 7 years. If the trustees pay, the rate is 20%. Trust rules are complex, so read GOV.UK's guidance and take advice. Source: GOV.UK, trusts and Inheritance Tax.
What changes for pensions on 6 April 2027?
Finance Act 2026 brings most unused pension funds and death benefits into the estate for Inheritance Tax for deaths on or after 6 April 2027. All death in service benefits payable from a registered pension scheme are excluded. Personal representatives are liable to report and pay any tax due. They can direct pension scheme administrators to withhold 50% of the taxable benefits for up to 15 months. Source: GOV.UK, unused pension funds and death benefits.
Tax planning FAQs
How do I avoid the 60% tax rate at £100,000?
Bring your adjusted net income down to £100,000 or less. Pension payments and Gift Aid donations do this, because each £1 paid into a pension that has had basic rate relief, or given through Gift Aid, counts as £1.25. Salary sacrifice lowers taxable pay. At a salary of £110,000, a £10,000 sacrifice saves £6,000 of Income Tax.
What is the cash ISA limit from April 2027 and who does it affect?
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 that date, the cash ISA limit stays at £20,000. Until 5 April 2027 there is no separate cash limit.
How much Inheritance Tax relief do business and farm owners get?
For deaths on or after 6 April 2026, Business Relief and Agricultural Relief give 100% relief on qualifying property up to £2.5 million combined. Above that the relief is 50%. A spouse or civil partner's unused allowance can be transferred, which can make it up to £5 million. The property must have been owned for at least 2 years.
Can I give shares to my spouse to cut my tax bill?
Income from shares you give your spouse outright is theirs for tax. HMRC's settlements rules apply if the gift has conditions, could come back to you, or is wholly or substantially a right to income. A transfer between spouses who live together is at no gain, no loss for Capital Gains Tax.
What has been announced for salary sacrifice in April 2029?
From 6 April 2029, only the first £2,000 a year of employee pension contributions made through salary sacrifice is to be exempt from National Insurance. Income Tax relief stays. It has been announced but is not yet law, and HMRC says primary legislation will follow. HMRC estimates 56% of employees using it for typical contributions will be unaffected.
Do Gift Aid donations count towards adjusted net income?
Yes. Take off the grossed-up amount: for every £1 you give through Gift Aid, take £1.25 from your net income, so a donation of £800 counts as £1,000. A higher rate taxpayer can also claim back the difference between the tax paid and what the charity reclaimed, through Self Assessment.
What is Marriage Allowance and can I backdate it?
Marriage Allowance lets you transfer £1,260 of your Personal Allowance to your husband, wife or civil partner, which reduces their tax by up to £252 in 2026/27. You can backdate a claim to 6 April 2022 for any year you were eligible. Your partner usually needs to pay tax at the basic rate.
Where can you read more?
UK Tax hub
All of our UK tax guides in one place.
Income Tax
Rates, bands and how the Personal Allowance taper works.
Capital Gains Tax
Rates, allowances and transfers between spouses and civil partners.
Family and marriage tax
Marriage Allowance, Child Benefit and childcare.
Inheritance Tax and estate planning
Thresholds, gifts, trusts and pensions.
ISAs explained
ISA allowances, types and the 2027 changes.
HMRC rules and compliance
Self Assessment, Making Tax Digital and penalties.
Salary after tax calculator
Estimate Income Tax and National Insurance on your pay.
Primary sources
- GOV.UK: Income Tax rates and Personal Allowances
- GOV.UK: adjusted net income
- GOV.UK: tax on your private pension contributions
- GOV.UK: tax relief when you donate to a charity
- GOV.UK: changes to salary sacrifice for pensions from April 2029
- HMRC: salary sacrifice reform for pension contributions
- GOV.UK: salary sacrifice and the effects on PAYE
- GOV.UK: Individual Savings Accounts
- legislation.gov.uk: Individual Savings Account (Amendment) (No. 2) Regulations 2026
- GOV.UK: tax-free interest on savings
- GOV.UK: Capital Gains Tax
- HMRC Capital Gains Manual: CG51560 and CG21204
- GOV.UK: Marriage Allowance
- GOV.UK: tax on dividends
- HMRC Trusts, Settlements and Estates Manual: TSEM4205
- legislation.gov.uk: Income Tax Act 2007 section 35
- legislation.gov.uk: Income Tax Act 2007 section 836
- legislation.gov.uk: Taxation of Chargeable Gains Act 1992 section 58
- GOV.UK: Inheritance Tax
- GOV.UK: Business Relief
- GOV.UK: Agricultural Relief
- GOV.UK: residence nil-rate band
- GOV.UK: trusts and Inheritance Tax
- GOV.UK: Inheritance Tax, unused pension funds and death benefits
- GOV.UK: Making Tax Digital for Income Tax
Your 2026/27 tax planning checklist
Use these checks with your own figures, and take advice before a large pension payment, a gift of shares or a trust.
Income near £100,000: work out your adjusted net income for the tax year, including bonuses, dividends and rent. Pension contributions and Gift Aid donations lower it.
Pensions: the annual allowance is £60,000 for most people, and you can carry forward unused allowance from the previous 3 tax years.
ISAs: you can save £20,000 in 2026/27. The separate cash limit of £12,000 starts on 6 April 2027 for people who are 64 or under at the end of the tax year.
Capital Gains Tax: the annual exempt amount is £3,000 for 2026/27. Transfers between spouses and civil partners who live together are at no gain, no loss.
Business and farm owners: 100% relief is limited to £2.5 million for deaths on or after 6 April 2026.
Self-employed or a landlord: Making Tax Digital for Income Tax applies from 6 April 2026 if your qualifying income for 2024/25 was over £50,000, and from 6 April 2027 if your qualifying income for 2025/26 was over £30,000. The HMRC rules and compliance guide in the links above covers the detail.
TaxYZ provides educational information only and is not regulated by the FCA or ICAEW. All figures are for 2026/27 and come from GOV.UK, HMRC guidance and legislation, as at 25 October 2026. Worked examples are our own calculations from those figures. This page does not constitute financial, tax, or legal advice. Tax planning strategies involve individual circumstances, so consult a qualified tax adviser, accountant, or financial planner before acting on the information contained here.