What You Need to Know from 6 April 2026 About Taxes.
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The new UK tax year starts on 6 April 2026, bringing a continuation of key personal tax changes that will affect employees, investors, landlords and business owners alike.
While there are no major new announcements, the impact of frozen thresholds, reduced allowances, and upcoming rule changes means many individuals will pay more tax in 2026/27.
Here, we break down What You Need to Know from 6 April 2026 About Taxes and what you should be thinking about now.
Income Tax Thresholds Frozen Until 2028
The government has confirmed that income tax thresholds remain frozen, including:
Personal Allowance: £12,570
Basic Rate Band: £37,700
Higher Rate Threshold: £50,270
Impact
As your income increases, more of it is taxed at higher rates — even though tax rates themselves haven’t changed.
This is often referred to as a “stealth tax increase”, more commonly referred to in the media as “fiscal drag” and boy is it a drag!
Dividend Tax Allowance Remains at £500
The dividend allowance remains at just £500, significantly lower than previous years, so you start paying tax sooner on your returns and the rate of tax has increased.
Dividend tax rates:
10.75% (basic rate)
35.75% (higher rate)
39.35% (additional rate)
Impact
If you receive dividends from investments or your own company, you are now likely paying more tax than ever before on dividend income, and the tax advantages of working via a Limited Company structure are reducing.
Capital Gains Tax (CGT) Allowance at £3,000
The CGT annual exemption remains at £3,000, following sharp reductions in recent years.
What this means
More individuals must now report capital gains
Increased tax on disposals of:
Shares
Investment portfolios
Second properties
More careful planning around asset sales is now essential to minimise tax payable.
National Insurance – Reduced Rates but Limited Benefit
Although National Insurance rates have been reduced, the benefit is largely offset by frozen thresholds.
Impact
Many individuals will still see an overall increase in their total tax burden.
Pension Contributions – Key Tax Planning Opportunity
Pension rules remain unchanged:
Annual Allowance: £60,000
Tax relief available at your marginal rate
Why this matters
Pensions continue to be one of the most effective ways to reduce income tax.
Particularly valuable for:
Higher rate taxpayers
Those approaching retirement
Business owners extracting profits
Inheritance Tax (IHT) – More Estates Affected
Inheritance tax thresholds remain frozen (more fiscal drag):
Nil-Rate Band: £325,000
Residence Nil-Rate Band: £175,000
Impact
As property values and asset levels rise, more families are being dragging into the 40% inheritance tax trap.
Important Future Change
From April 2027, pensions are to be included within your estate for IHT purposes.
This makes 2026/27 your key year to review your estate planning.
Making Tax Digital (MTD) for Income Tax
The 2026/27 tax year sees the rollout of Making Tax Digital (MTD) for Income Tax for many individuals.
What this means
Quarterly reporting to HMRC
Mandatory digital record keeping
Requirement to use compatible software
This is one of the biggest changes to personal tax compliance in recent years, impacting those with self-employed/property income above £50,000 per year. This level drops to £30,000 next April 2027 bring even more in the requirement to use MTD.
Summary:
The new tax year brings continued pressure on your personal finances through:
Frozen income tax thresholds
Reduced dividend and CGT allowances
Increasing inheritance tax exposure
New digital reporting requirements
Doing nothing will mean paying more tax.
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