The new tax year always brings a fresh bundle of tax legislation. Here are the key UK tax changes for the 2026/27 tax year to be aware of, which took effect on 6 April 2026.
Income tax
Although there are no rate changes, the reality is that personal income continues to be a victim of “stealth tax”. The frozen bands, which aren’t due for review until 2031, mean that as your income rises more of it will be taxed contributing to fiscal drag.
- Personal allowance stays at £12,570
- Higher-rate threshold stays at £50,270
- Additional rate stays at £125,140
Dividend tax increases
From April 2026 the following rates apply:
- Basic rate rises from 8.75% to 10.75%
- Higher rate rises from 33.75% to 35.75%
- Additional rate remains at 39.35%
Capital Gains Tax (CGT)
Business Asset Disposal Relief has risen to 18% which will have an effect if you are selling a business or selling shares in your company.
Inheritance Tax (IHT) changes
Tthe 100% relief for business/agricultural assets is now capped at £2.5 million. Above that there is now only 50% relief available. This mainly impacts business owners, farmers and high net worth individuals.
Home working tax relief removed
The £6 per week flat relief is abolished so now you must claim actual costs or be reimbursed by your employer.
Making Tax Digital (MTD)
his significant shift in reporting tax is taking effect for some sole traders and landlords. If you’re in this group you’ll now need to keep digital records and submit quarterly updates to HMRC.
Investment tax relief cut
Venture Capital Trust relief has dropped from 30% to 20%. This makes tax-efficient investing slightly less attractive.
Other changes
- Corporation tax remains capped at 25%
- Electric car benefit-in-kind tax increases
- Fuel duty is expected to rise later in 2026
While there aren’t any significant jumps in the headline tax rates this April, the 2026/27 tax year still has an impact. Between frozen tax bands and the loss of smaller reliefs like the working-from-home allowance, most people will see their take-home pay dip. If you’re a contractor or business owner, the higher dividend tax and new CGT/IHT limits mean your operations and investments are slightly less tax-efficient than they used to be. It’s a year of stealth increases with a steady push which means you’ll likely pay more overall.