What Changed This Tax Year (2026/27)

By UK Tax Drag · Reviewed 3 October 2026

£12,570Personal Allowance still frozen

10.75%Basic-rate dividend tax from 6 April 2026

15%Employer Class 1 NI rate

£90,000VAT registration threshold

The short version

The biggest story is not a dramatic new headline rate. It is the combination of frozen income tax thresholds, a higher employer NI environment, and new 2026/27 dividend tax rates. For a lot of people, this means the tax year feels harsher without looking radically different at first glance. These changes all flow from one fiscal event: see what the Autumn 2025 Budget changed for 2026/27.

Frozen thresholds

Income tax bands did not move

The Personal Allowance stays at £12,570, the basic-rate limit stays at £50,270, and the Personal Allowance taper still begins at £100,000. The Budget on 26 November 2025 extended the freeze to 5 April 2031, so wage growth keeps pushing more income into higher bands for years yet.

Dividend tax

Dividend rates rose for 2026/27

From 6 April 2026, dividend tax above the £500 allowance is 10.75% in the basic-rate band, 35.75% in the higher-rate band, and 39.35% in the additional-rate band.

National Insurance

Employer NI remains the loudest payroll drag

Employee Class 1 rates stay at 8% and 2%, but employer NI remains 15% above the £5,000 secondary threshold, with an Employment Allowance of up to £10,500 for eligible employers. That keeps salary sacrifice relevant because it cuts both tax and payroll friction.

Pensions and VAT

The important planning limits stayed put

The annual pension allowance remains £60,000, the tapered allowance rules still pivot around £260,000, and the VAT registration threshold remains £90,000.

What to watch if you are employed

If your pay is drifting through £50,270, the higher-rate band is still exactly where it was before.
If your income is between £100,000 and £125,140, the Personal Allowance taper still creates the 60% effective band.
If you receive Child Benefit, the High Income Child Benefit Charge still starts at £60,000 of adjusted net income and claws back all of it by £80,000.
If you work from home, you can no longer claim the employee tax relief for household costs for 2026/27, though claims for the four previous tax years are still open.
The National Living Wage for workers aged 21 and over rose to £12.71 an hour from April 2026.
If you receive the State Pension, the full new State Pension is now £241.30 a week.

What to watch if you run a business

Self-employed Class 4 NI stays at 6% between £12,570 and £50,270 and 2% above that. The Small Profits Threshold rises to £7,105: with profits at or above it, Class 2 is treated as paid; below it, you can pay voluntary Class 2 at £3.65 a week to protect your record.
Making Tax Digital for Income Tax started on 6 April 2026 for sole traders and landlords whose qualifying income was over £50,000 in 2024/25. The threshold falls to £30,000 from April 2027 and £20,000 from April 2028.
Business Asset Disposal Relief now taxes qualifying gains at 18%, up from 14% in 2025/26.
Companies still face 19% Corporation Tax on profits up to £50,000 and 25% above £250,000, with marginal relief between those points.
The VAT registration threshold stays at £90,000, so rapid turnover growth can still trigger a cliff-edge admin change.

The most useful follow-up pages

Tax Drag Calculator

Best first stop if you want to feel the frozen thresholds and HICBC in actual take-home numbers.

Bonus / Pay Rise Calculator

Useful when the question is “how much do I actually keep from the next £1,000?” rather than total annual pay.

Sole Trader Tax Calculator

Best route if you care more about trading profit, Class 4 NI and Self Assessment than PAYE salary.

Official references used

Every figure on this page was checked against these sources on 3 October 2026.

HMRC: Income Tax rates and allowances for current and previous tax years (updated 6 April 2026) HMRC policy paper: maintaining Income Tax and NI thresholds until 5 April 2031 (26 November 2025) GOV.UK: Tax on dividends (rates from 6 April 2026 to 5 April 2027) HMRC: National Insurance rates and thresholds, 2026 to 2027 GOV.UK: self-employed National Insurance rates, 2026 to 2027 GOV.UK: Employment Allowance (up to £10,500) GOV.UK: High Income Child Benefit Charge (£60,000 to £80,000 from 2024/25) GOV.UK: working from home relief (not available from 6 April 2026) GOV.UK: National Minimum Wage and National Living Wage rates from April 2026 GOV.UK: new State Pension, what you'll get (2026/27 rate) HMRC: check if you need to use Making Tax Digital for Income Tax (start dates from 6 April 2026) GOV.UK: Business Asset Disposal Relief (18% from 6 April 2026) GOV.UK: pension annual allowance and taper GOV.UK: Corporation Tax rates and Marginal Relief GOV.UK: VAT registration threshold (£90,000)

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