Every April, a wave of changes hits your pay packet, tax bill, and benefits. Here is a comprehensive rundown of what is changing from 6 April 2026 and how it affects your finances.
The 2026/27 tax year is the fifth consecutive year in which the Income Tax Personal Allowance has been frozen at £12,570. Combined with wage growth driven by inflation, this freeze has pulled millions of additional people into paying tax — or paying more of it — through a mechanism economists call fiscal drag. You’re not earning more in real terms, but more of your nominal income is now taxable. For anyone whose income has grown in the last few years, this is a good time to review whether pension contributions, salary sacrifice, or ISA contributions could reduce your effective tax bill.
Income Tax
Tax Bands and Rates 2026/27
| Band | Taxable income | Rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Basic rate | £12,571 – £50,270 | 20% |
| Higher rate | £50,271 – £125,140 | 40% |
| Additional rate | Over £125,140 | 45% |
The Personal Allowance remains frozen at £12,570. It has been stuck at this level since 2021/22, and the freeze is set to continue until at least 2028. With wages rising, more people are being pulled into higher tax bands through fiscal drag.
If you earn over £100,000, your Personal Allowance is reduced by £1 for every £2 of income above that threshold. It disappears entirely at £125,140.
Scottish Income Tax 2026/27
Scotland sets its own income tax rates and bands for non-savings, non-dividend income. Scottish taxpayers pay different rates from the rest of the UK on employment income, self-employment income, and pension income — but Scottish income tax does not apply to savings interest, dividends, or capital gains (which remain subject to UK-wide rules).
| Band | Taxable income | Rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Starter rate | £12,571 – £14,876 | 19% |
| Basic rate | £14,877 – £26,561 | 20% |
| Intermediate rate | £26,562 – £43,662 | 21% |
| Higher rate | £43,663 – £75,000 | 42% |
| Advanced rate | £75,001 – £125,140 | 45% |
| Top rate | Over £125,140 | 48% |
Scottish taxpayers earning above £43,662 pay a higher rate (42%) than their English and Welsh counterparts (40%), and the top rate of 48% is among the highest income tax rates in the UK. However, Scotland has also maintained lower rates at the bottom of the income scale with its 19% starter rate.
Use our calculator: Take-Home Pay Calculator
National Insurance
National Insurance affects both employees and employers — and since the April 2025 changes to employer NI, businesses face significantly higher payroll costs. These costs often get passed back to workers through slower pay growth, reduced benefits, or in small businesses, decisions about hiring.
Employee NI 2026/27
| Earnings | Rate |
|---|---|
| Below £12,570 | 0% |
| £12,570 – £50,270 | 8% |
| Above £50,270 | 2% |
Employer NI 2026/27
| Earnings | Rate |
|---|---|
| Below £5,000 | 0% |
| Above £5,000 | 15% |
The employer NI threshold dropped significantly from £9,100 to £5,000, and the rate rose from 13.8% to 15% — a change introduced in April 2025 that continues to apply. This increases the cost of employing staff and may affect pay rises and hiring decisions.
For a business paying an employee the National Living Wage (£12.21/hour, 37.5 hrs/week = ~£23,810/year), employer NI is now due on £23,810 – £5,000 = £18,810 at 15% = £2,822. At the old threshold and rate, that would have been £23,810 – £9,100 = £14,710 at 13.8% = £2,030. The change adds nearly £800 per employee per year — a material cost for small employers.
Self-Employed NI 2026/27
| Class | Details |
|---|---|
| Class 2 | Abolished — no longer payable |
| Class 4 (£12,570 – £50,270) | 6% |
| Class 4 (above £50,270) | 2% |
Related: National Insurance Explained
National Living Wage and Minimum Wage
| Age group | Hourly rate from April 2026 |
|---|---|
| 21 and over (National Living Wage) | £12.21 |
| 18–20 | £10.00 |
| Under 18 | £7.55 |
| Apprentice rate | £7.55 |
The National Living Wage for 21+ increased from £11.44 to £12.21 — a rise of 6.7%. For a full-time worker doing 37.5 hours a week, that works out to roughly £23,800 a year before tax.
Use our calculator: Salary to Hourly Rate Calculator
State Pension
New State Pension (for those who reached State Pension age on or after 6 April 2016)
| Period | Amount |
|---|---|
| Weekly | £230.25 |
| Monthly | Approx. £1,001 |
| Annual | £11,973 |
Basic State Pension (for those who reached State Pension age before 6 April 2016)
| Period | Amount |
|---|---|
| Weekly | £176.45 |
| Monthly | Approx. £767 |
| Annual | £9,175 |
The triple lock guarantee ensures the State Pension rises by the highest of earnings growth, CPI inflation, or 2.5%.
Related: State Pension Guide
Benefits
Key benefit rates from April 2026:
Most working-age benefits are uprated annually in April by CPI inflation measured in the prior September. In recent years, high inflation meant benefit rates have risen in cash terms, though real-terms value has often remained static or declined due to the time lag between price rises and uprating. From 2026/27, benefit increases are more modest as inflation has fallen.
Universal Credit
| Element | Monthly amount |
|---|---|
| Single under 25 | £311.68 |
| Single 25 or over | £393.45 |
| Joint claimants both under 25 | £489.23 |
| Joint claimants one or both 25+ | £617.56 |
| First child (born before 6 April 2017) | £333.33 |
| Second child and subsequent | £287.92 |
Other Key Benefits
| Benefit | Weekly rate |
|---|---|
| Child Benefit (eldest child) | £26.05 |
| Child Benefit (other children) | £17.25 |
| Carer’s Allowance | £81.90 |
| PIP daily living (enhanced) | £108.55 |
| PIP mobility (enhanced) | £75.75 |
| Attendance Allowance (higher) | £108.55 |
Related: Complete UK Benefits Guide
ISAs and Savings
ISA allowances have been unchanged for several years — the £20,000 overall limit has not risen since 2017/18. With inflation eroding the real value of the allowance year on year, savers and investors with large portfolios outside ISAs face growing exposure to Dividend Tax and Capital Gains Tax unless they use bed-and-ISA strategies to transfer holdings into the tax-free wrapper.
ISA Allowances 2026/27
| ISA type | Annual limit |
|---|---|
| Overall ISA allowance | £20,000 |
| Lifetime ISA (LISA) | £4,000 (part of £20,000) |
| Junior ISA | £9,000 |
| Help to Save | £50 per month |
You can split the £20,000 allowance across Cash ISAs, Stocks & Shares ISAs, Innovative Finance ISAs, and Lifetime ISAs in any combination.
Other Savings Allowances
| Allowance | Amount |
|---|---|
| Personal Savings Allowance (basic rate) | £1,000 |
| Personal Savings Allowance (higher rate) | £500 |
| Personal Savings Allowance (additional rate) | £0 |
| Dividend Allowance | £500 |
| Capital Gains Tax annual exempt amount | £3,000 |
The Dividend Allowance and CGT annual exempt amount have both been significantly cut in recent years. Plan around these lower thresholds, especially if you hold investments outside an ISA. The CGT allowance fell from £12,300 in 2022/23 to just £3,000 — a 76% reduction in three years. Any taxable capital gains beyond £3,000 now cost basic rate taxpayers 18% on assets (24% on property) and higher rate taxpayers 24% (24% on property).
Related: ISA Allowance Guide
Pensions
Pension rules have seen significant changes in recent years — the Lifetime Allowance was abolished in April 2024, and the Annual Allowance jumped from £40,000 to £60,000 in April 2023. For high earners who previously hit the LTA, the 2026/27 tax year continues to offer much better conditions for pension saving than existed just a few years ago.
Key Pension Limits 2026/27
| Limit | Amount |
|---|---|
| Annual Allowance | £60,000 |
| Money Purchase Annual Allowance | £10,000 |
| Tax-free lump sum (standard) | £268,275 |
| Lifetime Allowance | Abolished |
The Lifetime Allowance was abolished from April 2024. There is no cap on the total you can hold in your pension, but the tax-free lump sum is capped at 25% of your pot up to a maximum of £268,275 (unless you have transitional protection for a higher amount).
You get tax relief on pension contributions at your marginal rate. For higher-rate taxpayers, contributing to a pension remains one of the most tax-efficient things you can do. A £1,000 pension contribution costs a basic rate taxpayer only £800 in take-home pay, and only £600 for a higher-rate taxpayer — HMRC effectively subsidises the rest.
Related: Pension Contributions Guide
Stamp Duty
England and Northern Ireland (from April 2025)
| Purchase price band | Standard rate | First-time buyer rate |
|---|---|---|
| Up to £125,000 | 0% | 0% |
| £125,001 – £250,000 | 2% | 0% |
| £250,001 – £300,000 | 5% | 0% |
| £300,001 – £500,000 | 5% | 5% |
| £500,001 – £925,000 | 5% | 5% |
| £925,001 – £1.5m | 10% | 10% |
| Over £1.5m | 12% | 12% |
First-time buyers pay no stamp duty on the first £300,000 on properties up to £500,000. Higher rates apply for additional properties (3% surcharge) and non-UK residents (2% surcharge).
Use our calculator: Stamp Duty Calculator
Student Loans
Repayment Thresholds from April 2026
| Plan | Annual threshold | Repayment rate |
|---|---|---|
| Plan 1 (pre-2012) | £24,990 | 9% |
| Plan 2 (post-2012) | £27,295 | 9% |
| Plan 4 (Scotland) | £31,395 | 9% |
| Plan 5 (from 2023) | £25,000 | 9% |
| Postgraduate loan | £21,000 | 6% |
Related: Student Loan Repayment Calculator
What You Should Do Before 5 April
The end of the 2025/26 tax year on 5 April is your deadline to use this year’s allowances. Consider these actions:
- Use your ISA allowance — You cannot carry it over. Contribute up to £20,000 before 5 April.
- Top up your pension — Make the most of your £60,000 Annual Allowance. You may also be able to carry forward unused allowance from the previous three years.
- Use your CGT exempt amount — If you have gains, consider realising up to £3,000 of gains tax-free.
- Claim Marriage Allowance — If one partner earns under £12,570 and the other is a basic-rate taxpayer, transfer £1,260 of Personal Allowance to save up to £252 a year. You can backdate claims up to four years.
- Check your tax code — Make sure your code is correct for the coming year. An incorrect code means you pay too much or too little tax.
- Review salary sacrifice — Pension and benefits sacrifice arrangements are highly tax-efficient, especially with higher employer NI rates. Both you and your employer save NI when contributions are made via salary sacrifice, making it mutually beneficial to maximise pension contributions this way rather than taking the money as salary.
Related: Tax Year-End Checklist
Key Dates for the 2026/27 Tax Year
| Date | Event |
|---|---|
| 5 April 2026 | End of 2025/26 tax year |
| 6 April 2026 | Start of 2026/27 tax year |
| 6 April 2026 | New NLW and benefit rates apply |
| 31 July 2026 | Second payment on account for 2025/26 |
| 5 October 2026 | Register for Self Assessment if newly self-employed |
| 31 October 2026 | Paper Self Assessment deadline for 2025/26 |
| 30 December 2026 | File online and request PAYE coding adjustment |
| 31 January 2027 | Online Self Assessment deadline and payment for 2025/26 |
Related: Self Assessment Guide