Personal Tax Changes April 2026

With the start of a new tax year brings a few changes to the tax rates and rules.

Frozen Tax Thresholds: Personal allowance will remain at £12,570 until at least 2031. Higher rate will start at £50,270 and additional rate at £125,140 for England, Wales and Northern Ireland. The thresholds for Scotland are personal allowance £12,570, starter rate up to £16,537, Scottish basic rate up to £29,526, intermediate rate up to £43,662, higher rate up to £75,000, advanced rate up to £125,140 with top rate over £125,140. 

Savings Tax: Savings allowances are unchanged at £1,000 for basic rate, £500 for higher rate and £0 for additional rate

ISAs: Maximum ISA savings is £20,000 for cash ISAs or stocks and shares ISAs. From April 2027, this limit will remain for stocks and shares ISAs and cash ISAs for over 65s. However, for under 65s the maximum cash savings will reduce to £12,000.

Dividend Tax: Tax rates increase to 10.75%, 35.75% and 39.35%.

State pension: The ‘new state pension’ rate rises to £241.30 a week or £12,547.60 a year.

Child benefit: Payments are increasing to £27.05 per week, equivalent to £1,406.60 a year for the eldest or only child, and to £17.90 per week – £930.80 a year – for subsequent children.

Tax relief for homeworking costs: From April 2026, the flat rate claim of £6 per week will only be available where this is a payment made by the employer.

Venture capital trusts (VCT): Income tax relief reducing to 20% of the investment with a maximum investment of £200,000.

Enterprise investment schemes (EIS): Gross asset test for non-Northern Irish companies will double to £30 million.

VCT and EIS: Qualifying companies can raise up to £10 million in a 12-month period. The threshold for gross assets before allotting shares has increased to £30 million. Annual investment limit increases to £10 million (£20 million for knowledge intensive companies) and lifetime investment limit increased £24 million (£40 million for knowledge intensive companies)

Business asset disposal relief: BADR tax rate increased to 18%.

Making Tax Digital for Income Tax: The first wave of taxpayers will move to quarterly reporting from 6 April 2026. Sole traders and landlords with qualifying gross income over £50,000 on their 2024/25 tax return will move to the new system.

Directors’ loan tax charge: For loans made on or after 6 April 2026 the tax charge will increase to 35.75%.

Enterprise management incentives (EMI):  Can be used by independent quoted or unquoted companies with group gross assets of £120m.

Construction industry scheme (CIS):  From 6 April will be required to complete monthly CIS returns even where no subcontractor is paid.

Inheritance Tax: No change to the nil rate band of £325,000 and additional residential nil rate band of £175,000. However, privately owned businesses and farmers will see changes to business property relief (BPR) and agricultural property relief (APR). The threshold for 100% relief is set at £2.5 million. Amounts over this will get 50% relief therefore IHT will be paid at a reduced rate of 20%.