The new tax year is now underway, and while some of the headline changes are already attracting attention, the bigger picture is more important: 2026/27 is a mix of new reporting rules, targeted rate changes and allowances that remain frozen for another year.
For business owners, landlords and individuals, that means this is not simply a case of checking one or two announcements. It is about understanding which changes take effect now, which thresholds are staying where they are, and how that may affect tax planning, cash flow and compliance over the year ahead.
Making Tax Digital for Income Tax is now live
One of the most significant developments this tax year is the introduction of Making Tax Digital for Income Tax for sole traders and landlords with qualifying income over £50,000.
From 6 April 2026, those within scope must use compatible software to keep digital records, submit quarterly updates and complete an end-of-year finalisation process. This marks a major shift from the traditional annual self-assessment cycle and places much greater importance on record-keeping throughout the year.
For those affected, this is not simply an administrative update. Changes to bookkeeping systems, internal processes, and the ongoing review of financial information may be necessary.
Key dates for Making Tax Digital for Income Tax
- From 6 April 2026: applies to sole traders and landlords with qualifying income over £50,000
- From 6 April 2027: applies to those with qualifying income over £30,000
- From 6 April 2028: applies to those with qualifying income over £20,000
Failure to comply with the MTD requirements could result in penalties or increased scrutiny from HMRC, so it’s crucial for businesses to start preparing early.
Income Tax thresholds remain frozen
Although rates may not have changed dramatically for many taxpayers, the continued freeze on thresholds remains significant.
When allowances and bands stay fixed while income rises, more income can be pulled into higher tax bands over time. As a result, frozen thresholds can still increase tax exposure, even without a headline rate rise.
Income Tax thresholds for 2026/27
- Personal Allowance: £12,570
- Basic rate limit: £37,700 (20% Basic rate)
- Higher-rate threshold: £50,270 (40% higher rate)
- Additional-rate threshold: £125,140 (45% additional rate)
Scotland continues to apply its own rates and bands.
Dividend tax remains an important planning point
A notable live change this year is dividend taxation. For owner-managed businesses, this is an important reminder that profit extraction strategies should not be left on autopilot. Salary, dividends and pension contributions may now need a fresh review to make sure the balance remains tax-efficient.
Dividend tax figures for 2026/27
- Dividend allowance: £500
- Basic rate dividend tax: 10.75%
- Higher rate dividend tax: 35.75%
- Additional rate dividend tax: 39.35%
A review of salary, dividends and pension contributions may help ensure the right balance is being struck.
High Income Child Benefit Charge (HICBC)
For families where the highest earner has an adjusted net income over £60,000, the High Income Child Benefit Charge remains a key consideration. The charge is tapered, meaning Child Benefit is gradually clawed back until it is withdrawn completely once income reaches £80,000. Given that many thresholds remain frozen, rising wages may inadvertently pull more families into this charge for the first time.
Capital gains tax and business disposals
Business owners planning a sale or exit may also want to revisit their capital gains position this tax year.
From 6 April 2026, the rate of Business Asset Disposal Relief has increased to 18%. While the relief remains available, the benefit is now less generous than in previous years, which may affect the net proceeds of a disposal.
The Capital Gains Tax annual exempt amount also remains low, limiting the amount of gains that can be realised tax-free.
Key figures for 2026/27:
- Business Asset Disposal Relief: 18%
- Capital Gains Tax annual exempt amount for individuals: £3,000
- Capital Gains Tax annual exempt amount for most trusts: £1,500
- Main Capital Gains Tax rates for individuals: 18% and 24%
This relief is intended to help reduce the Capital Gains Tax burden on business owners selling qualifying business assets, but with the increase in the rate to 18%, it’s now less beneficial than before.
For those considering a business sale or other chargeable disposal, reviewing the timing and structure in advance could make a meaningful difference.
Inheritance Tax thresholds are frozen
Inheritance tax remains an area where the lack of movement in thresholds is just as important as the live changes to reliefs.
The nil-rate bands remain fixed, which means more estates may gradually be brought within scope over time. On top of that, changes to agricultural property relief and business property relief now make succession planning even more important for certain family businesses and farms.
Inheritance Tax thresholds for 2026/27
- Nil-rate band: £325,000
- Residence nil-rate band: £175,000
These thresholds remain fixed through to the end of the 2030/31 tax year. This could lead to more estates exceeding the £325,000 threshold, especially in the context of rising house prices and asset values, resulting in more estates potentially being subject to Inheritance Tax.
Agricultural Property Relief and Business Property Relief
From 6 April 2026:
- 100% relief applies to up to £2.5 million of combined qualifying agricultural and business property
- qualifying value above £2.5 million receives 50% relief
- any unused part of the £2.5 million allowance can be transferred to a surviving spouse or civil partner
Early planning will be important where business or agricultural assets form a substantial part of an estate.
National Insurance remains a key cost area
National Insurance continues to be a major consideration for both employers and the self-employed, particularly when assessing payroll costs and remuneration structures.
While the framework is familiar, the thresholds and rates still need to be factored into any wider tax planning exercise.
National Insurance figures for 2026/27
For employees:
- Primary Threshold: £242 per week
- Upper Earnings Limit: £967 per week
- Main employee Class 1 NIC rate: 8%
- Employee rate above Upper Earnings Limit: 2%
Employers:
- Secondary Threshold: £96 per week
- Employer Class 1 NIC rate: 15%
Self-employed:
- Class 3 voluntary contributions: £18.40 per week
- Lower Profits Limit: £12,570
- Upper Profits Limit: £50,270
- Class 4 NIC main rate: 6%
- Class 4 NIC additional rate: 2%
- Small Profits Threshold: £7,105
- Class 2 voluntary contributions: £3.65 per week
Pensions: Maximising Allowances
Pensions remain one of the most effective tools for tax planning. For the 2026/27 tax year, the standard Annual Allowance is £60,000, which is the maximum amount you can contribute to your pension (including employer contributions) while still receiving tax relief.
High earners with an “adjusted income” over £260,000 may see this allowance tapered down to a minimum of £10,000.
You may also be able to “carry forward” unused allowances from the previous three tax years to make a larger contribution.
Corporation Tax
Not all changes are new. Corporation Tax remains on the same framework already in place: 19% for companies with profits under £50,000, 25% for profits over £250,000, with marginal relief applying to companies whose profits fall between these limits. Note that “associated companies” do reduce the thresholds proportionately.
Investment Incentives for Companies
To encourage long-term growth, Full Expensing is now a permanent feature of the UK tax system. This allows companies to deduct 100% of the cost of qualifying new plant and machinery from their taxable profits in the year of purchase. This provides significant cash flow benefits for businesses investing in technology, manufacturing equipment, or commercial vehicles (excluding most cars), especially where this exceeds the £1m Annual Investment Allowance (per Group).
VAT
The VAT registration threshold remains at £90,000, with deregistration possible where taxable turnover falls below £88,000.
ISAs and Personal Savings
For ISAs, the annual allowance remains at £20,000 for 2026/27. More changes are planned with effect from 6 April 2027 regarding the split of cash and stocks & shares ISAs.
- The Personal Savings Allowance remains at £1,000 for basic-rate taxpayers
- £500 for higher-rate taxpayers No allowance for additional-rate taxpayers
Stamp Duty Land Tax (SDLT)
- Property buyers in England and Northern Ireland should note that the temporary threshold increases introduced in 2022 have expired on 31 March 2025.
- Standard Buyers: The nil-rate threshold is now £125,000.
- First-Time Buyers: The nil-rate threshold for first-time buyers is £300,000 (applicable on properties valued up to £500,000). 5% SDLT applies to the portion from £300,001 to £500,000, and no relief at all if the price exceeds £500,000 (standard rates apply to the full price)
- Additional Properties: Purchases of buy-to-let or second homes continue to attract a 5% surcharge on top of the standard residential rates.
How bk plus can help
The 2026/27 tax year is a combination of frozen thresholds, new compliance obligations and targeted rate changes that could affect everything from profit extraction and succession planning to reporting and investment decisions.
Understanding how these changes interact is key. Without regular review, there is a risk of missed opportunities, unexpected liabilities or falling behind on new compliance requirements such as Making Tax Digital.
At bk plus, we work closely with business owners, landlords and individuals to ensure tax planning remains proactive rather than reactive. Whether it’s reviewing remuneration strategies, preparing for digital reporting, or planning for a future exit or succession, our team can help you stay ahead of the changes.
Get in touch with bk plus to speak to one of our tax specialists about how the 2026/27 changes could affect you or your business.