2026/27 Tax Year: Key Changes You Need to Know

The 2026/27 tax year began on 6 April 2026. Here are the most significant changes and what they could mean for your financial planning.

Frozen Income Tax Thresholds

Income tax thresholds remain frozen for 2026/27. The Personal Allowance stays at £12,570, and the higher rate threshold remains at £50,270. The freeze continues to pull more people into higher tax bands each year through "fiscal drag" as wages rise while thresholds stand still.

If you received a pay rise since last year, it is worth checking whether you have crossed into a higher tax band and considering whether pension contributions or other tax-efficient actions might help — our financial planning tools can help you model the impact.

Pension Annual Allowance

The pension annual allowance remains at £60,000 for 2026/27. The money purchase annual allowance (MPAA) — which applies if you have flexibly accessed your pension — stays at £10,000.

You can carry forward unused allowance from the previous three tax years (2023/24, 2024/25, and 2025/26). You must use the current year’s allowance in full before drawing on earlier years.

Capital Gains Tax

The CGT annual exempt amount remains at £3,000 for 2026/27. Rates are:

• 18% (basic rate) and 24% (higher rate) for all assets, including residential property

Business Asset Disposal Relief (BADR) rate is 18% for qualifying disposals in 2026/27.

ISA Allowance

The ISA annual allowance remains at £20,000. The Junior ISA allowance stays at £9,000, and the Lifetime ISA limit remains at £4,000 (counting towards the £20,000 total).

National Insurance

Employee National Insurance contributions remain at 8% on earnings between £12,570 and £50,270, and 2% above that. Self-employed Class 4 rates remain at 6% and 2% respectively. Employer NI stays at 15% with the employer secondary threshold at £5,000.

State Pension

The full new State Pension increased to £236.01 per week (£12,272 per year) under the triple lock. State Pension age is now 67 for most people, rising to 68 from 2044.

Inheritance Tax — Pensions from April 2027

The nil-rate band remains frozen at £325,000 and the residence nil-rate band at £175,000. Important upcoming change: From April 2027, unused defined contribution pension pots will be brought into the scope of IHT and will form part of your estate. This is a significant change for estate planning. If you have not already done so, it is worth reviewing how your pension fits into your estate plan before April 2027. Use our estate planning tools to model the impact, or consult a regulated adviser for personal guidance.

Agricultural Property Relief and Business Property Relief will also be reformed from April 2026, capping full relief at a combined £1 million per individual.