The new tax year is just a few weeks away, starting on 6 April 2026. Key changes in store for 2026/27 are:
Personal tax
The Government has decided to continue the Income Tax threshold freeze until at least April 2031, keeping the tax-free personal allowance at £12,570.
With these rates and thresholds remaining unchanged, we will see more individuals dragged into higher tax bands.
Inheritance Tax (IHT)
From April 2026, the 100 per cent Agricultural Relief and Business Relief will be capped at £2.5m per individual. The Government has confirmed that this will be transferable between spouses and civil partners.
A 50 per cent rate of relief will apply to assets above this threshold.
Business tax
The main rate of writing down allowance, for capital allowance purposes, will drop from 18 per cent to 14 per cent from April 2026.
However, a new first-year allowance of 40 per cent for main‑rate assets will be available.
Business owners looking to exit their business using an Employee Ownership Trust (EOT) will be required to pay Capital Gains Tax (CGT) on 50 per cent of their profits, following the removal of the existing 100 per cent relief.
Will there be a wealth tax?
There will not be a wealth tax, but the basic and higher rates of tax on dividend income will increase by two percentage points from April 2026. The additional rate will remain unchanged.
There are additional changes to consider, including new separate tax rates for property income and a new mansion tax.
However, these changes will not come into effect until April 2027 and April 2028, respectively.
Get advice for the new tax year
With so many changes to prepare for, understanding your financial position early gives you more options as the new tax year approaches.
To get your financial affairs up to date, book your 2026/27 tax planning consultation.
