UK Budget 2026 Tax Changes
Understand how the latest UK Budget impacts your finances. Explore updated tax bands, National Insurance rates, and frozen allowances for the 2026/2027 tax year.
Estimate Your 2026/27 Tax Impact
Use our estimator to see how frozen thresholds and current tax rates affect your take-home pay and overall tax burden for the 2026/2027 tax year.
Tax Impact Estimator
See your estimated Income Tax and National Insurance based on 2026/27 thresholds.
Key 2026 Budget Takeaways
Summary of major tax policy positions
Frozen Allowances
The Personal Allowance (£12,570) and Higher Rate Threshold (£50,270) remain frozen, continuing ‘fiscal drag’ as wages rise.
National Insurance
Primary thresholds remain aligned with the Personal Allowance. Rates are subject to annual HMRC confirmation.
Capital Gains Tax
The Annual Exempt Amount remains at the reduced £3,000 level for individuals, affecting those selling assets like property or shares.
Inheritance Tax
The nil-rate band (£325,000) and residence nil-rate band (£175,000) remain frozen, impacting estate planning for homeowners.
2026/2027 Tax Thresholds & Rates
A general overview of the key tax limits, bands, and allowances applicable for the 2026/2027 UK tax year.
| Tax / Allowance Type | 2026/2027 Limit | Rate / Detail |
|---|---|---|
| Personal Allowance | £12,570 | Frozen. Tapers to zero for income over £100,000. |
| Basic Rate Band | £12,571 – £50,270 | 20% Income Tax (Frozen threshold). |
| Higher Rate Band | £50,271 – £125,140 | 40% Income Tax. |
| Additional Rate | Over £125,140 | 45% Income Tax. |
| Capital Gains (Annual Exempt) | £3,000 | Reduced threshold. 10%/18% (Basic) or 20%/24% (Higher) depending on asset. |
| Inheritance Tax Nil-Rate Band | £325,000 | Frozen. Plus up to £175,000 Residence Nil-Rate Band for direct descendants. |
| Dividend Allowance | £500 | Reduced threshold. Taxed at 8.75%, 33.75%, or 39.35% above this. |
Budget 2026 Tax FAQ
Answers to the most frequently asked questions about the 2026/2027 UK tax year changes, fiscal drag, and allowances.
The standard Personal Allowance for the 2026/2027 tax year remains frozen at £12,570. This continues the policy of fiscal drag, meaning more taxpayers are pulled into the higher rate tax band as wages rise with inflation, without the threshold adjusting upwards.
For every £2 you earn over £100,000, your Personal Allowance is reduced by £1. This means if your income reaches £125,140, your Personal Allowance is completely eliminated. This taper creates an effective marginal tax rate of 60% for earners in this specific income band.
National Insurance thresholds and rates are subject to annual review. The primary threshold generally remains aligned with the Personal Allowance at £12,570. Always verify the latest HMRC guidance for the exact main and upper earnings limits applicable to your specific employment status for the current tax year.
The Capital Gains Tax Annual Exempt Amount remains at the significantly reduced threshold of £3,000 for individuals. This is down from the historical £12,300, meaning a much larger number of individuals will be liable to pay CGT when selling assets like second homes, land, or significant share portfolios.