What changed in the 2026/27 tax year
Every tax change that matters for the 2026/27 tax year (6 April 2026 to 5 April 2027): what changed, what it costs or saves you, and what to do about it.
Last reviewed 7 July 2026 by the TaxFly Editorial Team.
2026/27 at a glance
| Rate or allowance | 2025/26 | 2026/27 | Changed? |
|---|---|---|---|
| Personal Allowance | £12,570 | £12,570 | Frozen |
| Higher-rate threshold (rUK) | £50,270 | £50,270 | Frozen |
| Mileage rate (first 10,000 miles) | 45p | 55p | Yes |
| Dividend tax (basic / higher) | 8.75% / 33.75% | 10.75% / 35.75% | Yes |
| Dividend allowance | £500 | £500 | Frozen |
| Capital Gains Tax exemption | £3,000 | £3,000 | Frozen |
| BADR rate (business sales) | 14% | 18% | Yes |
| ISA allowance | £20,000 | £20,000 | Frozen |
| Personal Savings Allowance (basic rate) | £1,000 | £1,000 | Frozen |
| Class 4 NI (self-employed main rate) | 6% | 6% | Frozen |
| Employee Class 1 NI (main rate) | 8% | 8% | Frozen |
| VAT registration threshold | £90,000 | £90,000 | Frozen |
Frozen is not neutral: with wages rising, frozen thresholds quietly increase the tax you pay each year.
Changed on 6 April 2026
What took effect at the start of this tax year.
Making Tax Digital for Income Tax went live
Before
One annual Self Assessment return
Now
Digital records + quarterly updates if turnover is over £50,000
Who it affects: Sole traders and landlords whose 2024/25 self-employment plus property turnover was over £50,000.
What to do: Check whether you are in scope and sign up before the first quarterly deadline on 7 August 2026.
Dividend tax rates rose by 2 percentage points
Before
8.75% basic, 33.75% higher
Now
10.75% basic, 35.75% higher (39.35% additional unchanged)
Who it affects: Company directors paying themselves in dividends and anyone holding shares outside an ISA. The £500 allowance is unchanged.
What to do: Directors: re-run your salary and dividend mix. Investors: shelter income shares inside your £20,000 ISA allowance first.
Business Asset Disposal Relief rate rose to 18%
Before
14% CGT on qualifying business sales
Now
18% from 6 April 2026
Who it affects: Business owners selling or winding up a qualifying business (lifetime limit £1 million of gains).
What to do: The staged rises announced in 2024 are now fully in. Factor 18% into any exit planning.
Personal Allowance frozen again at £12,570
Before
£12,570 since April 2021
Now
Still £12,570, frozen until at least April 2031
Who it affects: Everyone. Pay rises push more of your income into tax and more people into higher bands (fiscal drag).
What to do: Check your tax code is right and use salary sacrifice or pension contributions if you sit just above a threshold.
Changed during the year
Announced or updated since 6 April.
Mileage rate rose from 45p to 55p per mile
Before
45p per mile (first 10,000 business miles)
Now
55p per mile, backdated to 6 April 2026
Who it affects: Employees using their own car for work and self-employed people using simplified mileage. First increase since 2011.
What to do: Log business miles at the new rate; if your employer still pays 45p, claim Mileage Allowance Relief on the 10p gap.
HMRC late payment interest at 7.75%
Before
Base rate + 2.5%
Now
Base rate + 4 percentage points (7.75% from January 2026)
Who it affects: Anyone paying Self Assessment, VAT or PAYE late, including the 31 July payment on account.
What to do: Pay on time or agree a Time to Pay plan; interest runs daily either way, so late is expensive.
Coming next
Confirmed changes to plan for now.
Payrolling of benefits in kind becomes mandatory
Before
Annual P11D forms
Now
Company cars, fuel and medical benefits taxed through payroll from 6 April 2027; most other benefits from 2028
Who it affects: Employers providing benefits, and every employee who receives them (tax collected in real time instead of via tax codes).
What to do: Employers: audit benefits and ask your payroll provider about readiness. Employees: expect payslip changes from April 2027.
Pay-per-mile tax for electric vehicles (eVED)
Before
EVs pay standard VED only
Now
3p per mile for EVs and 1.5p for plug-in hybrids, expected April 2028
Who it affects: Electric and plug-in hybrid drivers. Announced at the 2025 Budget; legislation still to come.
What to do: Estimate your future annual cost now so it does not surprise you at purchase time.
MTD threshold drops to £30,000
Before
Over £50,000 turnover (2026)
Now
Over £30,000 from April 2027, then £20,000 from April 2028
Who it affects: Smaller sole traders and landlords, based on 2025/26 turnover for the 2027 wave.
What to do: If your 2025/26 turnover was over £30,000, start trying software this year while it is still optional for you.
Never miss the next change
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