2026/27 tax rates don’t make for the most gripping reading, but getting them wrong is expensive. Having the right figures to hand when you’re making business decisions isn’t just a nice to have, it’s vital. This guide covers the key 2026/27 tax rates and allowances — income tax, National Insurance, dividends, capital gains, and corporation tax — all in one place, in plain English.

Income tax rates and allowances for 2026/27

The income tax bands for England, Wales and Northern Ireland are unchanged from last year. The freeze on thresholds continues until at least April 2031, which means that as earnings rise, more people gradually pay a higher proportion of tax. Economists call ‘fiscal drag’.

 

The 2026/27 income tax rates and bands for England, Wales and Northern Ireland are:

• Personal allowance (tax-free): £12,570

• Basic rate (20%): income between £12,571 and £50,270

• Higher rate (40%): income between £50,271 and £125,140

• Additional rate (45%): income above £125,140

 

You can check your personal tax position on the GOV.UK income tax rates page. If you need information on tax rates in Scotland, this is also available on Gov.uk

 

Worth noting: if your income exceeds £100,000, your personal allowance is gradually reduced – losing £1 for every £2 earned above that threshold. Once your income reaches £125,140, the personal allowance disappears entirely. If you’re in that band, pension contributions are one of the most effective ways to bring your adjusted net income back down.

 

National Insurance contributions for 2026/27

For employees (Class 1 NI), the rates are unchanged from 2025/26:

• Main rate: 8% on earnings between £12,570 and £50,270

• Higher earnings rate: 2% on earnings above £50,270

 

For the self-employed, Class 4 NI applies at 6% on profits between £12,570 and £50,270, and 2% above £50,270.

Employers continue to pay Class 1 NI at 15% on employee earnings above £5,000 per year, with the Employment Allowance remaining at £10,500. These employer NI rates were introduced in April 2025 and remain in place for 2026/27.

See the full breakdown of employer rates and thresholds on GOV.UK.

Dividend tax rates: the change to watch

This is the area where the 2026/27 tax rates bring a meaningful shift for limited company directors and investors. While the dividend allowance stays at £500, the rates applied above that allowance have increased by 2 percentage points for basic and higher rate taxpayers:

• Basic rate dividend tax: 10.75% (up from 8.75%)

• Higher rate dividend tax: 35.75% (up from 33.75%)

• Additional rate dividend tax: 39.35% (unchanged)

 

If you run a small, limited company and pay yourself primarily through dividends, this increase is worth factoring into your tax planning for the year. A conversation with your accountant at the start of the tax year, not at the end, can make a real difference to your overall tax position.

For more on tax-efficient director remuneration, read our blog on dividend tax planning for small limited company directors but be aware that this blog uses 2025/26 rates.

 

Capital gains tax for 2026/27

The capital gains tax (CGT) annual exempt amount remains at £3,000, continuing the sharp reduction from £12,300 in 2022/23. The main CGT rates are:

• Basic rate taxpayers: 18%

• Higher and additional rate taxpayers: 24%

 

One notable change from 6 April 2026: the CGT rate for Business Asset Disposal Relief (BADR) has increased from 14% to 18%. If you’re thinking about selling your business or business assets, timing can have a significant impact on your tax bill, so do take advice before making any decisions.

 

Corporation tax rates for 2026/27

For limited companies, corporation tax rates remain as set in 2023/24:

• Small profits rate: 19% (profits up to £50,000)

• Main rate: 25% (profits above £250,000)

• Marginal relief available between £50,000 and £250,000

 

You can find full details on the HMRC corporation tax rates page or check out our recent blog explaining Corporation Tax for small businesses.

 

Other allowances to be aware of

A few further figures worth having to hand for 2026/27:

• ISA allowance: £20,000 (unchanged) – note that from April 2027, the cash ISA limit for under-65s will reduce to £12,000

• Annual pension allowance: £60,000 (with up to 3 years carry forward allowance)

• Personal savings allowance: £1,000 for basic rate taxpayers, £500 for higher rate taxpayers

• Marriage allowance: £1,260 transferable to a spouse or civil partner

• Inheritance tax nil-rate band: £325,000 (frozen until at least April 2031)

 

Don’t forget: MTD for Income Tax is now live

From 6 April 2026, sole traders and landlords with income over £50,000 must comply with Making Tax Digital for Income Tax (MTD ITSA). This means quarterly digital reporting rather than a single annual return. If you’re in scope and haven’t yet made the switch, please get in touch with us as soon as possible.

Our MTD for Income Tax checklist covers everything you need to do to get ready.

 

Make sure you’re using all your allowances

Knowing the 2026/27 tax rates is one thing. Making sure you’re using every allowance available to you is another. We’re here to help you optimise your business for maximum profit, so contact us today for a free, no-obligation chat about your tax position. Call us on 01322 250001 or get in touch online. No question is too silly.

 

About the author

Michelle Adams is a qualified accountant and director at Adams Accountancy, a friendly, all-female practice based in Dartford, Kent. With over 15 years of experience supporting sole traders, landlords, and limited company directors across Kent, Michelle and her team specialise in making tax simple and stress-free. No question is too small – get in touch for a free consultation.

Frequently asked questions about 2026/27 tax rates

 

Has the personal allowance increased for 2026/27?

No. The personal allowance remains at £12,570 for 2026/27, exactly where it has been since April 2022. It is due to stay frozen at this level until at least April 2031. With many people receiving pay rises, this freeze means that a larger proportion of income falls into taxable bands – which is why reviewing your allowances each year is so important.

 

What are the dividend tax rates for 2026/27?

From 6 April 2026, dividend tax rates have risen for basic and higher rate taxpayers. Basic rate taxpayers now pay 10.75% on dividend income above the £500 allowance, and higher rate taxpayers pay 35.75%. Additional rate taxpayers are unaffected and continue to pay 39.35%. If you pay yourself through dividends, it’s worth reviewing your salary and dividend split with your accountant.

 

What is the corporation tax rate for small businesses in 2026/27?

Small limited companies with profits of £50,000 or less pay corporation tax at the small profits rate of 19%. Companies with profits above £250,000 pay the main rate of 25%. If your profits fall between those two thresholds, marginal relief applies, giving a gradual increase in the effective rate. You can use HMRC’s marginal relief calculator to work out your position.

 

Will I pay tax on my savings interest in 2026/27?

It depends on how much interest you earn and which income tax band you’re in. Basic rate taxpayers can receive up to £1,000 of savings interest tax-free each year through the Personal Savings Allowance; for higher rate taxpayers that drops to £500, and additional rate taxpayers receive no allowance at all. Interest earned within an ISA is always tax-free. That’s why making full use of your £20,000 ISA allowance before 5 April 2027 is important, particularly as the rules around cash ISAs are set to change from April 2027.