UK Tax Year Changes 2026/27: What’s Changing from April 2026
The 2026/27 tax year begins on 6 April 2026. For the sixth consecutive year, the Personal Allowance and income tax thresholds remain frozen — a policy that continues to pull more workers into higher tax bands through fiscal drag. This page provides a complete comparison of 2025/26 vs 2026/27 tax rates, thresholds, and take-home pay at every salary level.
Last updated: March 2026. All figures for England, Wales & Northern Ireland unless stated otherwise. Use our salary calculator for personalised results.
Key Changes at a Glance: 2025/26 vs 2026/27
| Item | 2025/26 | 2026/27 | Change |
|---|---|---|---|
| Personal Allowance | £12,570 | £12,570 | Frozen |
| Basic Rate Band (20%) | £0 – £37,700 | £0 – £37,700 | Frozen |
| Higher Rate Threshold | £50,270 | £50,270 | Frozen |
| Additional Rate (45%) | Above £137,710 | Above £137,710 | Frozen |
| Employee NI (main rate) | 8% | 8% | No change |
| NI Primary Threshold | £12,570 | £12,570 | Frozen |
| NI Upper Earnings Limit | £50,270 | £50,270 | Frozen |
| Employer NI rate | 15% | 15% | No change |
| Employer NI Secondary Threshold | £5,000 | £5,000 | No change |
| Dividend Allowance | £500 | £500 | No change |
| CGT Annual Exempt Amount | £3,000 | £3,000 | No change |
| CGT Rates (non-residential) | 10% / 20% | 18% / 24% | Increased |
See our full tax bands guide and NI rates page for more detail.
Take-Home Pay Comparison: 2025/26 vs 2026/27
Side-by-side take-home pay at key salary levels. All figures assume employment income only, no pension contributions, no student loan. England, Wales & Northern Ireland.
| Gross Salary | Take-Home 2025/26 | Income Tax | NI | Take-Home 2026/27 | Difference | Monthly |
|---|---|---|---|---|---|---|
| £25,000 | £21,520 | £2,486 | £994 | £21,520 | £0 | £0 /mo |
| £30,000 | £25,120 | £3,486 | £1,394 | £25,120 | £0 | £0 /mo |
| £35,000 | £28,720 | £4,486 | £1,794 | £28,720 | £0 | £0 /mo |
| £40,000 | £32,320 | £5,486 | £2,194 | £32,320 | £0 | £0 /mo |
| £50,000 | £39,520 | £7,486 | £2,994 | £39,520 | £0 | £0 /mo |
| £75,000 | £54,057 | £17,432 | £3,511 | £54,057 | £0 | £0 /mo |
| £100,000 | £68,557 | £27,432 | £4,011 | £68,557 | £0 | £0 /mo |
Try any salary in our salary calculator.
Personal Allowance: Frozen at £12,570 for the Sixth Year
The Personal Allowance — the amount you can earn before paying income tax — remains at £12,570 for 2026/27. This threshold has not moved since the 2021/22 tax year. The government confirmed in the Autumn Statement 2024 that the freeze will continue until at least 2027/28, making this one of the longest threshold freezes in modern UK tax history.
To put this in perspective: if the Personal Allowance had risen with CPI inflation since 2021, it would be approximately £14,800 by now. That £2,230 gap means an extra £446 per year in income tax for every basic-rate taxpayer, rising to £892 for higher-rate taxpayers.
Income Tax Bands: No Movement
All three income tax bands for England, Wales and Northern Ireland remain unchanged:
- Basic rate (20%): On taxable income from £0 to £37,700 (gross £12,571 to £50,270)
- Higher rate (40%): On taxable income from £37,700 to £125,140 (gross £50,271 to £137,710)
- Additional rate (45%): On taxable income above £125,140 (gross above £137,710)
The Higher Rate Threshold of £50,270 is particularly significant. Average UK full-time earnings are now above £35,000, meaning millions of workers who received modest pay rises over the past five years have been pushed into the 40% bracket for the first time. See our full tax bands breakdown.
National Insurance: Rates and Thresholds Unchanged
Employee National Insurance contributions for 2026/27:
- 8% on earnings between £12,570 and £50,270 per year
- 2% on earnings above £50,270
Employer NI remains at 15% with the Secondary Threshold at £5,000 — the elevated rate introduced in April 2025. While this doesn’t appear on your payslip, it increases the total cost of employing you by thousands of pounds, which can suppress future pay rises and hiring. For a £50,000 employee, the employer pays £6,750 in NI alone.
See our National Insurance rates page for a complete breakdown including self-employed rates.
Capital Gains Tax: Higher Rates on Non-Residential Assets
One genuine change for 2026/27: Capital Gains Tax rates on non-residential assets have increased to align with residential property rates. The basic rate rises from 10% to 18%, and the higher rate from 20% to 24%. The Annual Exempt Amount remains at £3,000 — down from £12,300 just two years ago.
This matters for anyone selling shares, business assets, or second properties. A £20,000 capital gain for a higher-rate taxpayer now costs £4,080 in CGT (after the £3,000 exemption), compared to £3,400 in 2025/26.
Student Loan Repayment Thresholds
Student loan repayment thresholds for 2026/27 remain broadly stable:
| Plan | Threshold | Rate | Who |
|---|---|---|---|
| Plan 1 | £22,015 | 9% | Started before Sep 2012 (England/Wales) |
| Plan 2 | £27,295 | 9% | Started after Sep 2012 (England/Wales) |
| Plan 4 | £27,660 | 9% | Scotland |
| Plan 5 | £25,000 | 9% | Started from Sep 2023 (England) |
| Postgraduate | £21,000 | 6% | Postgraduate Master’s or Doctoral loan |
The Real Cost of Fiscal Drag: What Happens When You Get a Pay Rise
This table shows the impact of a 3% pay rise from 2025/26 to 2026/27 with frozen thresholds. The “effective rate on your raise” shows how much of your gross pay rise goes to tax and NI.
| 2025/26 Salary | 2026/27 Salary (+3%) | Gross Gain | Net Gain | Tax on Raise |
|---|---|---|---|---|
| £30,000 | £30,900 | £900 | £648 | 28% |
| £40,000 | £41,200 | £1,200 | £864 | 28% |
| £50,000 | £51,500 | £1,500 | £908 | 39% |
| £75,000 | £77,250 | £2,250 | £1,305 | 42% |
Had thresholds risen with inflation, these effective rates would be lower. The frozen thresholds mean the government collects additional revenue without changing headline tax rates — an estimated £40 billion per year across the UK workforce.
Scotland vs England: 2026/27 Tax Comparison
Scotland sets its own income tax rates and bands, while NI rates are UK-wide. Scottish taxpayers have six bands compared to England’s three.
| Basic | 20% | £0 – £37,700 |
| Higher | 40% | £37,700 – £125,140 |
| Additional | 45% | £125,140+ |
| Starter | 19% | £0 – £2,397 |
| Basic | 20% | £2,397 – £14,733 |
| Intermediate | 21% | £14,733 – £31,092 |
| Higher | 42% | £31,092 – £62,430 |
| Advanced | 45% | £62,430 – £112,570 |
| Top | 48% | £112,570+ |
| Salary | Take-Home (England) | Take-Home (Scotland) | Scotland Diff |
|---|---|---|---|
| £30,000 | £25,120 | £25,117 | -£3 |
| £50,000 | £39,520 | £37,986 | -£1,534 |
| £75,000 | £54,057 | £51,969 | -£2,088 |
| £100,000 | £68,557 | £65,219 | -£3,338 |
For a detailed analysis, see our England vs Scotland tax comparison.
The £100K Tax Trap: Still in Full Effect
Earners between £100,000 and £125,140 continue to face a 60% effective marginal tax rate in 2026/27. For every £2 earned above £100,000, you lose £1 of Personal Allowance. This means each additional pound is taxed at 40% income tax plus you lose the 20% relief on the withdrawn allowance — giving an effective 60% rate, plus 2% NI on top.
At £100,000 gross, your take-home is £68,557. Strategies to manage this include salary sacrifice into pension, charitable donations via Gift Aid, and timing of bonuses. Read our complete £100K tax trap guide.
What You Can Do: Tax-Efficient Strategies for 2026/27
- Maximise pension contributions: Salary sacrifice reduces your taxable income, avoids fiscal drag, and saves employer NI too. The Annual Allowance remains at £60,000 for 2026/27.
- Use your ISA allowance: The £20,000 ISA allowance is unchanged. Investment growth and income within an ISA are entirely tax-free.
- Gift Aid donations: Charitable giving via Gift Aid extends your Basic Rate Band, potentially keeping you below the Higher Rate Threshold or reducing your PA taper.
- Check your tax code: Ensure HMRC has your correct allowance, especially if you changed jobs, have benefits in kind, or earn over £100,000.
- Consider salary sacrifice for childcare: Workplace nursery schemes and childcare vouchers (where still available) reduce your taxable pay.
Frequently Asked Questions: 2026/27 Tax Year
When does the 2026/27 tax year start? ▼
The 2026/27 tax year starts on 6 April 2026 and runs until 5 April 2027. Your employer should automatically apply the new rates from your first pay date on or after 6 April 2026.
Has the Personal Allowance changed for 2026/27? ▼
No. The Personal Allowance remains frozen at £12,570 for 2026/27. It has been frozen since the 2021/22 tax year, and the government has confirmed the freeze will continue until at least 2027/28. This means more of your income is taxed each year as wages rise — a phenomenon known as fiscal drag.
What is fiscal drag and how does it affect me? ▼
Fiscal drag occurs when tax thresholds are frozen while wages rise with inflation. Even though tax rates haven’t changed, you pay more tax in real terms because a larger share of your income falls into higher tax bands. For example, a 3% pay rise on a £40,000 salary adds £1,200 gross, but only about £864 reaches your pocket — the rest goes to income tax and National Insurance.
Are National Insurance rates changing in 2026/27? ▼
Employee NI rates remain at 8% on earnings between £12,570 and £50,270, and 2% above the Upper Earnings Limit. Employer NI also remains at 15% with the £5,000 Secondary Threshold — both unchanged from 2025/26.
How do Scottish tax rates differ from England in 2026/27? ▼
Scotland has six income tax bands compared to England’s three. The Scottish Starter rate is 19%, followed by Basic (20%), Intermediate (21%), Higher (42%), Advanced (45%), and Top (48%). Most Scottish taxpayers earning above £28,000 pay more income tax than their English counterparts, though the difference is partially offset by identical NI rates across the UK.
What are the student loan repayment thresholds for 2026/27? ▼
Plan 1: £22,015, Plan 2: £27,295, Plan 4 (Scotland): £27,660, Plan 5: £25,000. The repayment rate remains 9% on earnings above the threshold for all undergraduate plans, and 6% above £21,000 for postgraduate loans.
Will I take home less money in 2026/27? ▼
If your salary stays the same, your take-home pay will be virtually identical to 2025/26 since income tax and NI rates are unchanged. However, if you received a pay rise, fiscal drag means you keep less of that rise than you would if thresholds had risen with inflation. Use our salary calculator to see your exact figures.