UK Tax Rates, Thresholds and Allowances 2026/27
Staying on top of UK tax rates and thresholds is essential for anyone running a business, employing staff, or working for themselves — misapplying a rate can mean overpaying tax or facing penalties for underpayment. This guide from Filing Accounts UK brings together the key rates, thresholds, and allowances for the 2026/27 tax year (6 April 2026 to 5 April 2027), using only verified facts from official HMRC and Autumn Budget 2025 sources.
At Filing Accounts, we help UK businesses and individuals apply these rates correctly across payroll, Self Assessment, and company accounts. For a deep dive specifically on the higher rate threshold, see our guide to the 40% tax bracket.
Income Tax: Personal Allowance and Bands
The personal allowance — the amount you can earn tax-free — is £12,570 for 2026/27, and is frozen at this level until at least April 2031. It tapers away for adjusted net income above £100,000, reducing by £1 for every £2 over that threshold, reaching zero at £125,140.
| Band | Taxable Income (England, Wales, NI) | Rate |
|---|---|---|
| Personal Allowance | £0 – £12,570 | 0% |
| Basic Rate | £12,571 – £50,270 | 20% |
| Higher Rate | £50,271 – £125,140 | 40% |
| Additional Rate | Over £125,140 | 45% |
Scotland has its own income tax bands, set separately by the Scottish Government, with a 6-band structure and rates ranging from 19% up to 48% for its top rate — higher overall than the rest of the UK for equivalent income levels.
Blind Person’s Allowance adds £3,250 on top of the standard personal allowance for 2026/27. Marriage Allowance lets a non-taxpayer transfer £1,260 of their allowance to a basic-rate taxpayer partner, worth up to £252.
Dividend Tax
The dividend allowance remains £500 for 2026/27. Above this, dividend tax rates increased by 2 percentage points from 6 April 2026, following Autumn Budget 2025:
| Band | Rate |
|---|---|
| Basic rate | 10.75% (was 8.75%) |
| Higher rate | 35.75% (was 33.75%) |
| Additional rate | 39.35% (unchanged) |
National Insurance Contributions
Employees (Class 1)
| Threshold | 2026/27 | Rate |
|---|---|---|
| Primary Threshold | £12,570/year | 8% up to Upper Earnings Limit |
| Upper Earnings Limit | £50,270/year | 2% above |
Employers (Class 1 Secondary)
The employer NIC secondary threshold is £5,000/year, with a rate of 15% above it. Employment Allowance lets eligible small employers reduce their employer NIC bill by up to £10,500 per year — see our full Employment Allowance guide for eligibility rules, including the sole-director exclusion.
Self-Employed (Class 4)
Class 4 NIC is charged on profits above the Lower Profits Limit (aligned with the £12,570 personal allowance), up to the Upper Profits Limit of £50,270. Class 2 NIC was abolished as a compulsory charge from April 2024, though voluntary payments remain available for those wanting to protect their State Pension record.
Corporation Tax
Corporation Tax operates on a two-rate system, unchanged for 2026/27:
| Profit Level | Rate |
|---|---|
| Up to £50,000 (small profits rate) | 19% |
| £50,001 – £250,000 | Marginal relief (effective rate up to ~26.5%) |
| Over £250,000 (main rate) | 25% |
Marginal relief smooths the jump between the 19% and 25% rates for companies with profits between £50,000 and £250,000 — but because of how the relief tapers, the effective rate on each additional pound of profit within this band can reach approximately 26.5%, higher than the 25% main rate itself. If your company has associated companies (under common control), the £50,000 and £250,000 thresholds are divided between them.
Corporation Tax is due 9 months and 1 day after your accounting period ends. See our guide on what to do if you can’t pay your Corporation Tax bill.
Capital Gains Tax
The annual exempt amount is £3,000 for individuals in 2026/27.
| Taxpayer | Most Assets | Residential Property |
|---|---|---|
| Basic rate | 18% | 18% |
| Higher/additional rate | 24% | 24% |
Business Asset Disposal Relief (BADR) offers a reduced rate on qualifying business disposals, up to a £1 million lifetime limit — this rate increased from 14% to 18% on 6 April 2026.
VAT
| Item | Detail |
|---|---|
| Registration threshold | £90,000 (rolling 12 months) |
| Deregistration threshold | £88,000 |
| Standard rate | 20% |
| Reduced rate | 5% (e.g. domestic energy) |
| Zero rate | 0% (e.g. most food, children’s clothes) |
Late VAT registration can result in backdated liabilities and penalties — see our guide on what to do if you can’t pay your VAT bill.
National Minimum Wage and National Living Wage
Rates increased from 1 April 2026, following Low Pay Commission recommendations accepted at Autumn Budget 2025:
| Age Group | Rate (from 1 April 2026) |
|---|---|
| 21 and over (National Living Wage) | £12.71/hour |
| 18–20 | £10.85/hour |
| 16–17 | £8.00/hour |
| Apprentice | £8.00/hour |
Underpaying the minimum wage can result in penalties of up to 200% of the arrears owed, capped at £20,000 per worker, alongside public naming by the government.
Other Key Figures for 2026/27
- Trading Allowance: £1,000 tax-free gross income from self-employment before registration is required
- Property Income Allowance: £1,000 tax-free gross rental income
- Personal Savings Allowance: £1,000 for basic-rate taxpayers, £500 for higher-rate taxpayers
- ISA Allowance: £20,000 per year across all adult ISA types
- Inheritance Tax Nil-Rate Band: £325,000, plus a £175,000 residence nil-rate band where applicable
- Annual Investment Allowance: £1 million on qualifying plant and machinery
- High Income Child Benefit Charge: starts at £60,000 household income, fully clawed back by £80,000
Common Mistakes to Avoid
Assuming Corporation Tax Marginal Relief Means a Flat Rate Between 19% and 25%
The effective marginal rate within the relief band can actually exceed 25%, reaching around 26.5% on the last pound of profit in that range.
Forgetting Associated Companies Split the Corporation Tax Thresholds
If you control multiple companies, the £50,000 and £250,000 thresholds are divided between them, often pushing profits into a higher effective rate sooner than expected.
Missing the Dividend Tax Rate Increase
Directors planning salary and dividend extraction based on old 2025/26 rates will underestimate their tax bill — both the basic and higher dividend rates rose by 2 percentage points from 6 April 2026.
Frequently Asked Questions
What is the personal allowance for 2026/27?
£12,570, frozen until at least April 2031.
What are the Corporation Tax rates for 2026/27?
19% on profits up to £50,000, 25% on profits over £250,000, with marginal relief tapering the rate in between.
Has the dividend tax rate changed for 2026/27?
Yes. The basic and higher dividend rates increased by 2 percentage points from 6 April 2026, to 10.75% and 35.75% respectively.
What is the VAT registration threshold?
£90,000 of taxable turnover in a rolling 12-month period.
What is the National Living Wage from April 2026?
£12.71 per hour for workers aged 21 and over.
Need Help Applying These Rates? Talk to Filing Accounts UK
Rates and thresholds change every tax year, and getting them wrong can mean overpaying tax or facing penalties for underpayment. At Filing Accounts, we help UK businesses and individuals apply the correct rates across payroll, Self Assessment, and company accounts.
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