With the new tax year starting on 6 April, now’s the time to revisit the key changes for 2026/27.

Personal tax

The Government has decided to continue the Income Tax threshold freeze until at least April 2031, while keeping the tax-free personal allowance at £12,570.

With these rates and thresholds remaining unchanged, we will see more individuals pushed into higher tax bands.

Inheritance Tax (IHT)

From April 2026, the 100 per cent Agricultural Relief and Business Relief will be capped at £2.5m per individual.   This represents an increase from the previous £1m cap, with the increase being announced in late 2025.

A 50 per cent rate of relief will apply to assets above this threshold.

The Government have confirmed that the £2.5m allowance will be transferable between spouses and civil partners, which is a really important extension to the previous proposals.

Business tax

The main rate of writing down allowance will drop from 18 to 14 per cent from April 2026.

However, practically, it is worth noting that the Annual Investment Allowance allows 100 per cent tax relief for capital expenditure on most plant and machinery for expenditure up to £1m per year and is available to almost all businesses.

Full expensing is available to companies only and allows 100 per cent tax relief on assets which would generally qualify for main rate capital allowances.

Business owners looking to exit their business using an Employee Ownership Trust (EOT) will also be required to pay Capital Gains Tax (CGT) on 50 per cent of their profits, following the removal of the existing 100 per cent relief.

Will there be a wealth tax?

No, but the ordinary and upper rates of tax on dividend income will increase by two percentage points from April 2026, increasing to 10.75 per cent (within the basic rate band) and 35.75 per cent (in the higher rate band). The additional rate will remain unchanged at 39.35 per cent.

There are additional changes to consider, including new separate tax rates for property income and a new mansion tax.

A two per cent increase in the tax rate on savings and property income will apply from April 2027, with the mansion tax (or annual surcharge on high value property) applying from April 2028 for properties valued at £2m or more.

Get advice for the new year

With so many changes to prepare for, with many taking effect over several years, understanding your position as early as possible will be really important for many of our clients.

To get your affairs up to date, book your 2026/27 tax planning consultation.