The 2026/27 UK tax year brings a range of rates, thresholds, and allowances that individuals and businesses need to be aware of for effective financial planning. In this guide, we break down the key areas from our latest tax card and explain what they mean in practical terms.
Income Tax Allowances and Rates
The personal allowance remains at £12,570, meaning most individuals can earn up to this amount before paying income tax. However, this allowance begins to taper once income exceeds £100,000.
Dividend and savings allowances remain unchanged, which means careful planning is still required for those generating investment income.
[Insert image: Income Tax Bands and Rates Table – Page 3]
Tax bands also remain consistent, with the basic rate at 20%, higher rate at 40%, and additional rate at 45%. Understanding where your income sits within these thresholds is essential for tax efficiency.
Benefits in Kind (Company Cars and Fuel)
Company car taxation continues to be heavily influenced by CO2 emissions, reinforcing the tax advantages of electric and low-emission vehicles.
Fuel benefits and van charges have increased slightly, so reviewing whether private fuel provision is still worthwhile can result in tax savings.
Tax-Free Mileage Allowances
Mileage rates remain unchanged, with 45p per mile for the first 10,000 miles. These rates are particularly important for employees and directors using personal vehicles for business travel.
Capital Gains Tax (CGT)
The annual exemption remains at £3,000, significantly lower than historic levels. This makes tax planning around disposals more important than ever.
CGT rates remain at 18% and 24%, depending on your income level, with Business Asset Disposal Relief still offering a reduced 18% rate subject to conditions.
Inheritance Tax (IHT)
The nil-rate band and residence nil-rate band remain frozen. As asset values increase over time, more estates are likely to fall within the scope of inheritance tax.
Early estate planning is essential to mitigate potential liabilities.
Corporation Tax and Capital Allowances
Corporation tax remains at 25% for main rate companies, with a small profits rate of 19%.
Full expensing and generous first-year allowances continue to provide strong incentives for businesses to invest in plant and machinery.
VAT
The VAT registration threshold remains at £90,000. Businesses approaching this level should monitor turnover carefully to avoid unexpected compliance obligations.
Tax-Efficient Investments & Pensions
ISA limits remain at £20,000, with additional opportunities available through Venture Capital Trusts and EIS schemes. These can form a key part of tax-efficient financial planning strategies.
The annual pension allowance remains at £60,000, with no lifetime allowance. This continues to create opportunities for high earners to build tax-efficient retirement savings.
National Insurance
Employee National Insurance is charged at 8% within the main band and 2% above the upper threshold. Employers continue to pay 15% on most earnings.
Understanding these rates is crucial for both payroll planning and remuneration strategies.
Property Taxes and Stamp Duty
Stamp Duty Land Tax thresholds remain unchanged in England and Northern Ireland, with similar structures in Scotland and Wales under different systems.
Additional charges apply for second properties and corporate purchases, which can significantly increase acquisition costs.
Key Takeaways
* Most major tax thresholds remain frozen, increasing the risk of "fiscal drag"
* Investment incentives for businesses remain strong
* Personal tax planning is more important than ever due to reduced allowances (e.g. CGT)
* Property and inheritance taxes continue to impact long-term wealth planning
Need Help Planning for 2026/27?
The tax landscape is becoming increasingly complex, and small changes can have a significant financial impact. If you want to ensure you're making the most of available allowances and reliefs, professional advice is essential.
Get in touch with Gow and Partners to discuss your tax planning strategy for the year ahead.
*Disclaimer: These rates are based on current announcements and may be subject to change. This article is for general information only and does not constitute advice.*
For a PDF copy of the tables above, click here!
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