UK Tax Rules for 2026
A comprehensive overview of the key tax changes taking effect in 2025/26 and 2026/27 — from MTD and CGT to IHT, payroll and corporation tax.
Key Changes for 2025/26 & 2026/27
MTD for Income Tax – Phase 1
Sole traders and landlords with qualifying income over £50,000 must use MTD-compatible software and file quarterly updates.
Business Asset Disposal Relief Rate Increase
BADR rate rises to 18% (up from 14% in April 2025). The lifetime limit remains at £1m. Plan disposals before April 2026 if possible.
Employer NIC Rate Increase
Employer National Insurance Contributions rise from 13.8% to 15% and the threshold drops to £5,000 — significantly increasing payroll costs for businesses.
Inheritance Tax on Pensions
From April 2027 (delayed from 2026), unused pension funds will be included in the deceased's estate for IHT purposes. Review pension and estate planning now.
Agricultural & Business Property Relief Changes
From April 2026, APR and BPR are each capped at £1m combined at 100% relief. Amounts above this attract 50% relief (20% effective IHT rate).
Income Tax Thresholds Frozen
The personal allowance remains at £12,570 and the higher rate threshold at £50,270 until April 2028 — fiscal drag continues to pull more people into higher bands.
Capital Gains Tax Rates
CGT rates of 18% (basic) and 24% (higher) for most assets remain unchanged from the October 2024 Budget changes. Annual exempt amount stays at £3,000.
Corporation Tax
The main rate of 25% for profits over £250,000 continues. Small profits rate of 19% for profits under £50,000 with marginal relief between.
Plan Ahead for 2026
The changes taking effect in April 2026 require action now. Book a planning session with EP Laval Accountants to make sure you're ready.
Book a Tax Planning Session