This article is part three of a series of articles on changes to tax rules, rates and allowances taking effect from April 2026. Other articles in the series may also be of interest to individuals, including the article for employees and an article to be published shortly for businesses, which will include Making Tax Digital for income tax. 

Income tax 

Due to the policy of freezing personal allowances and thresholds and the government’s manifesto commitment not to increase rates of income tax for “working people”, there are only limited changes to income tax rates, thresholds and allowances for 2026/27. 

Changes to be aware of for 2026/27 include increases to: 

• the dividend ordinary rate, from 8.75% to 10.75%, and the dividend upper rate, from 33.75% to 35.75%. The dividend additional rate remains at 39.35%; 
• the thresholds at which the basic and intermediate rates of tax are paid on the non-savings and non-dividend income of Scottish taxpayers (as explained in a recent article); 
• the amount of the married couple’s allowance (MCA), from £11,270 to £11,700. The income limit for, and the minimum amount of the MCA are increased from £37,700 to £39,200 and from £4,360 to £4,530 respectively;
• the amount of the blind person’s allowance, from £3,130 to £3,250; and
• the annual fixed amount for qualifying care relief, from £19,690 to £20,440. Increases are also made to the weekly amounts.  

Other income tax changes applying from 6 April 2027 include: 

• a cut in the rate of income tax relief for qualifying investments in venture capital trusts, from 30% to 20%; and
• treating carried interest as trading profits subject to income tax and national insurance contributions (NIC). The taxable amount will be adjusted by applying a multiplier of 72.5% where the carried interest is “qualifying” carried interest. For 2025/26, carried interest is typically subject to CGT at a flat rate of 32%. This is explained in more detail in an earlier article.  

National insurance contributions 

An individual may wish to pay class 2 or class 3 NIC on a voluntary basis depending on their circumstances. The rates and relevant thresholds are as follows: 

From 6 April 2026, for 2026/27 onwards, it will not be possible to pay voluntary class 2 NIC for time abroad. It will still be possible to pay voluntary class 3 NIC for time abroad; however, the criteria will be tightened for new applications. HMRC’s guidance provides further details.  

CGT 

Gains subject to business asset disposal relief or to investor’s relief are taxed at the rate of 18% for 2026/27, up from 14% for 2025/26.  

As announced at the Autumn Budget 2025, with effect for qualifying transfers of a business on or after 6 April 2026, claims for incorporation relief must be made by the transferor in their self assessment tax return for the tax year in which the transfer took place. For qualifying transfers before 6 April 2026, the relief was given automatically.  

The following measures, also announced at the Autumn Budget 2025, took effect from 26 November 2025: 

• a reduction in the rate of relief for qualifying disposals to an employee ownership trust, from 100% to 50%. This is discussed in the latest episode of The Tax Track podcast; and
• changes to the rules for share exchanges and reorganisations, as explained in a recent article.  

IHT 

From 6 April 2026, assets qualifying for agricultural property relief (APR)/ business property relief (BPR) up to a combined total of £2.5m will attract relief from inheritance tax (IHT) at the rate of 100% (known as the 100% relief allowance). Where APR/BPR assets exceed £2.5m, relief will be given at the rate of 50% on the excess over £2.5m. The allowance will refresh every seven years (10 years for trusts). Any unused amount of the £2.5m allowance can be transferred to a surviving spouse/civil partner.  

ICAEW has raised concerns with the government’s IHT reforms and welcomes recent concessions made by the government, including the announcement made in December 2025 to increase the allowance for 100% APR/BPR from £1m to £2.5m. However, ICAEW agrees with the findings of a recent report from the House of Lords that further changes may be required. 

The rate of BPR will also fall to 50% in all circumstances for shares designated as “not listed” on the markets of recognised stock exchanges, such as the Alternative Investment Market (AIM). BPR given on such shares will not use up the £2.5m 100% relief allowance. 

Legislative process 

Legislation providing for many of the changes outlined in this article is included in the Finance Bill 2025-26. The Finance Bill is currently making its way through Parliament and is subject to change. Learn more in ICAEW’s TAXguide 05/25.