Your 2026/27 tax year checklist: what to review, act on, and plan for

New tax year · April 2026

The new tax year began on 6th April 2026. While many headline rates are unchanged, there are important shifts, and frozen allowances that deserve your attention. Here’s what individuals and small business owners across the UK should be looking at right now.

1. Check your tax code: Frozen thresholds are quietly costing more

The personal allowance, the amount you can earn before paying any income tax, remains at £12,570 for 2026/27, where it has been since 2022 and where it will stay until at least 2031. The higher-rate threshold (where you start paying 40%) is also frozen at £50,270.

That freeze matters. As wages rise with inflation, more people are pulled into higher tax bands even though the rates themselves haven’t changed. This is known as “fiscal drag.” If you’ve had a pay rise, now is the time to check your PAYE tax code with HMRC to make sure it’s still correct. Errors in tax codes are surprisingly common and can lead to underpaying or overpaying throughout the year.

2. Use your ISA allowance from day one

Every adult in the UK gets a fresh £20,000 ISA allowance on 6th April. An ISA (Individual Savings Account) lets you save or invest without paying tax on interest or growth. Junior ISAs have an allowance of £9,000 per child.

Crucially, this is the last tax year where anyone under 65 can put the full £20,000 into a Cash ISA. From April 2027, that limit drops to £12,000 for under-65s. If you rely on cash savings, this year is an opportunity worth taking seriously. The earlier in the year you invest your ISA allowance, the longer your money has to grow tax-free, don’t leave it to March 2027.

3. Dividend income? Rates have risen: Review your structure

If you’re a company director taking dividends, or an investor holding shares outside an ISA, there’s a meaningful change this year. Dividend tax rates have increased by 2 percentage points for basic and higher-rate taxpayers.

From 6th April 2026, basic-rate taxpayers pay 10.75% on dividends above the allowance (up from 8.75%), and higher-rate taxpayers pay 35.75% (up from 33.75%). The dividend allowance, the amount you can receive tax-free, remains at just £500, which hasn’t gone far since it was slashed from £2,000 in 2023. If you run a limited company, speak to your accountant about the most tax-efficient way to draw income this year.

4. Maximise pension contributions: The allowance is generous

The annual pension allowance remains at £60,000 for 2026/27 (or 100% of your earnings if lower). Pension contributions are one of the most effective legal ways to reduce your tax bill, contributions attract tax relief at your marginal rate, meaning a higher-rate taxpayer effectively gets 40p of tax relief on every £1 they contribute.

Didn’t use your full allowance in the last three tax years? You may be able to “carry forward” unused amounts and contribute more this year. Salary sacrifice arrangements (where contributions come out of your pay before tax) remain attractive, though from April 2029 there will be a cap on National Insurance savings through this route, so don’t delay if you’re considering increasing contributions.

5. Small business owners: payroll, NI, and the minimum wage

If you employ staff, several changes took effect from 6 April 2026. The National Living Wage rose to £12.71 per hour (up from £12.21) for workers aged 21 and over, update your payroll immediately if you haven’t already. Statutory Sick Pay (SSP) now applies from day one of illness (the previous three-day waiting period is gone), and more lower-paid workers qualify.

Employer National Insurance contributions remain at 15% on earnings above £5,000, a threshold that is frozen until 2031. If you haven’t already claimed the Employment Allowance (which reduces your NI bill by up to £10,500), check your eligibility. It doesn’t always carry over automatically, and it’s one of the most overlooked reliefs available to small employers.

6. Self-employed and landlords: Making Tax Digital is now live

This is a significant change. If you are self-employed or a landlord with gross income over £50,000, you are now legally required to use Making Tax Digital (MTD) for Income Tax. This means keeping digital records and submitting quarterly summaries of income and expenses to HMRC using approved software, in addition to your annual return.

The threshold drops to £30,000 from April 2027, and to £20,000 from April 2028, so even if you’re not affected yet, now is the time to get the right software in place and build good habits. Your accountant can help you choose compatible software and set up a process that isn’t as painful as it might sound.

7. Capital gains and inheritance tax: use your allowances

The Capital Gains Tax (CGT) annual exemption, the amount of profit you can make from selling assets (such as shares or a second property) before tax applies, remains at £3,000 for individuals. That’s a long way from the £12,300 it was just a few years ago, so planning disposals carefully has never been more important.

If you’re planning to sell a business or qualifying assets, note that Business Asset Disposal Relief (BADR) now carries a CGT rate of 18% (up from 14% last year and 10% in 2024). Inheritance tax nil-rate bands are also frozen at £325,000 until 2031. These thresholds won’t rise with inflation, so proactive gifting and estate planning is worth discussing sooner rather than later.

Ready to make the most of the new tax year?

Whether you’re an individual wanting to protect more of your income, or a business owner navigating payroll changes and new digital filing requirements, the start of the tax year is the best time to take stock. Get in touch with our team and we’ll help you make sure your tax affairs are in the best possible shape for 2026/27. Read more on how to maximise tax efficiency through your limited company here.