What’s changed, what’s stayed the same, and what’s next? Some allowances remain frozen, others have been adjusted, and there’s additional change on the horizon. Here’s a concise overview to help you get to grips with the tax and planning changes that took effect on 6 April 2026.

What’s changed for 2026/27?

Dividend Tax Rates Increase

From 6 April 2026, dividend tax rates have risen by 2% for basic and higher‑rate taxpayers:

• Basic rate: 10.75% (up from 8.75%)
• Higher rate: 35.75% (up from 33.75%)
• Additional rate: unchanged at 39.35%

Business relief cap introduced

A major change to inheritance tax (IHT) planning was the new £2.5m cap now on the combined value of business and agricultural property eligible for 100% relief. Value above this cap receives only 50% relief.

All qualifying unquoted shares traded on recognised exchanges (e.g. AIM shares) will only qualify for 50% relief, but won’t count toward the £2.5m cap.

Venture Capital Trust (VCT) income tax relief reduced

The VCT income tax relief rate for investors has dropped from 30% to 20%.

CGT rate for BADR and IR increased

The Capital Gains Tax (CGT) rate for Business Asset Disposal Relief (BADR), and Investors Relief (IR), increased from 14% to 18% for qualifying disposals made after 6 April 2026.
This completes the phased increase announced in the Autumn Budget 2024.

What’s not changed for 2026/27?

ISA and Junior ISA Subscription Limits

Subscription limits remain:

• ISA limit: £20,000
• JISA limit: £9,000

The changes to cash ISA limits for under‑65s begin in 2027/2028.

Income Tax personal allowance and thresholds frozen

The £12,570 personal allowance remains frozen until 5 April 2031.

Capital Gains Tax (CGT) annual exemption

The annual CGT exemption remains at £3,000 for 2026/27.

Inheritance tax nil‑rate bands

Bands continue to be frozen until 5 April 2031:

• £325,000 standard nil‑rate band
• £175,000 residence nil‑rate band (with taper starting at £2m).

Pensions

Remaining the same for 2026/27:

• Standard Annual Allowance: £60,000
• Money Purchase Annual Allowance (MPAA): £10,000
• Tapered Annual Allowance: unchanged
• Lump Sum Allowance: £268,275
• Lump Sum and Death Benefit Allowance: £1,073,100

Dividend allowance and CGT environment tighten

Although unchanged for 2026/2027, the combination of:

• low dividend allowance (£500)
• low capital gains tax exemption (£3,000)
• the 2026 dividend tax increase

makes wrapper strategy (use of ISAs, pensions, bonds) increasingly important this year.

Looking ahead: future changes to prepare for

Pension death benefits to become subject to Inheritance Tax (from 6 April 2027)

The regulations have not been laid yet and, as such, these details may change, but as it stands, unused pension funds will fall within IHT scope, potentially triggering double taxation (IHT and income tax for beneficiaries).

Cash ISA contribution limits changing (from 2027)

From 6 April 2027, the cash ISA limit for under‑65s falls to £12,000, making broader ISA planning in 2026/27 important.

Taxation of bonds changing (from 2027 but impacts 2026/27 planning)

Though not effective until 6 April 2027, planning may need to happen in 2026/27:

• 2% rise to non‑dividend income tax inside UK life policyholder funds
• 2% rise in tax on chargeable event gains made on UK and offshore/international investment bonds
• UK bond tax credit increases from 20% to 22% to offset this

Read more

The ultimate guide to tax year end and tax year start planning

Published pre-tax year end, this guide takes you through everything to consider at the end of tax year 2025/2026 and the start of tax year 2026/27.  

Download your copy now

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This article is intended for regulated financial advisers and investment professionals only.

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