UK Tax Guide 2025/26
Comprehensive Rates, Thresholds & Preparation for Digital Reporting
— ProACT Partnership Tax Team
Personal Income Tax (England, Wales & NI)
The Personal Allowance remains at £12,570. Note that for high earners, the allowance is tapered at a rate of £1 for every £2 earned above £100,000.
| Income Band (£) | Tax Rate | Category |
|---|---|---|
| 0 - 12,570 | 0% | Personal Allowance |
| 12,571 - 50,270 | 20% | Basic Rate |
| 50,271 - 125,140 | 40% | Higher Rate |
| Over 125,140 | 45% | Additional Rate |
Dividend Tax 2025/26
The Dividend Allowance is £500. Rates for this year remain lower than the upcoming 2026/27 increases, making this an ideal year for dividend distributions.
| Band | 2025/26 Rate | Allowance |
|---|---|---|
| Basic Rate | 8.75% | £500 |
| Higher Rate | 33.75% | £500 |
| Additional Rate | 39.35% | £500 |
The Road to Making Tax Digital (MTD)
Current Status: For the 2025/26 tax year, you should continue using the traditional Self Assessment Online portal. However, this is the year to prepare your digital record-keeping.
- Preparation: If your income is over £50,000, you must have compatible software ready by 6 April 2026.
- Action: Review your spreadsheet habits now to ensure they can bridge to HMRC-approved software next year.
National Insurance (NICs)
Significant changes apply to Employer contributions this year following the 2024 Budget updates.
| Class | Rate | Threshold |
|---|---|---|
| Class 1 (Employee) | 8% | £12,570 to £50,270 |
| Class 1 (Employer) | 15% | Above £5,000 |
| Class 4 (Self-Employed) | 6% | £12,570 to £50,270 |
Capital Gains & Inheritance Tax
The Capital Gains Tax (CGT) lower rate is 18% and the higher rate is 24% across most assets, including residential property.
| Tax Type | Rate / Allowance | Notes |
|---|---|---|
| Capital Gains (Basic) | 18% | Annual Allowance: £3,000 |
| Capital Gains (Higher) | 24% | Annual Allowance: £3,000 |
| Inheritance Tax (IHT) | 40% | Nil Rate Band: £325,000 |
| Residence Nil Rate | £175,000 | Total potential IHT-free: £500k |
Tax Calendar 2025-2026
| Date | Obligation |
|---|---|
| 6 April 2025 | Start of the 2025/26 Tax Year |
| 31 July 2025 | Second Payment on Account for 2024/25 |
| 31 January 2026 | Final Deadline for 2024/25 Online Returns & Payment |
| 5 April 2026 | End of 2025/26 Tax Year |
2025/26 Specialist FAQs
Yes. Scotland uses a 6-band system ranging from 19% to 48%. While the personal allowance is the same, the higher rate (42%) kicks in much earlier in Scotland (approx. £43,663) than in the rest of the UK.
It remains at £7,500 per year. This allows you to earn tax-free income from letting out a furnished room in your main home.
The 30-day rule still applies. You cannot sell shares and buy them back within 30 days to "reset" your CGT allowance; however, you can still sell and your spouse can buy (Bed & Spouse).
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Tax rates & allowances for 2023-24
Income tax
Personal allowance: £12,570 - 0%
Basic rate band: £12,571 - 50,270 - 20%
Higher rate bane: £50,271 - 125,140 - 40%
Additional rate: over £125,140 - 45%
National insurance
Employees
National insurance was reduced from 12% to 10% from 6 January 2024.
6 April 2023 - 5 January 2024 - 12%
6 January 2024 - 5 April 2024 - 10%
Employers
2023-24 - 13.8%
Self-Employed
Self employed people in the UK pay 2 classes of national insurance depending on their profit.
CLASS 2
Self employed people in the UK pay class 2 contributions of £3.45 per work when their profit exceeds £12,570
Small Profits Threshold (per year) - £6,725
Lower Profits Threshold (per year) - £12,570 - Rate (per week) - £3.45
CLASS 4
Self employed people in the UK also pay Class 4 contributions of 9% on profit between £12,570 & £50,270 & 2% on profits above £50,270.
Lower Profits Limit - £12,570 - Rate: 9%
Upper Profits Limit - £50,270 - Rate: 2%
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