UK Tax Guide 2026/27
Income Tax, Making Tax Digital, investment income, capital gains, inheritance tax and international taxation for the tax year 6 April 2026 to 5 April 2027.
The 2026/27 tax year combines frozen personal tax thresholds with several important structural changes. Making Tax Digital for Income Tax is now mandatory for the first affected sole traders and landlords, dividend tax rates have increased, and internationally mobile taxpayers are now operating under the UK's residence-based Foreign Income and Gains regime.
With further increases to the taxation of property and savings income scheduled from April 2027, tax planning should increasingly consider not only the amount of income received but also its source, timing and the taxpayer's residence position.
ProACT Partnership Tax Team
UK Tax 2026/27: Key Changes
The 2026/27 UK tax year runs from 6 April 2026 to 5 April 2027.
- Personal Allowance remains £12,570.
- Higher-rate threshold remains £50,270 outside Scotland.
- Dividend ordinary and upper rates rise by 2 percentage points.
- Making Tax Digital for Income Tax begins for qualifying income above £50,000.
- The 4-year Foreign Income and Gains regime continues for qualifying new UK residents.
- CGT Annual Exempt Amount remains £3,000 for most individuals.
The continued freeze in Income Tax thresholds is particularly important. The Personal Allowance and basic-rate limit are now set to remain at current levels through the 2030/31 tax year.
Personal Income Tax
The standard Personal Allowance remains £12,570.
The Personal Allowance is reduced by £1 for every £2 of adjusted net income above £100,000 and is fully lost when adjusted net income reaches £125,140.
England, Wales and Northern Ireland
| Income | Rate | Band |
|---|---|---|
| Up to £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
The Dividend Allowance remains £500 in 2026/27.
From 6 April 2026, the ordinary and upper dividend rates increased by two percentage points. The additional dividend rate remains unchanged.
| Income Tax Band | 2026/27 Dividend Rate |
|---|---|
| Basic Rate | 10.75% |
| Higher Rate | 35.75% |
| Additional Rate | 39.35% |
Foreign Income & Gains: The New 4-Year Regime
The old remittance-basis regime for non-UK domiciled individuals was abolished from 6 April 2025.
UK taxation of internationally mobile individuals is now primarily based on tax residence rather than domicile.
4-Year Foreign Income & Gains Regime
A qualifying individual can claim relief from UK tax on eligible foreign income and gains during their first four years of UK tax residence, provided they were non-UK resident for at least 10 consecutive tax years immediately before the relevant period of UK residence.
Eligible foreign income can include, subject to the detailed rules:
- foreign dividends;
- foreign bank interest;
- income from overseas property;
- certain foreign trading income; and
- eligible foreign capital gains.
Making Tax Digital for Income Tax
From 6 April 2026, Making Tax Digital for Income Tax became mandatory for the first group of sole traders and landlords.
| Start Date | Qualifying Income |
|---|---|
| 6 April 2026 | More than £50,000 |
| 6 April 2027 | More than £30,000 |
Qualifying income is generally the total gross income before expenses from self-employment and property.
Employment income, dividends, pensions and an individual's share of partnership profits do not count towards the MTD qualifying income threshold.
What MTD Requires
- Digital records using compatible software.
- Quarterly updates to HMRC.
- An annual tax return submitted through compatible software.
- Normal Self Assessment tax payment deadlines continue to apply.
2026/27 Quarterly Deadlines
| Update | Deadline |
|---|---|
| Quarter 1 | 7 August 2026 |
| Quarter 2 | 7 November 2026 |
| Quarter 3 | 7 February 2027 |
| Quarter 4 | 7 May 2027 |
Quarterly updates are cumulative summaries produced from the taxpayer's digital records. They are not separate tax returns.
Non-Resident Landlords
MTD can also apply to landlords who live outside the UK.
For a non-UK resident, qualifying income can include UK property income and relevant self-employment income reported through UK Self Assessment.
Foreign property or self-employment income that is not reportable on the individual's UK Self Assessment return generally does not count towards the MTD qualifying-income calculation.
National Insurance Contributions
Employees
| Class | 2026/27 Rate | Band |
|---|---|---|
| Employee Class 1 | 8% | £12,570 – £50,270 |
| Employee Class 1 | 2% | Above £50,270 |
| Employer Class 1 | 15% | Generally above £5,000 |
Self-Employed
| Contribution | 2026/27 Rate |
|---|---|
| Class 4: profits £12,570 – £50,270 | 6% |
| Class 4: profits above £50,270 | 2% |
| Voluntary Class 2 where applicable | £3.65 per week |
Capital Gains Tax
The Capital Gains Tax Annual Exempt Amount for most individuals is £3,000 in 2026/27.
| Taxpayer / Gain | 2026/27 Rate |
|---|---|
| Individual – gains falling within unused basic-rate band | 18% |
| Individual – gains above basic-rate band | 24% |
| Qualifying Business Asset Disposal Relief gains | 18% |
| Most trustees | 24% |
Non-UK residents can also have UK CGT obligations on disposals of UK land and property. Reporting deadlines can apply even where little or no tax is ultimately payable.
Inheritance Tax
The standard Inheritance Tax rate remains 40% on the taxable part of an estate after allowances and reliefs.
| Allowance / Threshold | 2026/27 |
|---|---|
| Nil-Rate Band | £325,000 |
| Residence Nil-Rate Band | Up to £175,000 |
| RNRB taper starts | Estate value above £2 million |
| Standard death rate | 40% |
Where the relevant conditions are satisfied, a married couple or civil partners may ultimately have access to combined nil-rate and residence nil-rate bands of up to £1 million.
Scottish Income Tax
Scottish taxpayers have separate rates for employment, pension and most other non-savings, non-dividend income.
| Taxable Income | 2026/27 Rate |
|---|---|
| Up to £12,570 | 0% |
| £12,571 – £16,537 | 19% |
| £16,538 – £29,526 | 20% |
| £29,527 – £43,662 | 21% |
| £43,663 – £75,000 | 42% |
| £75,001 – £125,140 | 45% |
| Over £125,140 | 48% |
UK-wide rules continue to apply to savings and dividend income rather than the Scottish earned-income rates.
Important Changes From 6 April 2027
The end of the 2026/27 tax year brings another significant set of changes, particularly for landlords and investors.
Property Income Tax Rates
From the 2027/28 tax year, separate Income Tax rates apply to property income in England, Wales and Northern Ireland:
- 22% property basic rate;
- 42% property higher rate; and
- 47% property additional rate.
Savings Income
From 6 April 2027, savings-income rates increase to:
- 22% basic rate;
- 42% higher rate; and
- 47% additional rate.
The Personal Savings Allowance remains separate. Under the current rules this provides up to £1,000 for basic-rate taxpayers and £500 for higher-rate taxpayers.
MTD Threshold Falls
From 6 April 2027, the Making Tax Digital qualifying-income threshold falls from more than £50,000 to more than £30,000.
UK Tax Calendar 2026–2028
| Date | Obligation |
|---|---|
| 6 April 2026 | 2026/27 tax year begins; first mandatory MTD cohort enters the regime. |
| 31 July 2026 | Second Self Assessment payment on account for 2025/26. |
| 7 August 2026 | First MTD quarterly update deadline for 2026/27. |
| 7 November 2026 | Second MTD quarterly update deadline. |
| 31 January 2027 | Online Self Assessment deadline and balancing-payment deadline for 2025/26; first payment on account for 2026/27 where applicable. |
| 7 February 2027 | Third MTD quarterly update deadline. |
| 5 April 2027 | End of the 2026/27 tax year. |
| 6 April 2027 | £30,000 MTD threshold begins and new property and savings income tax rates take effect. |
| 7 May 2027 | Fourth MTD quarterly update deadline for 2026/27. |
| 31 January 2028 | Deadline for the 2026/27 tax return and balancing payment, including returns submitted through MTD-compatible software. |
UK Tax 2026/27 FAQ
Potentially, yes. Non-UK residence does not automatically exclude a landlord from MTD. UK property income can count towards the qualifying-income threshold. For 2026/27 the threshold is more than £50,000 of qualifying gross income before expenses.
No. The test is generally based on qualifying gross income before expenses rather than taxable profit.
The qualifying gross income from the relevant property and self-employment businesses is generally combined when determining whether the MTD threshold has been exceeded.
Fiscal drag occurs when tax thresholds remain fixed while nominal incomes rise. More income is then exposed to tax, and taxpayers can move into higher tax bands even where their real purchasing power has not increased substantially. The principal UK Income Tax thresholds are currently frozen through 2030/31.
Yes. Scottish taxpayers have separate rates for wages, pensions and most other non-savings, non-dividend income, ranging from 19% to 48% in 2026/27. Savings and dividend income continues to use UK-wide rates.
From 6 April 2025, the remittance-basis regime was replaced by a residence-based system. Qualifying new UK residents can potentially claim the 4-year Foreign Income and Gains regime if they were non-UK resident for at least the previous 10 consecutive tax years.
Not under the standard individual CGT rates for 2026/27. The main rates for ordinary individual gains are now 18% and 24%, depending on the individual's taxable income and the amount of the gain.
Yes. From 6 April 2027, separate property-income rates of 22%, 42% and 47% apply in England, Wales and Northern Ireland under the new property income tax regime.
Professional Advice
UK tax becomes particularly complex where an individual has overseas income, spends time in several countries, owns UK property while living abroad, returns to the UK after a period overseas or operates businesses across jurisdictions.
Residence status, Double Tax Treaties, the Foreign Income and Gains regime, MTD obligations and overseas tax credits should therefore be considered together rather than independently.
This guide is intended as general information and is based on legislation and HMRC guidance available at the date of publication. Individual circumstances can materially alter the tax treatment. Professional advice should be obtained before acting on the information contained in this guide.
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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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