Key takeaways
- Dividends now pay 10.75% at the ordinary rate and 35.75% at the upper rate for 2026 to 2027, both up by 2 percentage points. The additional rate held at 39.35%.
- The Personal Allowance is £12,570 and the basic rate limit £37,700, both frozen until 5 April 2031. Above £100,000 the allowance falls by £1 for every £2 of income.
- Scotland charges six rates on earnings, from 19% to 48%, but Scottish taxpayers pay the same UK-wide rates on dividends and savings interest.
- Capital gains tax is still 18% and 24% with a £3,000 annual exempt amount. Business asset disposal relief rose from 14% to 18% on 6 April 2026.
- The ISA allowance is £20,000 and the pension annual allowance £60,000. The inheritance tax nil-rate band is £325,000, unchanged since 6 April 2009.
Every figure here is the 2026 to 2027 tax year, checked on 8 August 2026
You want to know what the ISA allowance is this year. You want the rate your dividends pay now, and whether the capital gains exemption moved again. Here's the whole set, in tables, with the gov.uk page behind every row.
The short version. The ISA allowance is £20,000 and the pension annual allowance is £60,000. The capital gains annual exempt amount is £3,000 and the Personal Allowance is £12,570. The figure most people have wrong is dividends. The ordinary rate went from 8.75% to 10.75% on 6 April 2026, and the upper rate from 33.75% to 35.75%.
Every number below was read off a gov.uk or HMRC page on 8 August 2026. All of it applies to the tax year running from 6 April 2026 to 5 April 2027. A tax reference that doesn't say when it was checked is worth very little. So that date sits at the top of this page, and in the source note under every figure.
Income tax in England, Wales and Northern Ireland: four bands and one taper
HMRC publishes one table for England, Northern Ireland and Wales. The amounts are income after allowances, not gross pay.
| Band | Rate | Income after allowances, 2026 to 2027 |
|---|---|---|
| Personal Allowance | 0% | Up to £12,570 |
| Starting rate for savings | 0% | Up to £5,000 |
| Basic rate | 20% | Up to £37,700 |
| Higher rate | 40% | £37,701 to £125,140 |
| Additional rate | 45% | Over £125,141 |
One line is missing. Add the Personal Allowance to the basic rate limit and you get the higher rate threshold, which HMRC puts at £50,270. That's the number your payslip actually crosses.
The taper is what catches people out. Above £100,000, in HMRC's words, the Personal Allowance "goes down by £1 for every £2 of income above the £100,000 limit". So an extra £1 of salary is taxed at 40%. It also drags a slice of previously untaxed income up into the 40% band. Combine the two and the effective rate between £100,000 and £125,140 is 60%. That's higher than the 45% additional rate sitting above it. The allowance reaches zero at £125,140, which is where the additional rate starts.
Scotland has six rates on earnings and the UK rates on everything else
Scottish income tax applies to "your wages, pension and most other taxable income". These bands are gross income, assuming a full Personal Allowance.
| Band | Taxable income, 2026 to 2027 | Scottish rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Starter rate | £12,571 to £16,537 | 19% |
| Basic rate | £16,538 to £29,526 | 20% |
| Intermediate rate | £29,527 to £43,662 | 21% |
| Higher rate | £43,663 to £75,000 | 42% |
| Advanced rate | £75,001 to £125,140 | 45% |
| Top rate | over £125,140 | 48% |
Two of those have no equivalent elsewhere. The intermediate rate at 21% and the advanced rate at 45% exist only in Scotland. The Scottish higher rate also starts at £43,663 rather than £50,270. A Scottish taxpayer therefore hits 42% about £6,600 of income before an English one hits 40%.
What Scotland does not set is investment tax. Gov.uk is blunt about it: "You'll pay the same tax as the rest of the UK on dividends and savings interest". A Scottish higher-rate taxpayer pays 42% on salary and 35.75% on dividends. Those two rates are decided by two different parliaments.
Dividends, savings interest, and the allowances that shrink as you earn more
| Allowance or rate | 2026 to 2027 |
|---|---|
| Dividend allowance | £500 |
| Dividend ordinary rate | 10.75% |
| Dividend upper rate | 35.75% |
| Dividend additional rate | 39.35% |
| Personal savings allowance, basic rate | £1,000 |
| Personal savings allowance, higher rate | £500 |
| Personal savings allowance, additional rate | £0 |
| Starting rate for savings | Up to £5,000 at 0% |
| Savings basic, higher and additional rates | 20%, 40%, 45% |
One row gets missed constantly. The starting rate for savings is up to £5,000 of interest taxed at 0%, and it withers fast. Gov.uk puts the cut-off plainly: "You're not eligible for the starting rate for savings if your other income is £17,570 or more". Below that, every £1 of other income above the Personal Allowance cuts the starting rate by £1.
The dividend allowance has sat at £500 since 2024 to 2025. It was £1,000 in 2023 to 2024. So the amount you can take before any dividend tax at all has halved in three years, while the rate on the rest has risen. For the mechanics of how these allowances stack, we work through a full bill in UK dividend and savings tax.
Capital gains: £3,000 exempt, then 18% or 24%
| Capital gains item | 2026 to 2027 |
|---|---|
| Annual exempt amount, individuals | £3,000 |
| Annual exempt amount, most trustees | £1,500 |
| Basic rate taxpayer | 18% |
| Higher or additional rate taxpayer | 24% |
| Trustees and personal representatives | 24% |
| Business asset disposal relief | 18% |
| Investors' relief | 18% |
| Residential property, basic rate taxpayer | 18% |
| Residential property, higher rate taxpayer | 24% |
| Stamp duty reserve tax on a share purchase | 0.5% |
Your salary alone doesn't decide the rate. HMRC's method is to add the taxed part of the gain to your taxable income. Whatever falls inside the basic rate band is charged at 18%, and anything above it at 24%. A basic rate taxpayer with a large gain pays both rates on one disposal.
The exempt amount has shrunk hard. It was £12,300 in 2022 to 2023 and £6,000 in 2023 to 2024 before settling at £3,000. Gains that produced no paperwork four years ago now produce a tax bill. Working out the gain means knowing which shares you sold, and that's settled by the same-day, 30-day and Section 104 matching rules, not by the order you bought them.
The wrappers: £20,000 into an ISA, £60,000 into a pension
| Wrapper limit | 2026 to 2027 |
|---|---|
| ISA subscription limit | £20,000 |
| Junior ISA limit | £9,000 |
| Lifetime ISA payment limit | £4,000 |
| Lifetime ISA government bonus | 25%, up to £1,000 |
| Pension annual allowance | £60,000 |
| Money purchase annual allowance | £10,000 |
| Minimum tapered annual allowance | £10,000 |
| Threshold income for the taper | £200,000 |
| Adjusted income for the taper | £260,000 |
| Lump sum allowance | £268,275 |
| Lump sum and death benefit allowance | £1,073,100 |
Two of those tapers work differently. The pension annual allowance falls only if both tests are met: threshold income over £200,000 and adjusted income over £260,000. Miss either and you keep the full £60,000. The money purchase annual allowance is not a taper at all. It drops to £10,000 the moment you flexibly access a pot, and it doesn't come back.
Relief on contributions runs up to "100% of your annual earnings". With no earnings at all it's £3,600 gross, which is £2,880 paid in and grossed up at 20%. How that relief reaches you depends on your scheme, and relief at source and net pay give higher-rate taxpayers different work to do. On the ISA side, the rules that bite are rarely the limits. They're the flexibility, transfer and death provisions. Knowing which holdings already sit inside a wrapper and which don't is the input all of this needs, and it's what LedgerTouch tracks.
Inheritance tax: two frozen thresholds and a 40% rate
| Inheritance tax item | 2026 to 2027 |
|---|---|
| Nil-rate band | £325,000 |
| Residence nil-rate band | £175,000 |
| Estate value where the residence band starts tapering | £2 million |
| Standard rate | 40% |
| Reduced rate, 10% or more of the net estate to charity | 36% |
| Chargeable lifetime transfers | 20% |
| Annual gift exemption | £3,000 |
| Small gift allowance, per person per year | £250 |
| Wedding gift to a child | £5,000 |
| Agricultural and business property relief at 100% | £1 million |
Gifts have their own scale. Anything given in the seven years before death is taxed on a sliding rate, and the slide only begins after three years.
| Years between gift and death | Rate of tax on the gift |
|---|---|
| 3 to 4 years | 32% |
| 4 to 5 years | 24% |
| 5 to 6 years | 16% |
| 6 to 7 years | 8% |
| 7 or more | 0% |
There's a condition people forget. Taper relief "only applies if the total value of gifts made in the 7 years before you die is over the £325,000 tax-free threshold". On a modest gift it does nothing at all. The residence nil-rate band has its own trap. It lifts a threshold to £500,000 only where the home passes to children or grandchildren, and only if the estate is worth less than £2 million. Above that it tapers away, which produces a marginal rate well above 40% on a narrow band of estate value.
What actually changed on 6 April 2026
Five things moved this year. Only one of them made headlines.
- Dividend rates. The ordinary rate went from 8.75% to 10.75%, and the upper rate from 33.75% to 35.75%. HMRC estimates this reaches 3.9 million individuals by 2029 to 2030, or 9% of taxpayers.
- Business asset disposal relief and investors' relief. Both rose from 14% to 18%. They were 10% as recently as 2024 to 2025.
- Carried interest. From 6 April 2026 it sits wholly inside income tax, so no capital gains rate applies to it this year. It was 32% in 2025 to 2026.
- Agricultural and business property relief. A £1 million allowance for relief at 100% now applies. The Budget 2025 table records none for 2025 to 2026.
- Scottish bands and the small allowances. Scotland's starter rate band widened to £3,967 of income after allowances, from £2,827. The Blind Person's Allowance rose from £3,130 to £3,250, and the Married Couple's Allowance maximum from £11,270 to £11,700.
The chart above puts the higher-rate marginal rate on each kind of income side by side. Three of the five bars sit at 40%. That's the last year it holds: from 6 April 2027, savings and property income split off at 42%.
What's frozen, and the exact date each freeze ends
Freezes do the quiet work in UK tax. A threshold that stands still while wages rise is a tax rise nobody has to vote for twice.
- Personal Allowance and basic rate limit. Held at £12,570 and £37,700 until 5 April 2031, with the higher rate threshold pinned at £50,270. HMRC's own note says this brings 700,000 individuals into income tax by 2030 to 2031, against letting the thresholds rise with inflation.
- ISA limits. £20,000 overall, £4,000 for a Lifetime ISA and £9,000 for a Junior ISA, all frozen until 5 April 2031.
- Inheritance tax. The nil-rate band has been £325,000 since 6 April 2009, and HMRC's table runs it to 5 April 2031. The residence nil-rate band has been £175,000 since 6 April 2020.
Three more changes are already announced for the year after this one. From 6 April 2027 the savings basic, higher and additional rates rise to 22%, 42% and 47%, with property income taxed at the same three rates. The annual ISA cash limit drops to £12,000 inside the same £20,000 overall limit. Savers over the age of 65 keep the full £20,000 in cash. And the order of the calculation changes, so allowances apply to other income before they reach property, savings and dividends.
Where a table like this misleads, and the objection worth taking seriously
The honest criticism of a reference page is simple. Headline rates are not marginal rates, and readers treat them as though they were. Nothing in the tables above tells you what your next £1,000 of income costs.
Two examples come out of these same figures. Cross £50,270 and your personal savings allowance halves from £1,000 to £500. The pound that tipped you over also created tax on £500 of interest that was free the day before. Cross £100,000 and the effective rate hits 60%, which is higher than anything printed in the table. Both are consequences of the numbers above, and neither is visible in them.
There's a second limitation, and it sits in the source rather than the reader. HMRC's inheritance tax page carries the nil-rate band to 5 April 2031 and the residence nil-rate band only to 5 April 2030. That's a one-year gap between two rows of the same document. It may be nothing more than two tables maintained at different times. A reference asset that quietly smoothed over it would be doing the reader a disservice, so it's here as it appears on the page.
What this page does not cover: National Insurance, stamp duty land tax, corporation tax, VAT, the rules for non-residents, and most of what happens inside trusts. The devolved picture is incomplete too. The Senedd sets Welsh rates of income tax, and for 2026 to 2027 they match the England and Northern Ireland table. That's why HMRC publishes one table for all three. The match is a choice rather than a permanent feature, and Budget 2025 opened the door to devolved property income rates as well.
What would change these numbers
A Budget, first and most obviously. Budget 2025 raised this year's dividend rates and legislated the 2027 savings and property rates in a single afternoon. The tables above have a shelf life measured in months rather than years.
After that, the freeze itself. The legislative default is that the Personal Allowance and basic rate limit rise with the Consumer Price Index once the freeze lapses. That default has now been suspended three times. Finance Act 2021 fixed the thresholds to 5 April 2026, Finance Act 2023 extended that to 5 April 2028, and Budget 2025 pushed it to 5 April 2031. A fourth extension would be the least surprising thing in this article.
Scotland runs its own timetable. The six Scottish rates are set annually by the Scottish Parliament, and nothing in a UK Budget binds them. So the gap between the Scottish higher rate at £43,663 and the UK one at £50,270 can widen or close on its own. Neither government has to consult the other first.
If you're reading this some way past 8 August 2026, two figures are worth re-checking before the rest. One is the dividend rates. They moved this year, and the political logic that moved them hasn't gone anywhere. The other is the ISA cash limit, because the legislation implementing it hasn't been laid yet.