Income Tax Rates and Allowances
The Personal Allowance, Capital Gains Tax Annual Exempt Amount and Dividend Allowance remain unchanged for the 2026/27 tax year. The Income Tax bands also remain frozen.
However, there are changes to the taxation of dividends and, from the 2027/28 tax year, new standalone Property Tax Rates and Savings Tax Rates will apply.
Individuals receiving rental income should be aware that, from 2027/28, property income will be taxed using the new Property Tax Rates rather than the standard Income Tax rates.
The current allowances and tax rates are shown below.
| Allowance | 2025/26 | 2026/27 |
|---|---|---|
| Personal Allowance | £12,570 | £12,570 |
| Capital Gains Tax Annual Exempt Amount | £3,000 | £3,000 |
| Dividend Allowance | £500 | £500 |
| Basic Rate Threshold | £37,700 | £37,700 |
| Higher Rate Threshold* | £125,140 | £125,140 |
*Income above £100,000 may result in the Personal Allowance being tapered
Tax Rates – 2025/26
| Rate | Basic Rate | Higher Rate | Additional Rate |
|---|---|---|---|
| Income Tax | 20% | 40% | 45% |
| Dividend Tax | 8.75% | 33.75% | 39.35% |
Tax Rates – 2026/27
| Rate | Basic Rate | Higher Rate | Additional Rate |
|---|---|---|---|
| Income Tax | 20% | 40% | 45% |
| Dividend Tax | 10.75% | 35.75% | 39.35% |
Tax Rates – 2027/28
| Rate | Basic Rate | Higher Rate | Additional Rate |
|---|---|---|---|
| Income Tax | 20% | 40% | 45% |
| Savings Tax | 22% | 42% | 47% |
| Property Tax | 22% | 42% | 47% |
| Dividend Tax | 10.75% | 35.75% | 39.35% |
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