6 April 2026 Personal Tax Changes: What You Need to Know Now
- Apr 14
- 3 min read
Key Personal Tax Changes Starting 6 April 2026
The new 2026/27 tax year brings a wide range of personal and business tax changes that will affect employees, investors, company directors, landlords, farmers, families and pensioners.
From higher dividend taxes and revised inheritance tax reliefs to the start of Making Tax Digital, these changes will impact your take-home pay, savings, investments, reporting obligations and long-term planning.
Below is your clear, jargon‑free summary of the key changes coming into force from 6 April 2026 and what you should be doing now.
Dividend Tax Rates Increase
Dividend tax rises by 2% for basic and higher rate taxpayers:
Basic rate: 10.75%
Higher rate: 35.75%
Additional rate: remains unchanged at 39.35%
These increases will affect shareholders, investors and company directors who extract income via dividends.
Directors’ Loans (Section 455)
The tax charge on loans made by close companies to directors or shareholders increases by 2%, from 33.75% to 35.75%, for loans made on or after 6 April 2026.
Owner‑managed businesses should review director loan account balances and repayment strategies to avoid unnecessary tax exposure.
Business Asset Disposal Relief (BADR)
Business Asset Disposal Relief (formerly Entrepreneurs’ Relief) increases to 18% from 6 April 2026.
Claims must be submitted by 31 January following the first anniversary of the disposal. Timing and eligibility remain critical.
Frozen Tax Thresholds Extended
Income tax thresholds remain frozen until 2031, continuing the impact of fiscal drag:
Personal Allowance: £12,570
Higher rate 40%: £50,271+
Additional rate 45%: £125,140+
Scotland has adjusted its starter and basic rate bands, but higher rate thresholds remain frozen.
Inheritance Tax: Major Changes to BPR & APR
Significant reforms are introduced to Business Property Relief (BPR) and Agricultural Property Relief (APR) from 6 April 2026:
100% relief capped at £2.5 million per person
£5 million combined limit for married couples and civil partners
Value above £2.5 million qualifies for 50% relief (effective IHT rate of 20%)
IHT can be paid in instalments over 10 years
These rules will affect farmers, family businesses and private company owners.
Unmarried couples do not benefit from the combined £5 million allowance, making estate planning especially important.
Making Tax Digital for Income Tax (MTD)
Mandatory quarterly digital reporting begins for:
Sole traders
Landlords
Self‑employed individuals
This applies where annual gross income exceeds £50,000.
Registration is already open
First quarterly reports are due 7 August 2026
ISA & Savings Changes
Personal Savings Allowance remain unchanged:
£1,000 (basic)
£500 (higher)
£0 (additional)
From April 2027, the Cash ISA limit reduces to £12,000 and over-65s retain the full £20,000 ISA allowance. Individuals will still have the £20,000 ISA allowance, however, £8,000 of the £20,000 must be invested into a Stocks and Shares ISA.
Now is the time to maximise tax-free saving before limits reduce.
State Pension Increase
The new State Pension increases by 4.8%, rising to £241.30 per week.
The Chancellor has confirmed that pensioners whose only income is the State Pension will not pay income tax.
Child Benefit Increase
Eldest/only child: £27.05 per week
Each additional child: £17.90 per week
The two‑child limit for Universal Credit is being removed, extending support to more families.
Umbrella Companies & PAYE
New joint and several liability rules mean recruitment agencies may be held responsible for unpaid PAYE and National Insurance if umbrella companies fail to meet their obligations.
Contractors and agencies should review their supply chain carefully.
Venture Capital Trusts (VCT)
Income tax relief on new VCT investments drops from 30% to 20%, reducing their upfront tax efficiency.
EIS & EMI Schemes
Higher gross asset limits extend access to:
Enterprise Investment Scheme (EIS)
Enterprise Management Incentive (EMI) share options
These changes support larger, fast‑growing businesses seeking investment and talent incentives.
What This Means For You
Many of these changes will result in higher tax bills, tighter reliefs or new reporting obligations. Advanced planning can help reduce liabilities, ensure compliance and avoid penalties.
Review your income structure, investments, dividends, estate planning and reporting obligations now to stay in control.
How We Can Help
We support expats, landlords, contractors, company directors and business owners in understanding and managing their UK tax obligations.
Contact us to review your tax position for the 2026/27 tax year.
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