We are now just a few weeks away from the start of the new 2026/27 on 6 April, so we thought that now is a great opportunity to remind you what tax rules and rates are changing in the year ahead.
Our team would encourage you to check the upcoming changes to see if they create any new opportunities or challenges for you or your business.
Inheritance Tax (IHT)
As has been widely reported, the 100 per cent Agricultural Relief and Business Relief will be capped at £2.5 million per individual from April 2026. This means that any eligible assets within an estate that exceed this allowance will effectively be taxed at 20 per cent.
However, the Government have confirmed that it will be transferable between spouses and civil partners.
Whilst the changes to the IHT rules have softened the blow of this reform, many new estates are likely to find themselves within the scope of IHT for the first time.
Personal tax
The Income Tax threshold freeze will remain in place until at least April 2031, which means that the tax-free personal allowance remains unchanged at £12,570.
With the impact of fiscal drag and the likelihood of rising inflation again, many taxpayers will see themselves dragged into higher tax bands.
Business tax
The main rate of writing down allowance will drop from 18 to 14 per cent from April 2026.
However, a new first-year allowance of 40 per cent for main‑rate assets will be available to ensure start-ups are not too disadvantaged.
Business owners looking to exit their business using an Employee Ownership Trust (EOT) will also be required to pay Capital Gains Tax (CGT) on 50 per cent of their profits, following the removal of the existing 100 per cent relief.
What else is changing?
From April 2026, the ordinary and upper rates of tax on dividend income will increase by two percentage points. The additional rate will, however, remain unchanged.
There are also additional changes to consider, including new separate and higher tax rates for property income and a new mansion tax.
However, these changes will not come into effect until April 2027 and April 2028, respectively.
Worried about changes to taxation?
The upcoming changes to the tax rules have certainly created new challenges for many businesses and individuals, so understanding your position as the new tax year begins is important.
To get your affairs up to date, book your 2026/27 tax planning consultation.
