The 2026/27 tax year: rates, thresholds and key dates

Written for the 2026/27 tax year. Checked against GOV.UK on 6 October 2026.

The 2026/27 tax year runs from 6 April 2026 to 5 April 2027. This guide sets out the rates, thresholds and deadlines that apply now, and what is coming next. It comes from Wainwrights Accountants in Bromborough, Wirral. We work with sole traders, landlords, companies and employers across the UK.

Key figures for 2026/27

What has changed in the 2026/27 tax year?

Four changes matter most to small businesses. Making Tax Digital for Income Tax began on 6 April 2026. Dividend tax rates went up at the basic and higher rates. The main rate of writing down allowance fell from 18% to 14%. The flat mileage rate for cars and vans rose from 45p to 55p for the first 10,000 miles.

The Personal Allowance is £12,570 this year. In England, Wales and Northern Ireland the rates are:

The Personal Allowance goes down by £1 for every £2 of adjusted net income above £100,000. It is zero at £125,140 or above. Income Tax bands are different if you live in Scotland.

What do sole traders pay in 2026/27?

Sole traders pay Income Tax on their profit at the rates above. They also pay Class 4 National Insurance of 6% on profits over £12,570 up to £50,270, and 2% above that. Nobody has to pay Class 2. With profits of £7,105 or more, Class 2 is treated as paid.

If profits are under £7,105, there is nothing to pay. Voluntary Class 2 contributions are £3.65 a week for anyone who chooses to pay them.

Illustration only. On a profit of £30,000, Class 4 is 6% of £17,430 (£30,000 less £12,570), which is £1,045.80. Income Tax on the same £17,430 at the 20% basic rate for England, Wales and Northern Ireland is £3,486, if there is no other income. A real bill depends on the whole picture.

Two other figures changed this year:

• Mileage. The simplified expenses flat rate for cars and goods vehicles is 55p a mile for the first 10,000 miles, then 25p. Before 6 April 2026 the first rate was 45p. Motorcycles are 24p a mile.
• Equipment. The Annual Investment Allowance is £1 million. The main rate of writing down allowance changed from 18% to 14% on 6 April 2026 for Income Tax.

We prepare accounts and tax returns for the self-employed. See our sole trader accountant service and Self Assessment help.

Who has to use Making Tax Digital for Income Tax?

Sole traders and landlords whose qualifying income was over £50,000 in the 2024/25 tax year. They should have started on 6 April 2026. The threshold is £30,000 of 2025/26 income from 6 April 2027, and £20,000 of 2026/27 income from 6 April 2028. Partnerships do not need to use it yet.

Qualifying income comes from self-employment or property, or both. If you are in, you keep digital records and send HMRC a quarterly update through software. Each update covers the tax year so far, not just the last quarter.

HMRC will not apply penalty points for late quarterly updates during 2026/27. Penalty points still apply for a late tax return. The updates must be sent before the tax return can be submitted. The 2026/27 return is due by 31 January 2028 and goes through compatible software.

This year’s income decides who joins in April 2028, so it is worth knowing your figure. Our Making Tax Digital compliance support is an add-on at £35 a month + VAT for sole traders and landlords.

What do landlords need to know this tax year?

Landlords pay Income Tax on rental income, minus day-to-day running expenses. Landlords over the Making Tax Digital threshold now send quarterly updates. Capital Gains Tax is 18% or 24% after a £3,000 tax-free allowance. GOV.UK says Income Tax on rental income will have separate property rates of 22%, 42% and 47% from April 2027.

The property allowance is £1,000 of rental income. For Capital Gains Tax, a higher or additional rate taxpayer pays 24% on gains. For a basic rate taxpayer, the rate is 18% or 24%, depending on the size of the gain and their taxable income.

Coming next. A GOV.UK policy paper published on 27 November 2025 says property (rental) income will have its own Income Tax rates for the 2027/28 tax year: 22% (basic), 42% (higher) and 47% (additional). It says this will apply to England, Wales and Northern Ireland, and that the Scottish Parliament and the Senedd will be given the power to set their own property rates. Rates in Scotland and Wales may therefore be different. The same paper says savings rates rise to 22%, 42% and 47% from April 2027.

See our landlord accounts service.

What do limited company directors pay in 2026/27?

Companies pay Corporation Tax of 19% on profits of £50,000 or less and 25% on profits over £250,000. Between the two, Marginal Relief may apply. Directors who take dividends get a £500 dividend allowance, then pay 10.75%, 35.75% or 39.35%, depending on their Income Tax band.

The £50,000 and £250,000 limits are reduced for short accounting periods and for associated companies. The Marginal Relief standard fraction is 3/200.

Dividend rates went up in April 2026. The basic rate is now 10.75% and the higher rate is 35.75%. The additional rate stayed at 39.35%. For companies, the main rate of writing down allowance changed from 18% to 14% on 1 April 2026.

How to split pay between salary and dividends depends on your own figures, so it is one to talk through with an accountant. See our limited company accountants service.

What do employers pay in 2026/27?

Employers pay 15% National Insurance on most employees’ pay above £96 a week, which is £5,000 a year. The Employment Allowance takes up to £10,500 off that bill for eligible employers. From 1 April 2026 the minimum wage is £12.71 an hour for workers aged 21 and over.

Employees pay 8% National Insurance on pay between £242 and £967 a week, and 2% above that.

Illustration only. On a salary of £30,000, employer National Insurance is 15% of £25,000 (£30,000 less £5,000), which is about £3,750 before any Employment Allowance.

A company with only one director cannot claim the Employment Allowance if that director is the only employee liable for employer National Insurance.

Statutory Sick Pay is £123.25 a week or 80% of average weekly earnings, whichever is lower. Statutory Maternity Pay after the first 6 weeks is £194.32 a week or 90% of average weekly earnings, whichever is lower.

See our payroll services.

When do you have to register for VAT?

You must register when your total taxable turnover for the last 12 months goes over £90,000, or when you expect it to go over £90,000 in the next 30 days. A VAT-registered business can ask to cancel its registration if taxable turnover is less than £88,000. The standard rate is 20%.

You have to register within 30 days of the end of the month when you went over the threshold. The test is your total taxable turnover for the last 12 months, so it helps to keep your bookkeeping up to date. See our VAT return help.

Which Self Assessment deadlines are coming up?

Three dates matter most. Paper tax returns for 2025/26 must reach HMRC by 31 October 2026. Online returns for 2025/26, and the tax owed, are due by 31 January 2027. If you make payments on account, the second one is due by 31 July 2027.

Payments on account are payments towards your next tax bill. They are due on 31 January and 31 July. They are not needed if last year’s bill was less than £1,000, or if more than 80% of the tax owed was paid outside Self Assessment.

The deadline to tell HMRC you need to send a 2025/26 return was 5 October 2026. If you have missed it, HMRC still needs to hear from you.

What do people ask us about the 2026/27 tax year?

When does the 2026/27 tax year start and end?

It runs from 6 April 2026 to 5 April 2027. The online tax return for 2026/27 is due by 31 January 2028.

Has the Personal Allowance changed for 2026/27?

No. It is £12,570, and it goes down by £1 for every £2 of adjusted net income above £100,000.

Do I have to use Making Tax Digital this year?

Only if you are a sole trader or landlord whose qualifying income was over £50,000 in 2024/25, unless you are exempt. If it was over £30,000 in 2025/26, you start on 6 April 2027. Ask us which date applies to you.

Do partnerships have to use Making Tax Digital for Income Tax?

Not yet. GOV.UK says partnerships do not currently need to use it, and that they will need to in the future. No start date is given.

Are the tax rates the same in Scotland?

No. Income Tax bands are different if you live in Scotland. The Income Tax bands in this guide are for England, Wales and Northern Ireland. GOV.UK says the dividend rates apply across the UK.

Will there be penalties if my Making Tax Digital update is late?

Not penalty points in 2026/27. HMRC will not apply penalty points for late quarterly updates this tax year. Penalty points still apply if the tax return is late.

Can Wainwrights work out what these changes mean for me?

Yes. An article can only explain the general rules. Book a free call and an accountant will go through your own figures with you. You can see how we price our services on our pricing page.

Rules, rates and thresholds change from one tax year to the next, and how they apply depends on your own figures. To talk yours through with an accountant in Bromborough, get a quote or book a free call.