UK Tax Changes 2026: What You Need to Know

1. Dividend Tax Increase (From 6 April 2026)

If you take income as dividends, the rates are rising:

• Basic rate: 8.75% → 10.75%

• Higher rate: 33.75% → 35.75%

• Additional rate: remains at 39.35%

What it means: Directors and business owners paying themselves in dividends will see higher tax bills. Planning your income mix could help reduce the impact.

2. Savings & Property Income Tax Rises (From 6 April 2027)

Tax on savings interest and rental income will increase:

• Savings income tax: Basic 20% → 22%, Higher 40% → 42%, Additional 45% → 47%

• Property rental income tax: Basic 22%, Higher 42%, Additional 47%

What it means: Landlords and savers will pay more tax on their income. Consider pensions, ISAs, or other tax-efficient options to manage exposure.

3. ISA Cash Limit Cut (From April 2027)

• Annual cash ISA limit for under-65s: £20,000 → £12,000

• Total ISA allowance remains £20,000 (remainder must go into stocks & shares or other investments).

What it means: Savers may need to rethink where they put money to maximise tax-free allowances.

4. High-Value Property Charges (From April 2028)

New annual charges for luxury properties:

• Homes £2m–£2.5m: £2,500/year

• Homes £5m+: £7,500/year

What it means: Owners of high-value homes should plan ahead for these additional costs.

5. Frozen Income Tax & National Insurance Thresholds

• Personal allowance: £12,570

• Higher rate threshold: £50,270

• Additional rate threshold: £125,140

What it means: Thresholds are frozen until at least 2031. As salaries rise with inflation, more income will be taxed at higher rates (fiscal drag).

6. Business Tax & Small Business Considerations

• Business rates relief continues for retail, hospitality, and leisure.

• Capital Gains Tax reliefs reduced (affects business sales).

• Making Tax Digital (MTD) expands in 2026 for sole traders and landlords, requiring digital records and quarterly submissions.

What it means: Business owners need to review compliance, tax planning, and digital reporting tools.

What You Should Do Now

1. Review income mix – salary, dividends, savings.

2. Plan ISAs and pensions to maximise tax-free allowances.

3. Landlords & investors – assess rental income and potential property tax liabilities.

4. Check MTD readiness – ensure software and reporting meet new requirements.

Why This Matters

With higher taxes on unearned income, frozen thresholds, and new property charges, most individuals and business owners could pay more tax unless they plan ahead. Taking early steps can reduce surprises and help you manage cash flow more effectively.

Need Help Navigating These Changes?

The team at Atlas & Co Accountants can help you:

• Plan your income and dividend strategy

• Optimise savings, ISAs, and pensions

• Navigate rental property taxes

• Stay compliant with Making Tax Digital

📞 Contact us today to arrange a consultation and make sure you’re prepared for 2026.