A new tax year, a new update to thresholds, allowances and tax rates. Knowing where you stand with your taxes can help you make the most of your income and stay compliant with HMRC.
Individuals, business owners and investors are impacted by these changes, so here is a guide highlighting the most important updates for the 2025/26 tax year.
PA is reduced by £1 for every £2 of adjusted net income above £100,000, and fully withdrawn when income exceeds £125,140.
Dividend income above the alliance is taxed at:
8.75% for basic rate taxpayers
33.75% for higher rate taxpayers
39.35% for additional rate taxpayers
Class 2 NICs were abolished from April 2024
Class 4 NICs apply at 6% on profits between £12,570 and £50,270, and at 2% on profits above £50,270.
The annual CGT exemption remains at £3,000 for individuals and £1,500 for most trusts.
The main rate of corporation tax remains at:
25% for companies with profits over £250,000
19% for companies with profits up to £50,000
Companies with profits between £50,000 and £250,000 continue to benefit from marginal relief.
Standard VAT rate is 20%
Registration threshold is £90,000 (up from £85,000)
Deregistration threshold remains at £88,000.
The thresholds for inheritance tax remain frozen in 2025/26:
NIL Band Rate (NRB): £325,000
Residence NIL Rate Band (RNRB): £175,000
Married couples or civil partners can combine their allowances in order to pass on up to £1 million tax-free (providing they meet the residence requirements). The standard IHT rate is 40% on estates above the NRB, reduced to 36% if at least 10% is left to charity.
Pensions remains fairly stable for 2025/26:
Annual Allowance: £60,000 (tapered down to a minimum of £10,000 for higher earners with an adjusted income of over £260,000)
Lifetime Allowance: This was abolished from April 2024 but the maximum tax-free lump sum remains capped at £268,275, unless protected.
Contributions continue to receive tax relief at your marginal rate. Pensions remain one of the most effective long-term tax-efficient saving options.
The HICBC now applies when one parent earns more than £60,000 (up from £50,000). 1% of the child benefit must be repaid on every £200 earned above that threshold. At £80,000 the benefit is fully withdrawn.
Property tax can affect both homebuyers and landlords. So, whether you’re buying your first home, adding to your portfolio or working your way up the property ladder, these are the 2025/26 thresholds to help you budget correctly… and avoid unexpected costs.
First-time buyers pay no SDLT on the first £300,000 for properties up to £500,000. A 3% surcharge applies to additional properties.
First-time buyers receive relief on the first £175,000. A 4% Additional Dwelling Supplement applies to extra properties.
Even the smallest of changes in rates or allowances can have a big impact on your personal or business situation. To make the most of your income, savings and pension contributions, staying up to date is key.
If you’re unsure how these changes affect you, speak to an expert to make sure you’re making the most of your money this year. Book a consultation or contact us today at 033 0088 3616, email contact@dnsaccountants.co.uk
Any questions? Schedule a call with one of our experts.
Gary Zouvani I am a qualified chartered management accountant with over 25 years’ experience working in industry and accountancy practise. Currently DNS group operations director I manage over 50 employees as well as head up our accountancy franchise proposition.
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