Personal Tax Changes Coming in April 2026

With only a few weeks remaining until the start of the new tax year, several personal tax changes will take effect from April 2026. While many individuals may not notice a significant difference in their day-to-day finances, several important developments are worth keeping on your radar.

Below is a summary of the key changes you should be aware of.

Dividend Tax Rises

Dividend tax rates will increase from April 2026. The basic rate and the higher rate will both rise by 2 percentage points, to 10.75% and 35.75%, respectively. The additional rate remains at 39.35%.

Many company directors and shareholders rely on a combination of salary and dividends as part of their remuneration strategy. If this applies to you, now is the time to review how you extract profits from your business and assess whether your current salary-dividend structure remains tax efficient.

If you would like tailored advice on profit extraction planning, book a free consultation with Naseems Accountants to review your position before the new rates take effect.

Thresholds Remain Frozen

The tax-free Personal Allowance and income tax thresholds remain frozen and are set to remain at their current levels until 2030/31. As a result, more individuals will gradually be drawn into higher tax rates due to fiscal drag.

For Scottish taxpayers, the basic and intermediate rate thresholds will increase slightly, providing a modest benefit to lower earners. However, higher earners may still find themselves paying more tax over time as income rises against fixed thresholds.

Planning is essential. If your income is increasing, reviewing pension contributions, salary sacrifice arrangements, or dividend strategies may help mitigate the impact.

National Insurance and Voluntary Contributions

Individuals with gaps in their National Insurance contribution (NIC) record, including some self-employed individuals with low profits or those who have spent time working overseas, may consider making voluntary contributions to protect their State Pension entitlement.

From 6 April 2026:

• Class 2 NICs (for the self-employed) will increase from £3.50 to £3.65 per week.
• Voluntary Class 3 NICs will increase from £17.75 to £18.40 per week.

In addition to the rate increases, a significant change is that voluntary Class 2 NICs will no longer be available for periods spent abroad. While voluntary Class 3 contributions will still be possible, the qualifying conditions have been tightened.

If you are unsure whether making voluntary contributions is beneficial in your circumstances, our team can review your NIC record and advise accordingly.

Capital Gains Tax (CGT)

Business owners considering a sale, succession plan or restructuring should note that capital gains qualifying for Business Asset Disposal Relief or Investor’s Relief will be taxed at 18% in 2026/27, up from 14% in 2025/26.

Reliefs for disposals to Employee Ownership Trusts have also been scaled back, and the rules governing share reorganisations have been tightened. These changes are already in force.

While these amendments will not affect everyone, those contemplating succession planning or restructuring should carefully consider timing and tax efficiency.

If you are planning a business exit or reorganisation, early advice can make a significant difference to your overall tax position. Book a free consultation with capital gains accountants before taking action.

Inheritance Tax – Agricultural and Business Property Relief Changes

Changes to Inheritance Tax (IHT) affecting Agricultural Property Relief (APR) and Business Property Relief (BPR) will take effect from 6 April 2026.

Previously, these reliefs were effectively unlimited. From April 2026, 100% relief will be capped at £2.5 million of combined agricultural and business assets. Any excess above this threshold will qualify for relief at 50%. Unused allowances may be transferred to a spouse or civil partner.

Although the £2.5 million cap is higher than originally proposed, individuals with significant agricultural or business assets may wish to review their estate planning arrangements.

If you believe these changes could affect you, we recommend reviewing your estate planning strategy sooner rather than later to explore potential tax-efficient options.

In Conclusion

The 2026/27 tax year brings a range of changes affecting dividends, National Insurance, Capital Gains Tax and Inheritance Tax. While not everyone will be directly affected, planning remains essential to ensure you operate in the most tax-efficient way possible.

If you are concerned about how these changes may affect you or your business, please get in touch with Naseems Accountants. We would be pleased to review your circumstances and help you prepare effectively for the new tax year.

See: https://www.icaew.com/insights/tax-news/2026/feb-2026/prepare-for-2026-27-individuals