What are the 2026/27 tax year rates and allowances?

Tax-free personal allowance – £12,570

Basic rate – 20% – up to £37,700

Higher rate – 40% – from £37,701 to £125,140

Additional rate – 45% – above £125,140

Lower Earnings Limit (LEL) – increasing from £6,500 to £6,708 from 2026/27 to ensure there’s enough for the state pension credit in the year

Primary threshold – £12,570

Secondary threshold – £5,000

Employees and directors must pay NI Class 1 contributions at 8% and 2%

Employers pay NI Class 1 contributions at 15%

Basic rate – 10.75%

Higher rate – 35.75%

Additional rate – 39.35%

Dividends basic rate – £37,700 and a salary of £12,570

Tax-free allowance – £500

Pay £3,999 Income Tax to HMRC by 31 Jan 2028

Profits up to £50,000 – 19%

Profits above £50,000 – £250,000 subject to marginal relief effectively taxed at 26.5%

Profits above £250,000 – 25%

It’s up to you to decide, because you control the company, but many will choose a salary of £12,570 for 2026/27 to match the personal allowance, or a salary of £6,708 to qualify for state pension credit

The Employment Allowance is not available to single-director companies where the director is the only employee paid above the Secondary Threshold

Employment allowance of £10,500 towards NIC if you have more than one employee and are eligible

Plan 3 repayment threshold – £21,000

Repayment rate – 6%

National Minimum Wage – increasing from £12.21 to £12.71 for those aged 21 and over

Capital Gains Tax annual exemption – remains at £3,000

The high income threshold for Child Benefit remains at £60,000. It’s tapered now for repayments between £60,000 and £80,000, when the full amount is repayable

From April 2026 the eldest / only child will receive £27.05 per week, and additional children will receive £17.90 per week

Changing rate for BADR – increasing to 18% from April 2026