National Insurance Contributions (NICs)

NICs deducted from employee wages remain at the same levels as we head into 2026/27. This means that, for employees, no NICs are deducted on the first £12,570 of pay, then a rate of 8% applies on earnings up to £50,270, with a rate of 2% applied thereafter.

For employers, the rate of NICs will remain at 15% after the first £5,000* paid to each employee. The available employment allowance to offset this cost remains at £10,500 for eligible claimants.

*A higher threshold of £50,270 applies for employees who are under 21 and apprentices under 25. Other variations can also apply.

Salary sacrifice for pension contributions

From 6 April 2029, the amount that is exempt from NICs will be capped at £2,000 a year for employee contributions made via salary sacrifice. Any employee contributions above this amount made under salary sacrifice will be subject to employer and employee NICs. Employees can still contribute as much as they want to their pensions, including via salary sacrifice, and these contributions will still be exempt from income tax (subject to the usual limits).

Removal of tax relief on non-reimbursed homeworking expenses

From 6 April 2026, employees will no longer be able to claim tax relief on additional household expenses incurred in employment duties that are not reimbursed by the employer. To date, a claim at the rate of £6 per week has been allowed. Employers can still reimburse employees for these costs where eligible without deducting income tax and NICs.

Enterprise Management Incentive (EMI) company eligibility expansion

The following limits will be increased for EMI contracts granted on or after 6 April 2026:

  • Company grant options will be increased from £3 million to £6 million.
  • Gross assets will be increased from £30 million to £120 million.
  • The number of employees will be increased from 250 to 500.
  • The maximum holding period will increase from 10 to 15 years.

These limits can also apply retrospectively to existing EMI contracts which have not already expired or been exercised.

The EMI notification requirement will also be removed from April 2027.

Expanding workplace benefits relief

From 6 April 2026, the income tax and national insurance exemption for employer-provided benefits will be extended to cover reimbursements for eye tests, home working equipment, and flu vaccinations.

Company car tax

Bringing employee car ownership schemes (ECOS) into scope of the benefit in kind (BIK) rules has been delayed from 6 April 2026 to 6 April 2030 to allow more time for the sector to prepare for and adapt to this change in treatment. Transitional arrangements will be in place until April 2031.

There is a temporary BIK easement for plug-in hybrid electric vehicles (PHEVs) from 1 January 2025 to 5 April 2028. This easement prevents the tax charge increasing significantly due to new emissions standards. During the easement period, the CO2 emission figure will be deemed to be a nominal figure for the purpose of calculating the BIK. Transitional arrangements will apply to certain PHEVs until 5 April 2031.

The BIK charge for vans as well as for car and van fuel will rise in line with inflation from April 2026.

Mandatory payrolling of benefits

Draft interim guidance and legislation has been issued to aid preparation for reporting BIK in real time through payroll software from April 2027. This is an extension to the original deadline of April 2026.

Employers are encouraged to prepare as early as possible to avoid disruption and minimise cost. HMRC is urging everyone not to underestimate the time it will take to ensure payroll processes are sufficiently robust.

PAYE changes for umbrella companies

Umbrella companies are employment intermediaries that employ workers on behalf of agencies and end clients.

From 6 April 2026, employment agencies (or end clients where there is no agency in the supply chain) will be jointly and severally liable for any amount required to be accounted for under PAYE.

Loan charge review

Disguised remuneration schemes are tax avoidance and have frequently been considered by the courts. Legislation was introduced to tackle the problem but settlement of claims has been difficult and protracted.

An independent review has recommended the government introduce a settlement opportunity to encourage those who have not settled so far, to settle their loan charge liabilities with HMRC on concessionary terms.

Under the terms of the settlement opportunity, everyone who comes forward will see a £5,000 reduction in their outstanding liabilities. This will substantially reduce the amount they have to pay. Where people decide to settle, most individuals could see reductions of at least 50% in their outstanding loan charge liabilities and an estimated 30% of individuals may be able to settle without paying anything.

This measure will have retrospective effect from 5 April 2019.

CAPITAL GAINS TAX (CGT)

As we head into 2026/27, it should be remembered that, for most sales of capital assets, CGT will apply at 18% for basic rate taxpayers and 24% otherwise. The rate of CGT for business asset disposal relief (BADR) purposes will increase from 14% to 18% from 6 April 2026.

Particularly in relation to business disposals, timing is important, so please do talk to us about optimising your tax position prior to any capital disposal.

There were a couple of significant changes for CGT in the Budget on 26 November.

Employee Ownership Trusts

With immediate effect, the CGT relief on disposals into an Employee Ownership Trust has been halved from 100% to 50%. This means 50% of the gain will be treated as chargeable. The remaining 50% of the gain will not be chargeable at the time of the disposal but will continue to be held over to come into charge on any future disposal of the shares by the trustees.

A further sting in the tail is the chargeable element of the gain will be excluded for BADR and investors’ relief (IR) purposes so tax will be payable at the full rate.

Incorporation relief

For transfers of a business on or after 6 April 2026, a claim for incorporation relief will be required.

Incorporation relief applies to individuals, partners in a partnership and trustees where a business is transferred to a company in exchange for shares.

Claims for the relief have previously been automatic with the ability to elect out. From 6 April 2026, claimants must include a claim in their self assessment tax return for the tax year of transfer. They must provide brief details of the transaction, the relevant tax computations and the type of business transferred.