With just a few weeks to go until the beginning of a new tax year, a new round of tax changes will take effect from April 2026. While many people won’t see a significant difference in their day-to-day tax position, there are some areas that are worth keeping on your radar.

Below is an overview of some of the changes you may wish to be aware of.

Dividend Tax Rises

The tax rates for dividends are rising from April 2026. The basic rate and higher rates are each increasing by two percentage points to 10.75% and 35.75% respectively. The dividend additional rate remains at 39.35%.

Many company owners rely on a combination of salary and dividends as part of their remuneration strategy. If that applies to you, it may be sensible to review how you extract income and consider whether your current balance between salary and dividends remains appropriate.

Thresholds Remain Frozen

The tax-free Personal Allowance and income tax thresholds remain frozen and are set to stay that way until 2030/31. This continued freeze is expected to bring more individuals into higher rates of tax over time.

For Scottish taxpayers, there is an increase to the basic and intermediate rate thresholds. This means that lower earners will see a modest rise in their take-home pay. However, due to fiscal drag, higher earners are likely to be drawn into paying additional tax.

National Insurance and Voluntary Contributions

Individuals with gaps in their National Insurance contribution (NIC) record, those who are self-employed with low profits, or those who have worked overseas often look at making voluntary contributions.

From 6 April 2026, the rate for Class 2 NICs (applicable to the self-employed) will increase from £3.50 to £3.65. The rate for voluntary Class 3 NICs will rise from £17.75 to £18.40.

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

Capital Gains Tax (CGT)

Business owners who are considering selling or restructuring should note that capital gains subject to Business Asset Disposal Relief or Investor’s Relief will be taxed at 18% for 2026/27, up from 14% in 2025/26.

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

These updates will not affect everyone. However, if you are contemplating business succession or restructuring, ensuring the timing and structure are right remains crucial.

Inheritance Tax – Agricultural and Business Property Relief Changes

As has been widely publicised, changes to Inheritance Tax (IHT) affecting Agricultural Property Relief (APR) and Business Property Relief (BPR) will come into force on 6 April 2026.

Previously, these reliefs were unlimited. From April, 100% relief will be capped at £2.5 million of combined agricultural and business assets. Thereafter, the relief will reduce to 50%. Unused allowances may be transferred to a spouse or civil partner.

Although the £2.5 million limit is higher than initially proposed, individuals who may be impacted by the new cap may wish to consider whether restructuring their estate could help mitigate potential tax liabilities.

In Conclusion

If you expect to be affected by any of these changes for 2026/27 and would like support in ensuring you are in the best possible tax position, please do get in touch. We would be delighted to assist.

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