Preparing for key tax changes in 2026/27

The next two years bring a series of important tax updates that could impact individuals, landlords, and business owners alike.

At Verallo, we believe early preparation is essential to manage these changes effectively and to safeguard your financial plans.

Here’s a clear guide to what’s coming and what actions you should consider.

1. Dividend tax increases: April 2026

For those who receive income through dividends, the rates are set to rise:

• Basic dividend rate: 10.75%
• Higher dividend rate: 35.75%

Shareholders and company directors may want to review their dividend strategy to minimise potential impacts and optimise post-tax income

2. Making Tax Digital expands: April 2027

The government’s Making Tax Digital (MTD) initiative continues to widen. From April 2027, self-employed individuals with qualifying income over £30,000 must comply.

If this applies to you, now is the time to adopt compatible software and organise records to ensure a smooth transition. Proactive compliance reduces the risk of penalties and administrative headaches later.

3. Savings income tax: April 2027

Interest and other savings income will face higher tax rates across all bands from April 2027:

• Basic rate: 22%
• Higher rate: 42%
• Additional rate: 47%

Individuals with substantial savings outside tax-efficient wrappers should consider reviewing their portfolios to assess potential effects on returns.

4. New property income rates: April 2027

Landlords will encounter separate rates for rental income, reflecting a more targeted approach to property taxation:

• Basic: 22%
• Higher: 42%
• Additional: 47%

Planning ahead, including the timing of income and allowable expenses, can help reduce your tax exposure.

5. Income tax thresholds remain unchanged: 2025/26

The Personal Allowance continues at £12,570, with income tax rates remaining at 20%, 40%, and 45%.

While thresholds are frozen, rising incomes may push more people into higher tax brackets – a gradual effect sometimes called fiscal drag. Awareness now allows for better financial planning before it affects you.

6. Other notable updates

• Inheritance Tax: Discussions are ongoing about potential changes to pensions for IHT purposes. Keeping an eye on these developments is recommended if you have pension assets.
• Late Payment Charges: HMRC has increased interest on overdue tax debts, highlighting the importance of timely filing and payments.
• Vehicle Excise Duty: Since April 2025, higher rates have applied to hybrid and high-emission vehicles, increasing running costs for some car owners.

Stay ahead of these upcoming changes:

• Review dividend and remuneration plans in preparation for the 2026 adjustments.
• Examine your savings and investment structures ahead of the 2027 tax increases.
• Landlords should assess property income strategies before the new rates take effect.
• Self-employed individuals nearing the £30,000 threshold should ensure MTD readiness.

Tax planning is most effective when it’s proactive, not reactive. If you would like to understand how these updates affect you or your business, get in touch with our Chartered Tax Advisors.