Every year, tax thresholds, allowances, and rates change — some dramatically, some not at all. For 2025/26, the headline story is frozen thresholds continuing to pull more people into higher tax bands, while several rates have also shifted. This article puts all the key numbers in one place.
Income Tax Rates and Thresholds 2025/26
| Band | Taxable Income | Rate |
|---|
| Personal Allowance | Up to £12,570 | 0% |
| Basic Rate | £12,571 – £50,270 | 20% |
| Higher Rate | £50,271 – £125,140 | 40% |
| Additional Rate | Above £125,140 | 45% |
Frozen Thresholds
The personal allowance (£12,570) and higher rate threshold (£50,270) have been frozen since 2021/22 and remain frozen through to 2027/28. As wages rise with inflation, more people are being pulled into the basic and higher rate bands — a stealth tax increase sometimes called "fiscal drag."
National Insurance 2025/26
Employee (Class 1)
| Earnings | Rate |
|---|
| Up to £12,570 (primary threshold) | 0% |
| £12,571 – £50,270 | 8% |
| Above £50,270 | 2% |
Employer (Class 1) — Changed April 2025
| Earnings | Rate |
|---|
| Up to £5,000 (secondary threshold) | 0% |
| Above £5,000 | 15% |
Self-Employed (Class 4)
| Profits | Rate |
|---|
| Up to £12,570 | 0% |
| £12,571 – £50,270 | 6% |
| Above £50,270 | 2% |
Class 2 NIC was abolished from April 2024. Self-employed people pay only Class 4 NIC on profits.
Corporation Tax 2025/26
| Company Profits | Rate |
|---|
| Up to £50,000 | 19% (small profits rate) |
| £50,001 – £250,000 | Marginal relief (19%–25%) |
| Over £250,000 | 25% (main rate) |
Dividend Tax 2025/26
| Dividend Income | Rate |
|---|
| Dividend allowance (first £500) | 0% |
| Basic rate band | 8.75% |
| Higher rate band | 33.75% |
| Additional rate | 39.35% |
Capital Gains Tax 2025/26
| Asset Type | Basic Rate Taxpayer | Higher Rate Taxpayer |
|---|
| Residential property | 18% | 24% |
| Other assets | 18% | 24% |
| Annual CGT exemption | £3,000 |
CGT Change
CGT rates for non-property assets were increased from 10%/20% to 18%/24% in the Autumn Budget 2024, effective 30 October 2024. This aligns non-property CGT rates with residential property rates.
VAT Thresholds
| Threshold | Amount |
|---|
| Registration threshold | £90,000 (rolling 12 months) |
| Deregistration threshold | £88,000 |
| Standard rate | 20% |
| Reduced rate | 5% |
| Zero rate | 0% |
Pension Annual Allowance 2025/26
| Allowance | Amount |
|---|
| Annual allowance | £60,000 (or 100% of earnings, whichever lower) |
| Tapered annual allowance (threshold income) | £200,000 |
| Tapered annual allowance (adjusted income) | £260,000 |
| Minimum tapered allowance | £10,000 |
| Money Purchase Annual Allowance (MPAA) | £10,000 |
Capital Allowances 2025/26
| Allowance | Amount / Rate |
|---|
| Annual Investment Allowance (AIA) | £1,000,000 |
| Full Expensing (main rate assets) | 100% first-year allowance |
| Main rate writing-down allowance | 18% |
| Special rate writing-down allowance | 6% |
Other Key Allowances 2025/26
| Allowance | Amount |
|---|
| ISA allowance | £20,000 |
| Junior ISA allowance | £9,000 |
| Trading income allowance | £1,000 |
| Property income allowance | £1,000 |
| Rent-a-Room relief | £7,500 |
| Marriage Allowance | £1,260 transferable |
General information only. This article provides general guidance on UK tax and accounting matters and reflects our understanding of legislation and HMRC guidance at the time of publication. Tax rules, rates, and thresholds change frequently. Nothing in this article constitutes personalised tax or financial advice. Always seek advice specific to your circumstances from a qualified accountant before taking action. Ledgertech Accountants Ltd accepts no liability for any loss arising from reliance on this content.
