News

Income tax and national insurance

The income tax and national insurance thresholds have been frozen for a further three years to 2030/31.  As salaries and pensions grow this is likely to result in more people paying tax and moving into higher rate tax bands.

Increased rates of income tax

From 2026/27 both the basic and higher rates of income tax on dividends will increase by 2% to 10.75% and 35.75% respectively.  The additional rate (39.35%) will remain the same.

From 2027/28 income tax on savings will increase by 2% so the basic rate will be 22%, higher rate 42% and additional rate 47%.  Separate rates will apply to property income so they are the same as those set for savings income (22%, 42% and 47%).  The income tax rules will also change so that rather than deducting allowances and reliefs in the most favourable way, they will be deductible to other sources of income first before they are applied to property, savings and dividend income.

National minimum wage

Increases from April 2026:

• 16 – 17 year olds £8.00   (increase of 45p)
• 18 – 20 year olds £10.85 (increase of 85p)
• Aged 21 plus      £12.71  (increase of 50p)
• Apprentice rate £8.00 (increase of 45p)

Cash ISA

From April 2027, savers under the age of 65 will be able to invest a maximum of £12,000 per annum into a cash ISA.  Those over 65 will still be able to invest up to £20,000 per annum.

The overall ISA limit remains the same so you could invest £12,000 in a cash ISA and £8,000 in a stocks and shares ISA per annum.  The limit for lifetimes ISAs remains at £4,000 and Junior ISAs £9,000 until 5 April 2031.

High-value homes (Mansion Tax)

A new high value council tax surcharge has been introduced on residential properties in England with a value exceeding £2m with effect from April 2028.  The Valuation Office will ‘conduct a targeted valuation exercise’ to identify those properties valued at over £2m and a charge will be made of between £2,500 and £7,500 per year depending on the value of the property.

Pensions

From April 2029, there will be a £2,000 cap on the contributions that can be put into a pension under the salary sacrifice scheme and shielded from national insurance contributions.  Any contributions above the £2,000 will be taxed in the same way to other employee pension contributions.

Please contact us if you need further information.