Changes in Pension & Tax Rules... The New Tax Year is Underway!
- Culverhouse & Co
- Apr 7
- 2 min read
The new tax year for 2026/27 is in full swing, albeit with a few changes to tax and pension rules.
National Insurance Contributions (NICs)
From 2026/27 onwards, people working or living abroad won’t be able to pay voluntary Class 2 NICs to build up their UK State Pension. You may still be able to make Class 3 contributions, but these are significantly more expensive at £18.40 per week compared to £3.65.
Dividend Tax
There’s a small increase to dividend tax rates to be aware of. If you’re a basic rate taxpayer, the rate rises from 8.75% to 10.75%, while higher rate taxpayers will see an increase from 33.75% to 35.75%. The additional rate remains at 39.35%, and the dividend allowance stays at £500.
State Pension Age (SPA)
The SPA will start to increase to 67 from April 2026. If you were born between 6 April 1960 and 5 March 1961, your pension age will gradually rise to somewhere between 66 years and 1 month and 66 years and 11 months. Anyone born on or after 6 March 1961 will have a State Pension Age of at least 67.
Inheritance Tax (IHT) Reforms
New rules are coming in for agricultural and business property relief. Following announcements in the Autumn 2025 Budget, the 100% relief allowance will be capped at a combined £2,500,000. The good news is that this allowance can still be passed between spouses and civil partners.
Making Tax Digital (MTD) for Income Tax
MTD is being introduced for self-employed individuals and landlords with qualifying income over £50,000 in the 2024/25 tax year. This means you’ll need to keep digital records and submit income and expense updates to HMRC every quarter using approved software.
Venture Captial Trusts (VCTs)
If you invest in VCTs, the income tax relief available will reduce from 30% to 20%. However, the scheme will expand, with the size limit for qualifying companies set to double.
Capital Gains Tax (CGT)
For those eligible for Business Asset Disposal Relief, the CGT rate will increase from 14% to 18%. Other CGT rates remain unchanged, and the annual tax-free allowance continues to be £3,000.
Questions about the New Tax Year?
Don’t hesitate to reach out to us should you have questions on how you could be affected by any changes this new tax year. The team at Culverhouse & Co. are happy to help.
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