2026/27 UK Tax Changes Explained: What's New for This Tax Year
Updated: March 2026 | Effective from 6 April 2026
Every April, the UK tax system changes. Some years the changes are dramatic; others are quieter. For 2026/27 there are several important updates that directly affect most employees' take-home pay — here's the plain-English breakdown.
2026/27 at a Glance: All Key Figures
| Item | 2025/26 | 2026/27 | Impact |
|---|---|---|---|
| Personal Allowance | £12,570 | £12,570 | No change (frozen since 2021) |
| Basic Rate Threshold | £50,270 | £50,270 | No change (frozen) |
| Income Tax Rates (Eng) | 20/40/45% | 20/40/45% | No change |
| Employee NI Rate | 8% | 8% | No change (cut from 12% in 2024) |
| Employer NI Rate | 13.8% | 13.8% | Higher since Oct 2024 budget |
| Employer NI Threshold | £9,100/yr | £5,000/yr | Lower — employers now pay more from £5k |
| National Living Wage (21+) | £11.44/hr | £12.21/hr | +6.7% — biggest group affected |
| State Pension (full new) | £11,502/yr | £11,973/yr | +4.1% triple lock increase |
1. Income Tax Thresholds: Still Frozen
| Band | 2025/26 | 2026/27 | Change |
|---|---|---|---|
| Personal Allowance | £12,570 | £12,570 | No change |
| Basic Rate Threshold | £50,270 | £50,270 | No change |
| Higher Rate Threshold | £125,140 | £125,140 | No change |
| Income Tax Rates (Eng/Wal/NI) | 20% / 40% / 45% | 20% / 40% / 45% | No change |
The freeze on thresholds since 2021/22 means fiscal drag continues — as wages rise with inflation, more workers are pulled into higher tax bands. An employee who earned £45,000 in 2021 and received standard pay rises may now be approaching the higher rate threshold without any political fanfare.
Take-Home Pay as % of Gross (2026/27)
Frozen thresholds mean the same gross salary keeps less proportionately each year as pay rises. This is "fiscal drag" made visible.
2. National Insurance: 8% Maintained
National Insurance was cut from 12% to 10% in January 2024 and then to 8% in April 2024. The 8% main employee rate is maintained for 2026/27. The UEL (Upper Earnings Limit) at £50,270 remains frozen alongside income tax thresholds.
The employer rate of 13.8% was increased in the Autumn 2024 Budget and remains at the higher level for 2026/27, with the secondary threshold (where employer NI kicks in) reduced to £5,000/year.
Minimum Wage Rates: 2025/26 vs 2026/27
The National Living Wage rose 6.7% for adults 21+, and significantly for younger workers — 18–20s saw the biggest jump.
3. Minimum Wage Increases
| Category | 2025/26 | 2026/27 |
|---|---|---|
| National Living Wage (21+) | £11.44/hr | £12.21/hr |
| 18–20 year olds | £8.60/hr | £10.00/hr |
| 16–17 year olds | £6.40/hr | £7.55/hr |
| Apprentices | £6.40/hr | £7.55/hr |
4. State Pension: Triple Lock Maintained
The State Pension increased by 4.1% from April 2026 under the triple lock guarantee. The new full State Pension is £11,502.40/year (£221.20/week).
5. Student Loan Thresholds Updated
Repayment thresholds are adjusted annually. Key 2026/27 changes:
- Plan 1: £24,990/year
- Plan 2: £27,295/year
- Plan 4 (Scotland): £31,395/year
- Plan 5: £25,000/year (new cohort)
- Postgraduate: £21,000/year
6. Scottish Income Tax: Rate Changes
Scotland operates its own income tax rates. See the full breakdown in our dedicated guide: Scottish Tax Bands Explained.
Calculate Your 2026/27 Take-Home
All these changes are already built into our UK Salary Calculator. Select 2026/27 from the tax year dropdown and get a fully updated breakdown instantly.