This is a record of what changed in the 2025/26 tax year, which ran from 6 April 2025 to 5 April 2026. Most of it still applies, because the thresholds are frozen — but if you want the figures for the current year, check our other guides or the calculator itself.
There was no single headline-grabbing reform. But the cumulative effect of frozen thresholds, slashed allowances, and higher employer NI meant most people paid more tax in 2025/26 than the year before — without a single rate technically going up. That’s fiscal drag for you, and it’s the government’s favourite stealth tax. Here’s what actually changed.
Income Tax: Thresholds Frozen. Again.
The Personal Allowance stays at £12,570. The higher-rate threshold stays at £50,270. These have been frozen since 2021/22 and won’t move until at least April 2028. Since the Autumn Statement confirmed the freeze extension, wages have kept rising while the thresholds haven’t — pushing millions more into higher tax bands without any actual rate change.
The additional rate threshold is still £125,140 (reduced from £150,000 in April 2023). Above that: 45% income tax, no Personal Allowance.
National Insurance
Employee NI stays at 8% (it was 10% until April 2024, and 12% before January 2024). The Primary Threshold is £12,570, aligned with the Personal Allowance.
But here’s the big one: employer NI jumped from 13.8% to 15% in April 2025, and the Secondary Threshold dropped from £9,100 to £5,000. That’s a serious cost hike for businesses. If your employer seems reluctant to give pay rises this year, this is why.
Dividend Allowance
Still at £500, where it landed in April 2024. It was £1,000 in 2023/24 and £2,000 in 2022/23. Dividend tax rates haven’t changed (8.75%, 33.75%, 39.35%), but with the allowance this low, virtually every dividend you take is now taxable.
Capital Gains Tax
The annual exempt amount stays at £3,000, having been halved from £6,000 in April 2024. But the rates went up in the October 2024 Budget: the lower rate rose from 10% to 18%, and the higher rate from 20% to 24% on most assets. These now match the residential property CGT rates. Business Asset Disposal Relief also rose from 10% to 14% for disposals on or after 6 April 2025. If you’re selling shares or a business, the tax bill is noticeably higher than it was.
Pensions
Annual allowance stays at £60,000. The Lifetime Allowance was scrapped in April 2024, replaced by a lump sum allowance of £268,275 and a lump sum and death benefit allowance of £1,073,100. The Money Purchase Annual Allowance (for people who’ve already accessed a pension flexibly) is still £10,000.
Stamp Duty
The temporary higher thresholds ended on 31 March 2025 and both nil-rate bands reverted. From 1 April 2025 the standard nil-rate band dropped from £250,000 back to £125,000, with a 2% band from £125,001 to £250,000, and first-time buyer relief fell from £425,000/£625,000 to £300,000/£500,000. On top of that, the additional property surcharge went up from 3% to 5% in October 2024 — a significant hit for landlords and second-home buyers.
High Income Child Benefit Charge
No change in 2025/26. The threshold had already risen from £50,000 to £60,000 in April 2024, with the taper running to £80,000, and it stayed there. Parents earning under £60,000 now keep full Child Benefit. A welcome change for many families.
Minimum Wage
The National Living Wage (workers 21+) went to £12.21/hour in April 2025, up from £11.44. For a full-time worker on 37.5 hours, that’s about £23,800/year. The age threshold dropped from 23 to 21 in April 2024.
What This All Means for You
The overall picture: higher effective tax rates for most people. Frozen thresholds, reduced CGT and dividend allowances, higher employer NI — it adds up. The employee NI cut helps, but for many it’s more than wiped out by fiscal drag pulling them into higher bands.
Use our take-home pay calculator to see exactly how the 2025/26 rates affect your specific situation.