Key Changes for 2025/26
Here's everything that changed for the 2025/26 tax year (starting 6 April 2025) and how it affects your take home pay.
Income Tax — Thresholds Frozen Again
The personal allowance remains at £12,570 and the higher rate threshold stays at £50,270. These have been frozen since 2021 and will remain frozen until at least 2028. Because wages are rising but thresholds aren't, more people are being pulled into higher tax bands each year — a process called "fiscal drag."
Impact of Frozen Thresholds
If thresholds had risen with inflation since 2021, the personal allowance would be approximately £14,800 and the higher rate threshold would be around £59,000. The freeze means someone on £50,000 pays roughly £1,100 more tax per year than they would with inflation-adjusted thresholds.
National Insurance
Employee NI rates for 2025/26 remain at 8% (between £12,570 and £50,270) and 2% above that. Employer NI increased to 15% from the previous 13.8%, and the secondary threshold dropped from £9,100 to £5,000. This is a significant cost increase for employers.
Capital Gains Tax
The CGT annual exemption remains at £3,000 (down from £6,000 in 2023/24 and £12,300 in 2022/23). CGT rates on shares remain at 10%/20%. Residential property rates remain at 18%/24%.
Dividend Tax
The dividend allowance stays at £500 (down from £1,000 in 2023/24 and £2,000 in 2022/23). This affects company directors and investors taking income as dividends.
National Living Wage
The National Living Wage (21+) increased to £12.21 per hour. For someone working 37.5 hours per week, this is an annual salary of £23,809. Check with our minimum wage calculator.
State Pension
The full new state pension increased to £230.25 per week (£11,973/year) under the triple lock.
See how the changes affect your take home pay
Calculate your 2025/26 take home pay →