By Chandraketu Tripathi · Updated 6 April 2026 · Fact-checked Breaking · 6 April 2026Today — 6 April 2026 — marks the start of the 2026/27 UK tax year. A wave of changes hits your pay packet, tax bill, savings and benefits simultaneously. Some are positive, others will cost you money. Here is a complete rundown of every change and what it means for your finances.
Your ISA Allowance Resets TodayFrom 6 April 2026, every UK adult has a fresh £20,000 ISA allowance. This is the last full tax year in which under-65s can contribute the full £20,000 to a cash ISA — from April 2027, the cash ISA limit for under-65s drops to £12,000. The best easy access cash ISA rate is currently 4.84% AER from Chip. Open or top up your ISA now to start earning tax-free interest immediately. IHT Hits Farms and Businesses From TodayFrom 6 April 2026, agricultural and business property relief is capped at £2.5 million per person (transferable to a spouse, giving couples up to £5 million). Above this threshold, assets receive 50% relief — an effective IHT rate of 20% rather than the previous 0%. AIM-listed shares are also restricted to 50% relief regardless of value. This is one of the most significant IHT changes in decades and affects thousands of family farms and businesses. Dividend Tax Rise — Investors Outside ISA AffectedThe basic rate of dividend tax rises from 8.75% to 10.5% and the higher rate from 33.75% to 34.5% from 6 April 2026. The dividend allowance (the amount you can receive tax-free) remains at just £500. If you hold dividend-paying investments outside an ISA or SIPP, you will pay more tax from today. Moving investments into an ISA wrapper eliminates dividend tax entirely. Making Tax Digital — Mandatory from TodayFrom 6 April 2026, sole traders and landlords with gross income above £50,000 must keep digital records and submit quarterly updates to HMRC through approved software. This replaces the annual self-assessment return with four quarterly submissions plus a final declaration. HMRC will not apply late submission penalties in 2026/27 but will from April 2027. 💡 The most important action today: open or top up your ISA with your fresh £20,000 allowance. Every day you delay is a day you miss out on tax-free interest. Best cash ISA rates are at 4.84% AER. Even if you cannot use the full allowance, depositing something today starts your tax-free interest earning immediately. ⭐ KEY TAKEAWAY 6 April 2026 brings the most consequential package of tax and benefit changes in several years. The headline wins are: State Pension rises 4.8%, UC rises above inflation, two-child limit removed. The key risks are: IHT now hits farms and businesses, dividend tax rises for investors outside ISAs, MTD requires digital record-keeping for higher-income self-employed. Review your personal position against every line of the table above to identify where you need to act. Frequently Asked QuestionsWhen does the 2026/27 tax year start? The 2026/27 UK tax year starts on 6 April 2026 and ends on 5 April 2027. All income, allowances and tax thresholds reset from this date. Your fresh £20,000 ISA allowance, £60,000 pension annual allowance and £3,000 CGT exempt amount all become available from 6 April. What changes from 6 April 2026? Key changes include: State Pension rises 4.8% to £241.30/week, Universal Credit rises 6.1%, ISA allowances reset to £20,000, IHT on farms and businesses is capped at £2.5m, dividend tax rises 2%, Making Tax Digital becomes mandatory for self-employed earning £50k+, work-from-home tax relief ends, and legacy benefits officially end. What is the ISA allowance for 2026/27? The ISA allowance for 2026/27 is £20,000 per person. This is the last full year at £20,000 for under-65s — from April 2027, the cash ISA limit drops to £12,000 for under-65s, with the remaining £8,000 needing to go into a Stocks and Shares ISA. Over-65s keep the full £20,000 cash ISA allowance. Does the work-from-home tax relief end in 2026? Yes. From 6 April 2026, the flat-rate home-working tax relief of £6 per week (worth up to £62/year for basic rate taxpayers or £124 for higher rate) has been abolished. If your employer reimburses you for home-working costs, that payment remains tax-free. But if you work from home without employer reimbursement, you can no longer claim this relief. |
New Tax Year 2026/27: Every Change to Your Money from 6 April 2026
|
|
