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TL;DR
The Autumn Budget 2024 set the major fiscal parameters in force for 2025/26 and 2026/27, including income tax threshold freezes through to 2028, higher employer National Insurance from April 2025, capital gains tax rate rises, and continued corporation tax at 25%. The Spring Statement 2025 made further adjustments. This tracker summarises the key personal finance implications of announced policy.
UK fiscal policy in 2026 reflects the decisions taken in the October 2024 Autumn Budget, the March 2025 Spring Statement, and a range of secondary legislation implementing specific measures. For personal finance, the most significant changes include the continuation of income tax and National Insurance threshold freezes, which cause fiscal drag as wages rise, the increase in employer National Insurance contributions from April 2025, and changes to capital gains tax and inheritance tax policy. This page tracks the main policy changes and their practical implications for UK taxpayers.
All tax figures and policy information in this tracker are verified against HMRC, HM Treasury, and legislation.gov.uk sources. Tax policy is subject to change through Budgets, Finance Acts, and secondary legislation. The next Budget is expected in autumn 2026; any changes announced will be added to this tracker within 48 hours of announcement.
Key facts (2026)
- Income tax personal allowance: frozen at £12,570 until April 2028. Basic rate band: 20% on £12,571 to £50,270. Higher rate: 40% on £50,271 to £125,140. Additional rate: 45% above £125,140 (HMRC 2025/26).
- Employer National Insurance rate increased to 15% (from 13.8%) from April 2025; employer NI threshold reduced to £5,000 per employee per year (HM Treasury, Autumn Budget 2024).
- Capital gains tax: higher rate for residential property remains 24%. CGT on other assets: basic rate taxpayers pay 18%, higher and additional rate taxpayers pay 24%, effective from October 2024 (HMRC).
- Corporation tax: 25% for companies with profits above £250,000; small profits rate 19% for profits below £50,000; marginal relief applies between £50,000 and £250,000 (HMRC).
- State pension triple lock: uprated by 4.1% for 2025/26 (earnings growth measure), taking the full new state pension to £221.20 per week (DWP).
Income tax threshold freeze and fiscal drag
The income tax personal allowance and rate band thresholds have been frozen since 2022 and are set to remain frozen until April 2028 under the Autumn Budget 2024 parameters. This creates a mechanism known as fiscal drag: as wages rise with inflation or through pay awards, more income is drawn into higher rate bands without any formal rate increase. A worker whose salary rises from £48,000 to £52,000 over two years moves from being a basic rate payer to a higher rate payer on the additional income, paying 40% on the amount above £50,270. The personal allowance taper also means that taxpayers earning between £100,000 and £125,140 lose £1 of personal allowance for every £2 earned above £100,000, creating an effective 60% marginal rate on income in that band. The Institute for Fiscal Studies (IFS) has calculated that the threshold freeze is one of the largest fiscal tightening measures in recent UK tax history in terms of its long-run yield.
Employer National Insurance changes
The October 2024 Budget increased the employer National Insurance contribution rate from 13.8% to 15% from 6 April 2025. Simultaneously, the secondary threshold - the earnings level above which employer NI is payable - was reduced from £9,100 per year to £5,000 per year. The effect is to substantially increase the NI cost per employee, particularly for employers of lower-paid workers where the threshold reduction has the most proportionate impact. The Employment Allowance, which allows small businesses to offset up to £5,000 of NI liability, was increased to £10,500 from April 2025 to partially compensate smaller employers. Large employers and multi-site businesses with many lower-paid staff bear the largest impact and may face significant additional annual payroll costs as a result.
Capital gains tax changes
From 30 October 2024, the CGT rates on assets other than residential property increased. Basic rate taxpayers now pay 18% (up from 10%) on qualifying gains; higher and additional rate taxpayers pay 24% (up from 20%). Residential property CGT rates were unchanged: 18% for basic rate taxpayers and 24% for higher rate taxpayers. The Business Asset Disposal Relief (formerly Entrepreneurs Relief) lifetime limit remains £1 million, but the CGT rate on qualifying disposals increased from 10% to 14% from April 2025 and 18% from April 2026. Investors Relief was similarly reformed. The annual CGT exemption remains at £3,000 for 2025/26, sharply reduced from £12,300 before the 2023 Budget. This means more gains are now taxable, and the rate increases compound the effect on investment portfolios and business disposals.
Inheritance tax changes from 2025
The October 2024 Budget announced significant reforms to inheritance tax. From April 2026, agricultural property relief and business property relief will be capped: the first £1 million of combined agricultural and business property value will continue to attract 100% relief, but the excess will qualify only for 50% relief, resulting in an effective IHT rate of 20% on the excess. This is a major change for farming families and business owners. Separately, unused pension funds and death benefits from defined contribution pensions will become subject to IHT from April 2027, reversing the position under which pensions were widely used as an IHT planning tool by placing them outside the estate. Existing IHT nil-rate band of £325,000 and residence nil-rate band of £175,000 remain in place and frozen at those levels until 2030.
State pension and benefit uprating
The state pension triple lock mechanism, which uprates the state pension by the highest of earnings growth, CPI inflation, or 2.5%, resulted in a 4.1% increase for 2025/26, the earnings growth measure having been the highest of the three. The full new state pension is £221.20 per week in 2025/26, up from £221.20 in the prior year. For 2026/27, the uprating decision was based on earnings growth of 4.0%, taking the full new state pension to approximately £230 per week. The government has committed to the triple lock for the duration of the parliament, though debate continues around the long-term fiscal sustainability of the mechanism.
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Frequently asked questions
When is the next UK Budget?
The next full Budget is expected in autumn 2026. The Chancellor may also deliver a Spring Statement in March 2026 with an updated fiscal assessment and any supplementary measures, though Spring Statements are typically less extensive than full Budgets. Dates are announced by HM Treasury. The Office for Budget Responsibility (OBR) publishes its economic and fiscal forecasts alongside each Budget and Spring Statement at obr.uk.
What is the income tax rate on earnings between £100,000 and £125,140?
The effective marginal rate is 60% in this band. For every £2 earned above £100,000, the £12,570 personal allowance is reduced by £1. This means an additional pound of earnings generates 40p in income tax on the extra earnings plus 20p in tax on the personal allowance lost (taxed at the basic rate), giving 60p total. This band effectively disappears the personal allowance by the time income reaches £125,140. HMRC guidance on personal allowance reduction is available at gov.uk.
How much has the CGT annual exemption been reduced?
The annual CGT exemption has been reduced substantially in recent years: from £12,300 in 2022/23, to £6,000 in 2023/24, to £3,000 in 2024/25, where it remains for 2025/26. This reduction means that gains on investments, rental property disposals, and other capital assets that were previously covered by the exemption are now taxable. Combined with the rate increases from October 2024, the effective tax cost of capital gains has risen significantly for most investors.
When do pension funds become subject to inheritance tax?
From April 2027, unused defined contribution pension funds and death benefits will be included in a deceased's estate for IHT purposes. This applies to personal pensions, SIPPs, and defined contribution workplace pensions. Defined benefit scheme death benefits are also affected in some circumstances. The change requires a review of pension and estate planning for those who have used pensions as an IHT shelter. Consult a regulated financial planner for personalised advice before making changes.
What is the Employment Allowance and who qualifies?
The Employment Allowance allows eligible employers to reduce their employer National Insurance bill by up to £10,500 per year (from April 2025, increased from the previous £5,000). Most small and medium businesses qualify, provided their total employer NI liability in the previous tax year was below £100,000. Companies where the sole director is also the only employee do not qualify. Apply for Employment Allowance through payroll software or HMRC's PAYE service.
How we verified this guide
All tax rates, allowances, and policy changes were verified against HMRC published guidance, HM Treasury Autumn Budget 2024 documents, OBR Economic and Fiscal Outlook, and Finance Act 2025 provisions during May 2026. We do not accept payment from government agencies or tax advisers.
Primary sources
- HM Treasury - Autumn Budget 2024 documents
- HMRC - Income tax rates and allowances 2025/26
- HMRC - Capital gains tax rates 2025/26
- Finance Act 2025 - legislation.gov.uk
Last reviewed: May 2026.