What the April 2026 tax changes could mean for you

Below, we break down the most relevant updates coming into effect from 6 April 2026 and what they may mean for your financial plans.

This tax year brings a mix of rate adjustments, allowance increases, and strategic reforms. Some of the biggest shifts relate to dividend taxation, payroll rules, and changes affecting estate planning. 

At the same time, many core allowances remain frozen, meaning more people could move into higher tax bands over time. This is an effect known as fiscal drag.

If you receive dividend income, either from investments or as a company director, basic and higher rate dividend tax rates will rise from April 2026.

• Basic rate: rising from 8.75% to 10.75% 
• Higher rate: rising from 33.75% to 35.75% 
• Additional rate: remains at 39.35% 

The £500 tax‑free dividend allowance remains unchanged.

For those who rely on dividends for income, now may be a good time to consider how you balance salary, dividends, and other sources of income to manage your overall tax position.

While income tax rates are not changing, the thresholds and personal allowance are remaining frozen:

• The personal allowance stays at £12,570 for the 2026/27 tax year. 
• Higher‑rate and additional‑rate thresholds also remain unchanged until at least April 2031.

Because income typically rises over time, more of your income may gradually fall into higher brackets. This subtly increases the amount of tax you pay, even when rates don’t change.

Scottish taxpayers

If you pay Scottish income tax, the rate bands for earned income see minor adjustments for 2026/27, though the rates themselves remain the same.

A number of other allowances will rise from April 2026. These include:

• Married Couple’s Allowance increases from £11,270 to £11,700, with corresponding increases to income limits and minimum amounts.
• Blind Person’s Allowance rises from £3,130 to £3,250.
• Qualifying care relief increases to £20,440, with higher weekly amounts for those receiving qualifying payments.

Some reliefs are decreasing, including:

• Income tax relief for Venture Capital Trusts reducing from 30% to 20% from April 2026.
• Carried interest being treated as trading profits for tax purposes and subject to income tax and national insurance (with adjustments for qualifying carried interest). 

If you invest in venture capital schemes or receive carried interest, these changes may influence how you structure future commitments.

Several updates that affect employers, employees, and directors will also begin in April 2026.

Statutory Sick Pay (SSP)

SSP becomes more generous and more widely accessible:

• No Lower Earnings Limit to qualify
• Payable from day one of sickness
• Paid at 80% of normal weekly earnings or the flat rate, whichever is lower

Employers may need to update payroll systems and employment policies to accommodate these changes.

Student loan Plan 5

A new repayment plan, known as Plan 5, launches on 6 April 2026. This will become the default plan when an employee’s loan type isn’t known, until HMRC provides the correct plan via a start notice.

One of the biggest structural changes to note is how inheritance tax reliefs for some business and agricultural assets are set to change. While these assets are already within scope of inheritance tax, future relief may be more limited, albeit with an additional allowance and a lower rate.

• More estate valuations may be required
• Farming families and business owners may need to review their estate planning
• Lifetime gifting strategies may become more relevant

If your estate includes business interests or agricultural property, seeking personalised financial planning advice could be valuable.

While there are no major changes to Capital Gains Tax (CGT) allowances for April 2026, the annual exemption remains at £3,000 per person. 

ISA allowances remain:

• £20,000 total across ISA types for 2026/27
• No tax on interest, growth, or withdrawals within the ISA wrapper

However, from April 2027, those aged 64 or under will see the cash ISA limit fall to £12,000, making 2026/27 the last year to pay the full £20,000 into cash ISAs if suitable for your plans.

With so many changes arriving at once, now is an ideal time to review your financial plans. 

Consider:

• How higher dividend tax rates may affect your income strategy
• Whether frozen income tax thresholds will influence how you take earnings
• How updated allowances apply to your personal circumstances
• Whether inheritance tax reforms affect your long‑term plans
• How payroll‑related changes might impact you if you’re an employer or employee

A financial adviser can help you understand how these updates fit into your broader goals while helping you move into the new tax year informed and confident.

Fees and charges apply.

This article is for information purposes only. It is not intended as investment or tax advice.

Schroders Personal Wealth does not provide personal tax advisory and tax compliance, however we can introduce you to a relevant specialist.  Schroders Personal Wealth might receive a referral fee from some of the partners we introduce to you.

In preparing this article we have used third party sources which we believe to be true and accurate as at the date of writing but can give no assurances or warranty regarding the accuracy, currency or applicability of any of the contents in relation to specific situations and particular circumstances.