OUR
PROCESS
GET IN TOUCH
WITH US
GET TO KNOW
US
TAX RATES, ALLOWANCES & BANDS
BANDS
ALLOWANCES &
TAX RATES
BANDS
ALLOWANCES &
TAX RATES
Rates & Allowances Pages ► Income Tax Rates & Allowances ■ Capital Gains Tax ■ Pensions ■
■ Inheritance Tax ■ National Insurance ■ Statutory Pay ■ Child Benefit ■ Vehicles ■ VAT ■ ISAs ■
v
Services
.png?crc=484381513)
01332 202660
61 Friar Gate Derby DE1 1DJ
Income Tax Rates & Allowances
Personal Allowance — The standard Personal Allowance for 2026/27 is £12,570. This is the amount of income you don't have to pay tax on.
The Personal Allowance has been frozen at £12,570 since 2021/22, and this freeze is confirmed to continue until at least April 2031. It's gradually withdrawn for higher earners: for every £2 of adjusted net income above £100,000, the allowance reduces by £1, meaning it's reduced to zero entirely once income reaches £125,140.
Main Allowances 2026/27 Personal Allowance* - up to 10% of the PA can be transferred to a spouse or civil partner who is a basic rate taxpayer £12,570 Blind Person's Allowance £ 3,250 Dividend Tax Allowance - taxes the first £500 at nil £ 500 Personal Savings Allowance - Basic rate taxpayer £ 1,000 Personal Savings Allowance - Higher rate taxpayer £ 500 You don't get a Personal Allowance on taxable income over £125,140.
Income Tax Rates - applied to the amount of income after deduction of personal allowances.
Income after allowances 2026/27 Band of taxable income Rate Dividend rate Starting rate for savings up to £5,000 0% Basic rate up to £37,700 20% 10.75% Higher rate £37,701 - £125,140 40% 35.75% Additional rate Over £125,140 45% 39.35% Married Couple's Allowance - https://www.gov.uk/married-couples-allowance
People born before 6 April 1948 - https://www.gov.uk/income-tax-rates/born-before-6-april-1948
Blind Person's Allowance - https://www.gov.uk/blind-persons-allowance
Capital Gains Tax
Capital Gains Tax (CGT) – is a tax on the profit when you sell (or dispose of) something that has increased in value. You pay CGT on the gain when you dispose of most personal possessions worth £6,000 or more, apart from your car, property that isn't your main home, your main home if you've let it out, used it for business or it's very large, shares that aren't in an ISA, and business assets (but see Business Asset Disposal Relief below).
You don't usually pay tax on gifts to your husband, wife, civil partner or a charity. You don't pay capital gains tax on certain assets, including any gains you make from: ISAs, UK government gilts and Premium Bonds, betting, lottery or pools winnings.
Capital Gains Tax allowances – You only have to pay capital gains tax on your overall gains above your tax-free allowance (called the Annual Exempt Amount), which is £3,000 for 2026/27. Following changes announced in the Autumn 2024 Budget, capital gains tax rates were aligned across all asset types from 30 October 2024: gains are now taxed at 18% within the basic rate band and 24% above it, whether the asset is residential property, shares, or another chargeable asset — there is no longer a separate, lower rate for non-property gains. An income tax trade loss may be offset against capital gains
TAX RATES - INDIVIDUALS 2024/25* 2025/26 2026/27 Standard rate (all chargeable assets) 18% 18% 18% Higher rate (all chargeable assets) 24% 24% 24% Standard rate for gains on residential property 18% 18% 18% Higher rate for gains on residential property 24% 24% 24% Annual Exempt Amount Individuals £3,000 £3,000 £3,000 *For 2024/25, the 18%/24% rates applied to disposals made on or after 30 October 2024 only; gains realised earlier in that tax year were taxed at the previous 10%/20% (or 18%/28% for residential property) rates.
Business Asset Disposal Relief (BADR) — formerly known as Entrepreneurs' Relief, renamed with effect from 6 April 2020 — may be available for certain business disposals and has the effect of charging qualifying gains at a reduced rate, up to a lifetime limit. That lifetime limit has changed significantly over the years: it started at £10 million (from 6 April 2011), was cut sharply to £1 million from 11 March 2020, and remains £1 million for 2026/27. The rate charged on qualifying gains has also risen in stages — from 10%, to 14% from 6 April 2025, to 18% from 6 April 2026.
The relief applies to gains arising on a disposal of:
- the whole, or part, of a trading business that is carried on by the individual, either alone or in partnership, in the 24 months prior to sale
- shares in an unquoted trading company, or holding company of a trading group, provided that the individual owns broadly a 5% shareholding (of the ordinary share capital and voting rights, and of distributable profits and net assets on a winding up) throughout the 24 months prior to sale, and has also been an officer or employee of the company throughout that time
- assets used by a business or a company which has ceased within the last three years
- assets used in a partnership or by a company but owned by an individual, if the assets disposed of are 'associated' with the withdrawal of the individual from participation in the partnership or the company
A trading business includes professions but only includes a property business if it is a 'furnished holiday lettings' business — though note that the furnished holiday lettings regime itself was abolished from 6 April 2025, so this route to qualification no longer applies in the way it once did and is worth checking carefully with affected clients.
Restrictions on obtaining the relief on an 'associated disposal' are likely to apply in certain specific situations. This includes the common situation where a property is in personal ownership but is used in an unquoted company or partnership trade in return for a rent. Relief is restricted where rent is paid.
Business Asset Rollover Relief — You may be able to delay paying Capital Gains Tax if you:
- dispose of some business assets
- use all or part of the proceeds to buy new assets
Business Asset Rollover Relief means you won't pay any tax until you sell the new asset. You may then need to pay tax on the gain from the original asset.
You can also claim:
- provisional relief if you're planning to buy new assets with your proceeds but haven't done so yet
- relief if you use the proceeds to improve assets you already own
Gift Hold-Over Relief — You may be able to claim Gift Hold-Over Relief if you give away business assets (including certain shares) or sell them for less than they're worth to help the buyer. Gift Hold-Over Relief means:
- you don't pay Capital Gains Tax when you give away the assets
- the person you give them to pays Capital Gains Tax (if any is due) when they sell (or 'dispose of') them
Tax isn't usually payable on gifts to your husband, wife, civil partner or a charity.
Eligibility — The conditions for claiming relief depend on whether you're giving away business assets or shares.
Pensions
In simple terms, a pension scheme is just a type of savings plan with favourable tax treatment.
Pensions set up by your employer — also known as occupational pensions — broadly fall under two main categories: defined benefit pension schemes and defined contribution pension schemes.
Pensions set up by yourself — contract-based schemes are provided by insurance companies and other pension providers. They're effectively a contract between you and the pension provider and include Personal pensions, SIPPs, Stakeholder pensions and Retirement annuities.
How much can I pay into a pension? — If you're a UK taxpayer, for the tax year 2026/27 the standard rule is that you'll get tax relief on pension contributions of up to 100% of your earnings or a £60,000 annual allowance, whichever is lower.
For example, if you earn £20,000 but put £25,000 into your pension pot (perhaps by topping up earnings with some savings), you'll only get tax relief on £20,000.
Any contributions you make over the annual allowance won't attract tax relief and may be subject to a tax charge based on your marginal rate of Income Tax.
However, you can carry forward unused allowances from the previous three tax years, as long as you were a member of a pension scheme during those years.
But there are exceptions to this standard rule:
- If you have a defined contribution pension and have flexibly accessed it, a reduced Money Purchase Annual Allowance of £10,000 applies to further contributions to defined contribution schemes.
- The annual allowance is also tapered for high earners: it reduces by £1 for every £2 that your adjusted income exceeds £260,000, down to a minimum allowance of £10,000, and this taper only applies if your threshold income also exceeds £200,000.
Automatic enrolment — Since October 2012, whether you work full time or part time, your employer will have to enrol you in a workplace pension scheme if you:
- are not already in a suitable workplace pension scheme
- are at least 22 years old, but under State Pension age
- earn more than £10,000 a year (for 2026/27)
As long as you meet these criteria, you'll also be covered if you're on a short-term contract or an agency pays your wages. If you earn less than £10,000, but above £6,240 (the lower earnings limit for 2026/27), your employer doesn't have to automatically enrol you in the scheme. You can still ask to join — your employer can't refuse and must make contributions for you.
Accessing your pension — Since 6 April 2015, most people aged 55 and over with a defined contribution (money purchase) pension have had the freedom to draw down as much or as little of their pension pot as they want, whenever they want, following the pension freedoms introduced at Budget 2014. This minimum access age is due to rise to 57 from 6 April 2028.
Inheritance Tax
Inheritance tax is paid if a person's estate is worth more than £325,000 when they die. This threshold (the "nil-rate band") has been frozen at this level since 2009 and, following the November 2025 Budget, is confirmed to remain frozen until April 2031.
An estate is exempt from IHT if the deceased left everything to their husband, wife or civil partner. Married couples and civil partners can give any value of gifts to each other during their lifetime without IHT being due on them. If someone's estate is less than the IHT threshold of £325,000, the remaining threshold can be transferred to their husband, wife or civil partner's estate when they die. This means the surviving partner's estate can be worth up to £650,000 before any IHT is due. IHT may also be payable on gifts made in an individual's lifetime but within 7 years of death. Transfers of assets into trust made in an individual's lifetime may be subject to an immediate charge at lifetime rates.
Residence nil-rate band — Since April 2020, an additional allowance of £175,000 per person has applied where a main residence is left to direct descendants (children, grandchildren, and certain others), on top of the standard nil-rate band. Like the main threshold, this is frozen until April 2031. Combined with the transferable nil-rate band, a married couple or civil partners can together shelter up to £1 million from IHT where a family home passes to direct descendants. This additional allowance is gradually withdrawn for estates worth more than £2 million, reducing by £1 for every £2 over that threshold.
Upcoming changes worth planning ahead for:
- From 6 April 2026, Business Property Relief and Agricultural Property Relief will be capped at 100% relief on the first £1 million of combined qualifying assets (transferable between spouses), with only 50% relief available above that — a significant change for family businesses and farms that could previously claim unlimited 100% relief.
- From 6 April 2027, most unused pension funds and death benefits will, for the first time, be included in the value of an estate for IHT purposes. Pensions have historically sat outside the taxable estate, so this is a major shift for anyone who has been relying on their pension as a tax-efficient way to pass on wealth. Pensions left to a surviving spouse or civil partner will remain exempt, as with other assets.
Standard nil rate band £325,000 Annual Exemption £3,000 Small Gifts £250 Normal expenditure out of income Rates of Inheritance tax % Lifetime rate 20 Death rate 40 Death rate if >10% charitable legacies made 36 IHT may also be payable on gifts made in an individual's
lifetime but within seven years of death.Years before death Tax you pay 0-3 40% 3-4 32% 4-5 24% 5-6 16% 6-7 8% There’s no IHT on a wedding gift worth up to: Gift from Amount (£) Parent 5,000 Grandparent 2,500 Bride/groom 2,500 Other 1,000 Business Relief — allows a business (or shares in an unquoted trading business) to be passed on with relief from Inheritance Tax. Previously, qualifying assets could receive 100% relief with no upper limit. From 6 April 2026, this changed: 100% relief now applies only to the first £1 million of combined qualifying Business Relief and Agricultural Relief assets. Above that £1 million, relief is reduced to 50%, meaning IHT at the standard 40% rate effectively applies at an effective 20% rate on the excess.
Agricultural Relief — allows a working farm (agricultural property, including farmland and farmhouses used for agricultural purposes) to be passed on with relief from Inheritance Tax. As with Business Relief, this previously offered 100% relief with no cap. From 6 April 2026, Agricultural Relief now shares the same £1 million combined allowance with Business Relief — so a farm and any qualifying business assets held together are assessed against a single £1 million threshold for the full 100% rate, with 50% relief on the excess.
The £1 million allowance is transferable between spouses and civil partners on death, similar to the way the nil-rate band works — meaning a married couple or civil partners could potentially shelter up to £2 million of combined qualifying assets at the full 100% rate, if planned for correctly.
National Insurance
National Insurance contributions (NICs) qualify you for certain benefits including the State Pension.
RATES - CLASS 1 EMPLOYER AND EMPLOYEE 2024/25 2025/26 2026/27 Thresholds (per week) Lower earnings limit (LEL) (employees and employers) £123 £125 £129 Primary threshold (PT) (employees) £242 £242 £242 Secondary threshold (ST) (employers) £175 £96 £96 Upper earnings limit (UEL) (employees only) £967 £967 £967 Upper secondary threshold (UST) for under 21s (employers) £967 £967 £967 Apprentice upper secondary threshold (AUST) for under 25s £967 £967 £967 RATES - CLASS 1 EMPLOYER AND EMPLOYEE Employee rates Earnings below LEL 0% 0% 0% Earnings between LEL and PT 0% 0% 0% Earnings between PT and UEL 8% 8% 8% Deferred rate for certain employees with more than one job 2% 2% 2% Earnings above UEL 2% 2% 2% Employer rates Earnings below ST, UST or AUST 0% 0% 0% Above ST, UST or AUST 13.8% 15% 15% Employment allowance (EA) - offset against employer's Class 1 NICs £5,000 £10,500 £10,500 Class 1A - on employer-provided benefits-in-kind 13.8% 15% 15% RATES - OTHER Class 2 (self-employed, now voluntary only) - per week n/a* £3.50 £3.65 Small profits threshold (per year) £6,725 £6,845 £6,845 Class 3 (entitlement to pension & other benefits) - per week £17.45 £17.75 £18.20 Class 4 (self-employed) Lower profits limit LPL (per year) £12,570 £12,570 £12,570 Upper profits limit UPL (per year) £50,270 £50,270 £50,270 Rate - below LPL 0% 0% 0% Rate - between LPL and UPL 6% 6% 6% Rate - above UPL 2% 2% 2% *Class 2 National Insurance was abolished as a compulsory charge for the self-employed from April 2024. Since then, it has only been payable voluntarily, to protect State Pension and benefit entitlement for those with profits below the Small Profits Threshold.
Statutory Pay
In certain circumstances an employer may be required to make payments to an employee who is not at work. The most common reasons are sickness and maternity.
Statutory Sick Pay — Your employees may be eligible for SSP, which is £123.25 a week (2026/27) for up to 28 weeks. You can offer more if you have a company sick pay scheme (you can't offer less).
SSP has changed significantly from 6 April 2026, following reforms under the Employment Rights Act 2025:
- SSP is now payable from day one of sickness — the previous three "waiting days" before payment started have been removed.
- The Lower Earnings Limit no longer applies to SSP eligibility. Previously, employees earning below the LEL (£125/week for 2025/26) received no SSP at all. Now, all employees are eligible regardless of how much they earn.
- Lower earners now receive a proportionate amount: SSP is calculated at the lower of £123.25 per week or 80% of the employee's average weekly earnings. This means employees on modest earnings will receive a reduced, earnings-based amount rather than either the full flat rate or nothing.
This is a genuinely significant change for any employer with part-time, casual, or lower-paid staff, since many employees who previously fell outside SSP altogether will now generate a statutory cost from their very first day of sickness.
Maternity pay and leave — When you take time off to have a baby you might be eligible for Statutory Maternity Leave, which is 52 weeks and made up of:
- Ordinary Maternity Leave — first 26 weeks
- Additional Maternity Leave — last 26 weeks
You don't have to take 52 weeks, but you must take 2 weeks of leave after your baby is born.
Statutory Maternity Pay is paid for up to 39 weeks. You get:
- 90% of your average weekly earnings (before tax) for the first 6 weeks
- £194.32 or 90% of your average weekly earnings (whichever is lower) for the next 33 weeks
SMP is paid in the same way as your wages (e.g. monthly or weekly). Tax and NI will be deducted. The Lower Earnings Limit still applies for maternity, paternity, adoption and shared parental pay eligibility, even though it no longer applies to SSP — this threshold rises to £129/week from April 2026.
Type Max period 2026/27 rate Statutory Sick Pay* 28 weeks £123.25, or 80% of average weekly earnings if lower — no minimum earnings threshold Statutory Maternity Pay** First six weeks 90% of weekly earnings Next 33 weeks £194.32 or 90% of weekly earnings if lower Statutory Paternity Pay** 1 or 2 weeks £194.32 or 90% of weekly earnings if lower Statutory Adoption Pay** First six weeks 90% of weekly earnings Next 33 weeks £194.32 or 90% of weekly earnings if lower Shared Parental Pay** 37 weeks £194.32 or 90% of weekly earnings if lower *From 6 April 2026, SSP is payable from day one of sickness (the previous 3 waiting days were removed) and no longer requires a minimum weekly earnings threshold to qualify.
**To qualify for family-related statutory pay, employees must earn at least £129/week (2026/27) on average.Child Benefit
You'll usually get Child Benefit for children you're responsible for, even if you're not their parent. Only one person can get Child Benefit for each child. There are 2 Child Benefit rates.
Allowance Weekly rate 2026/27 Eldest or only child £27.05 Additional children £17.90 (per child) Child Benefit stops 31 August on or after your child's 16th birthday if they leave education or training. It continues if they stay in education or training (up to age 20), but you must tell the Child Benefit Office.
High Income Child Benefit Charge — You may have to pay a tax charge if you (or your partner, whichever of you has the higher income) have an adjusted net income over £60,000 and you or your partner get Child Benefit. The charge is based on individual income, not combined household income — so a two-earner household on £59,000 each keeps the full benefit, while a single earner on £70,000 does not, even if their household income is lower overall.
The charge is worked out at 1% of the Child Benefit received for every £200 of income above £60,000, with the benefit fully clawed back once income reaches £80,000.
If you're affected by the tax charge you can choose not to get Child Benefit payments, while still submitting a claim (this protects your National Insurance record, so it's usually worth doing even if you opt out of receiving the money). Alternatively, you can carry on getting Child Benefit and pay any tax charge at the end of each tax year — either through Self Assessment, or, since a simplification introduced in September 2025, directly through PAYE, without needing to register for Self Assessment at all if that's your only reason for filing.
What counts as income — To work out if your income is over the threshold, you'll need to work out your 'adjusted net income'. Your adjusted net income is your total taxable income before any personal allowances and less certain tax reliefs, such as trading losses, donations to charity made through Gift Aid, and pension contributions.
Vehicles
Car Benefit — The taxable benefit is calculated as a percentage of the list price of the car (its P11D value, including delivery and accessories, but excluding the first-year registration fee and Vehicle Excise Duty), on the day before it was first registered. The percentage depends on the rate at which the car emits CO2, and ranges from 3% up to a maximum of 37% of list price for 2026/27. Zero-emission electric vehicles now carry a BIK rate of 3% (up from 2% in 2025/26), reflecting the gradual phase-out of the very low rates EVs previously enjoyed.
Car Fuel Benefit — Where an employee has the benefit of private fuel for a company car, the same CO2-based percentage used to calculate the car benefit is applied to the 'fuel benefit multiplier' to work out the assessable benefit.
Fuel benefit multiplier: 2026/27 £29,200 (2025/26: £28,200)
Van Benefit — There is a tax charge for an employee who is provided with a company van that is made available for private use. There is also a tax charge where fuel is provided for private use. No taxable benefit arises for zero-emission vans.
Van benefit charge: 2026/27 £4,170 (2025/26: £4,020)
Van fuel benefit: 2026/27 £798 (2025/26: £769)
Employers pay Class 1A National Insurance at 15% on all of these benefit values (increased from 13.8% in April 2025).
Mileage Allowance Payments - are what an employee can receive from their employer for using their own vehicle for business.
Vehicle type Pence per mile Cars and vans to 10,000 miles 55p over 10,000 25p Bicycles 20p Motorcycles 24p The cars and vans rate for the first 10,000 business miles rose from 45p to 55p per mile with effect from 6 April 2026 — the first change to this rate since 2011/12. It applies retrospectively across the whole 2026/27 tax year, including to electric vehicles (there is no separate AMAP rate for EVs). All other rates are unchanged.
Advisory Fuel Rates - where employers reimburse employees for business travel in a company car. Pence/mile
Engine size Fuel type Rate from 1 June 2026 (pence per mile) 1400 or less Petrol 14 1400 or less LPG 11 1600 or less Diesel 15 1401 to 2000 Petrol 17 1401 to 2000 LPG 13 1601 to 2000 Diesel 17 > 2000 Petrol 26 > 2000 LPG 21 > 2000 Diesel 23 Fully electric Home charging 7 Fully electric Public charging 15 HMRC reviews Advisory Fuel Rates every quarter (1 March, 1 June, 1 September, 1 December). The previous quarter's rates can still be used for up to one month after new rates take effect. These figures apply only to company cars used for business travel, not to employees using their own vehicle (see the AMAP mileage rates table for that).
VAT
The standard rate of VAT is 20%. Some things are exempt from VAT, eg. postage stamps, financial and property transactions. The VAT rate businesses charge depends on their goods and services.
RATES AND LIMITS From 1.4.2024 From 1.4.2025 From 1.4.2026 Standard rate 20% 20% 20% Reduced rate 5% 5% 5% Annual registration limit £90,000 £90,000 £90,000 Annual de-registration limit £88,000 £88,000 £88,000 Cash & annual accounting turnover limit £1.35m £1.35m £1.35m Cash & annual accounting - exit turnover £1.6m £1.6m £1.6m Flat rate schemes - entry turnover limit £150,000 £150,000 £150,000 Flat rate schemes - exit turnover limit £230,000 £230,000 £230,000 The VAT registration threshold is £90,000, having risen from £85,000 on 1 April 2024 — the first increase since 2017. The deregistration threshold is £88,000. Both figures have remained unchanged through 2025/26 and 2026/27, with no change announced at the Spring Statement 2026.
We offer a comprehensive VAT service including assessing the benefits and disadvantages to your business of being VAT registered, deciding on the most appropriate scheme, attending to VAT registration, VAT returns preparation & dealing with more complex VAT issues.
ISAs
ISAs (Individual Savings Accounts) allow you to earn interest on your savings or investments tax-free. The amount you can put into your ISA is capped for each tax year — for 2026/27 it's £20,000, unchanged since 2017/18 and confirmed frozen until at least 2030. You can choose to split your ISA allowance across different ISAs, and since April 2024 you can also pay into more than one ISA of the same type in the same tax year (for example, two different Cash ISAs with different providers), as long as your combined contributions stay within £20,000.
You can choose from a Cash ISA, Stocks & Shares ISA, Innovative Finance ISA (IFISA), and Lifetime ISA (LISA). There's also a Junior ISA to help you save for the kids. The Help to Buy ISA is no longer available to new applicants — it closed to new accounts back in November 2019 — though see below if you already hold one.
- Cash ISA — a Cash ISA works like a savings account, only all the interest you earn is tax-free.
- Stocks & Shares ISA — you can also use an ISA to earn tax-free returns on investments.
- Innovative Finance ISA — allows you to earn tax-free interest by lending to people or businesses.
- Help to Buy ISA (closed to new savers) — a type of Cash ISA that was made for first-time house buyers. If you already hold one, you can still pay in up to £200 per month and claim your government bonus, but the scheme stopped accepting new applicants from 30 November 2019. Existing holders can keep contributing until November 2029, and must claim their bonus by November 2030.
- Lifetime ISA — for adults aged 18–50, you can save up to £4,000 a year (which counts within your overall £20,000 allowance), and the government adds a 25% bonus, up to £1,000 a year. It can be used to buy a first home worth up to £450,000, or accessed penalty-free from age 60 for retirement. Withdrawing for any other reason normally triggers a 25% charge.
- Junior ISA — if your child is under 18, you can open a Junior ISA (JISA) for them instead. The allowance is currently £9,000 per year, separate from and in addition to your own £20,000 allowance. You have a choice of Cash or Stocks & Shares, and you can divide the allowance between the two.
Changes on the horizon, worth knowing about now:
From 6 April 2027, the amount under-65s can save in a Cash ISA specifically will be cut to £12,000 (the overall £20,000 combined allowance stays the same — the rest would need to go into a Stocks & Shares or Innovative Finance ISA to use it in full). Savers aged 65 and over are unaffected and keep the full £20,000 Cash ISA allowance.
The Lifetime ISA is expected to be replaced by a new "First-Time Buyer ISA", likely from April 2028, following a government consultation launched in June 2026. If you're eligible for a LISA now, it may still be worth opening one before any transition.
Here are a few tips on how to get the maximum benefit from your ISA allowance:
- Use it or lose it — Your ISA allowance doesn't roll over to the next tax year
- Invest at the start of the tax year (6 April) — You'll get more benefit this way
- Keep adding to your ISA each year — you get a new allowance each tax year
Corporation Tax
Corporation tax is charged on the profits of companies and unincorporated bodies that are not partnerships, for example members' clubs.
The term profits includes all sources of income and capital gains. A company pays Corporation Tax on the profits it makes from doing business ('trading profits'), its investments, and selling assets for more than they cost ('chargeable gains' – company assets include land and property, equipment and machinery, and company shares). The rate of Corporation Tax is fixed by reference to financial years, which run from 1 April to 31 March.
Since April 2023, the UK has operated a tiered Corporation Tax system rather than a single flat rate:
Profit level Rate Up to £50,000 19% (Small Profits Rate) £50,000 – £250,000 25%, reduced by Marginal Relief on a sliding scale Over £250,000 25% (Main Rate) Financial years commencing 1 April 2023, 2024, 2025 and 2026: the rates and thresholds above remain unchanged, with no changes currently announced for 2026.
A couple of important notes:
- These thresholds (£50,000 and £250,000) apply to a standalone company with a 12-month accounting period and no associated companies. If your company has associated companies under common control, or a shorter accounting period, the thresholds are reduced proportionally — worth reviewing with us if this applies to you.
- Companies falling between the two thresholds don't simply pay a blended percentage — Marginal Relief is calculated using a specific formula based on your profits, so the effective rate rises gradually from 19% towards 25% as profits increase.
Company and Corporation Tax deadlines:
Action Deadline File accounts with Companies House 9 months after your year end Pay Corporation Tax 9 months and 1 day after your year end File a Company Tax Return 12 months after your year end We can help you set up and manage your business's finances so you achieve your strategic goals with minimum tax liability — including reviewing whether Marginal Relief applies to you, and planning ahead of your year end to manage your position proactively.
Capital Allowances
PLANT AND MACHINERY 2024/25 2025/26 2026/27 AIA of 100% on expenditure up to £1m £1m £1m Full expensing (companies only) - 100% on qualifying new main rate plant & machinery 100% 100% 100% New 40% first year allowance (all businesses, main rate assets) - from 1 January 2026 n/a n/a 40% Structures and buildings allowance 3% 3% 3% Main rate writing down allowance 18% 18% 14% from 1/4/2026 (companies) or 6/4/2026 (unincorporated) Special rate pool 6% 6% 6% Zero-emission cars / EV charging points (first year allowance) 100% 100% 100% (extended to April 2027) Commercial / industrial building (enterprise zone / Freeport tax site) 100% 100% 100% Research and development 100% 100% 100% MOTOR CARS 2024/25 2025/26 2026/27 Zero emission (new) 100% 100% 100% CO2 emissions 1-50g/km (main rate pool) 18% 18% 14% from April 2026 CO2 emissions over 50g/km (special rate pool) 6% 6% 6% Cars can never qualify for the Annual Investment Allowance, full expensing, or the new 40% first year allowance — they follow the separate CO2-based rules shown above.
Stamp Duty & Stamp Duty Land Tax
SDLT is payable in England & Northern Ireland. It applies to transactions in Wales up to 1 April 2018, from which date the Welsh Land Transaction Tax (LTT) applies. In Scotland, the Land and Buildings Transaction Tax (LBTT) replaced SDLT from April 2015.
Current thresholds (from 1 April 2025):
- SDLT (England & NI): nil rate up to £125,000, then 2%, 5%, 10% and 12% on successive bands above £250,000, £925,000 and £1.5 million respectively. First-time buyers get a nil rate up to £300,000 (on purchases up to £500,000). An additional 5% surcharge applies to second homes and buy-to-let purchases.
- LBTT (Scotland): nil rate up to £145,000 (£175,000 for first-time buyers), with an 8% Additional Dwelling Supplement on second homes and buy-to-lets.
- LTT (Wales): nil rate up to £225,000. Wales does not offer a separate first-time buyer relief — every buyer pays the standard LTT rates regardless of buying history.
Rates and thresholds are set separately by HMRC, Revenue Scotland and the Welsh Revenue Authority, and can change at each nation's respective fiscal events, so it's worth checking current figures before any transaction.
Higher rates for additional properties — If buying a new residential property means you'll own more than one, you'll usually have to pay a surcharge on top of the normal SDLT rates. This surcharge started at 3% when introduced on 1 April 2016, but was increased to 5% with effect from 31 October 2024, and remains at that rate for 2026/27.
The surcharge applies to the whole purchase price where the property costs £40,000 or more, and is added to every SDLT band — so the effective rates for an additional property become 5%, 7%, 10%, 15% and 17% (rather than the standard 0%, 2%, 5%, 10% and 12%). It generally doesn't apply if you're simply replacing your main residence, and if you buy a new main home before selling your previous one, the surcharge can usually be reclaimed once the old property is sold — provided you do so within the required time limit.
Rates for first time buyers (for properties worth £500,000 or less) Property value From 1 April 2025 - on the portion of value above the threshold £0-£300,000 0% £300,001-£500,000 5% £500,000+ Standard rates above apply Between 23 September 2022 and 31 March 2025, a temporary higher threshold applied (0% up to £425,000, with relief available on purchases up to £625,000). This reverted to the £300,000/£500,000 figures shown above from 1 April 2025.
Non-residential property from 17 March 2016 - on consideration falling in each band SDLT rate Up to £150,000 Zero £150,001 to £250,000 2% Over £250,000 5% Tax when you buy shares — If you buy:
- shares electronically (through the CREST system), you'll pay Stamp Duty Reserve Tax (SDRT)
- shares using a stock transfer form, you'll pay Stamp Duty if the transaction is over £1,000
The rate in either case is 0.5% of the consideration (rounded up to the nearest penny for SDRT, or to the nearest £5 for paper Stamp Duty).
You don't have to pay tax if you:
- are given shares for nothing (including settling a debt)
- subscribe to a new issue of shares in a company
- buy shares admitted to trading on a recognised growth market that isn't also listed on a main stock exchange — AIM shares are the most common example of this exemption
A significant change is coming: from 2027, Stamp Duty and SDRT on shares are due to be replaced by a single, self-assessed Securities Transfer Charge (STC), reported and paid through a new online portal, as part of a wider modernisation of how share taxes are administered. Finance Bill 2026 includes powers to begin piloting the new digital reporting service. The rate itself isn't expected to change materially, but the mechanics of how it's reported and collected will.
Investing in a small business
Enterprise Investment Scheme
The Enterprise Investment Scheme is designed to help smaller, higher-risk companies raise finance, and investors can obtain generous income tax and capital gains tax breaks for their investment. The table below sets out the income and capital gains tax reliefs.
Venture Capital Trusts
VCTs are designed to encourage private individuals to invest in smaller, high-risk unquoted trading companies. They can receive income tax relief of 20% of the amount invested, up to £200,000, following a reduction from the previous 30% rate with effect from 6 April 2026. Dividends paid out of VCTs are tax-free and capital gains are also tax-free.
Seed Enterprise Investment Scheme
A junior version of EIS, known as the Seed Enterprise Investment Scheme (SEIS), is also available — please see the table below for the differences.
VCT EIS SEIS Annual investment limit £200,000 £1 million (£2 million for knowledge-intensive companies) £200,000 Income tax relief for subscribers 20% 30% 50% Clawback if held for less than 5 years 3 years 3 years Tax free dividends? Yes No No Tax free capital gains? Yes Yes - after 3 years Yes - after 3 years Tax relief for losses? No Yes - after 3 years Yes - after 3 years IHT business property relief? No Yes* Yes* *From 6 April 2026, Business Property Relief is capped at 100% on the first £1 million of combined qualifying assets (shared with Agricultural Property Relief), with 50% relief above that threshold. This applies across an individual's qualifying holdings generally, not per investment.
