How much income can you receive before paying tax?
- 2025/26 tax year – £12,570 p.a.
- You start to lose this allowance when annual income exceeds £100,000
- This threshold is due to remain unchanged until April 2031
- If you only receive the basic State Pension and this rises above £12,570, the chancellor confirmed you should not be taxed on this.
How much income can you receive before paying higher rate tax (40%)?
- 2025/26 tax year – £50,270 p.a.
- This threshold is due to remain unchanged until April 2031
How much income can you receive before paying additional rate tax (45%)?
- 2025/26 tax year – £125,140 p.a.
- This threshold is due to remain unchanged until April 2031
How much dividend income can you receive before paying tax?
- 2025/26 tax year – £500 p.a.
Tax on Dividends
- Basic rate taxpayers will pay 10.75% from April 2026 up from 8.75%
- Higher rate taxpayers will pay 35.75% from April 2026 up from 33.75%
- Additional rate taxpayers pay 39.35%
Tax on Savings Interest
- From April 2027, basic rate tax on savings will increase from 20% to 22%
- From April 2027, higher rate tax on savings will increase from 40% to 42%
- From April 2027, additional rate tax on savings will increase from 45% to 47%
How much Savings interest can you receive before paying tax?
- Basic rate taxpayers – £1,000 p.a.
- Higher rate taxpayers – £500 p.a.
- Additional rate taxpayers – £0 p.a.
Capital Gains Tax (CGT)
- For the 2025/6 tax year, individuals can receive £3,000 of Capital Gains in the tax year before being charged CGT.
- Basic rate taxpayers pay 18% tax on Capital Gains
- Higher rate taxpayers pay 24% tax on Capital Gains
Property Income (Landlords)
- From April 2027, basic rate tax on income from property will increase from 20% to 22%
- From April 2027, higher rate tax on income from property will increase from 40% to 42%
- From April 2027, additional rate tax on income from property will increase from 45% to 47%
Inheritance Tax (IHT)
- The Inheritance Tax nil-rate band will remain at £325,000 per person until April 2031
- The residence nil-rate band will remain at £175,000 until April 2030
- The residence nil-rate band taper will continue to start at £2 million
- From April 2027, inherited pension funds will be subject to inheritance tax rules.
ISA contribution limits
- The 2025/26 annual ISA limit is £20,000
- The 2025/26 Junior ISA annual limit is £9,000
- From 6th April 2027, the annual ISA cash limit will be limited to £12,000 within the overall £20,000 limit for those aged under 65. Over 65s will still be able to put up to £20,000 into a Cash ISA.
- Government has committed to keep these limits at least until 5th April 2031
Pensions
- Please see amendments to Inheritance Tax rules above.
- Maximum Pension Commencement Lump Sum (“Tax Free Cash”) is frozen at £268,275.
- Annual Allowance for gross pension contributions is £60,000.
- roughly… Once total income exceeds £260,000 p.a. the annual gross pension input allowance starts to reduce. If total income is £360,000 or more, the annual gross pension input allowance is limited to £10,000. (Carry Forward may be an option.)
- The Money Purchase Annual Allowance for those who have flexibly accessed their pensions is £10,000. You can contribute £10,000 (gross) in a tax year, even if you have previously “flexibly” accessed a pension. You still need to earn at least £10,000 for this to work.
Salary Sacrifice
- From April 2029, employee pension contributions that are exempt from National Insurance contributions (NICS) will be capped at £2,000 a year if made via salary sacrifice.
Self Assessment
- From April 2029 taxpayers with PAYE and self assessment income will need to pay more of their tax liabilities ‘in year’. Government will also consult on timelier tax payment for those with only self assessment income. Ie HMRC aim to collect tax on a more regular basis
This post is intended as information only and does not constitute advice in any way. The information contained herein could be wrong or may have changed by the time you read it so should not be relied upon in any way.