As we move into the 2025/26 tax year, it’s important for individuals and businesses alike to understand the latest updates and how they might affect your finances. At Clear Start Accountants, we’re here to break down the key changes so you can stay informed and prepared.
📆 When does the new tax year start?
The 2025/26 tax year runs from 6 April 2025 to 5 April 2026.
💷 1. Income Tax Bands
There are no changes to the main income tax thresholds in England, Wales and Northern Ireland. The bands remain as follows:
Personal Allowance: £12,570 (unchanged)
Basic Rate (20%): £12,571 to £50,270
Higher Rate (40%): £50,271 to £125,140
Additional Rate (45%): Over £125,140
👉 Note: In Scotland, income tax bands differ due to devolved powers. Scottish taxpayers should refer to the Scottish Government’s budget for specific rates.
🏡 2. National Insurance Contributions (NICs)
One of the most significant changes is to National Insurance:
Class 1 Employee NICs: Reduced from 10% to 8% for earnings between £12,570 and £50,270.
Self-employed Class 4 NICs: Reduced from 8% to 6% for profits between £12,570 and £50,270.
Class 2 NICs: Abolished – self-employed individuals will no longer need to pay this flat-rate contribution.
This represents meaningful savings for employees and the self-employed.
🧾 3. Dividend Allowance and Capital Gains Tax
The Dividend Allowance has been halved again to £500 (was £1,000 in 2024/25).
The Capital Gains Tax (CGT) Annual Exempt Amount is now £3,000, down from £6,000 in the previous year.
This means investors and company directors may face higher tax bills on dividend income and capital gains.
🏠 4. Property and Buy-to-Let Updates
There are no major changes to Stamp Duty Land Tax (SDLT) thresholds in England and Northern Ireland. However, the government has reaffirmed its commitment to reviewing property taxes, and we may see future changes announced later in the year.
💼 5. Corporation Tax and Business Support
Corporation Tax remains at 25% for companies with profits over £250,000.
For companies with profits under £50,000, the small profits rate of 19% applies.
Profits between £50,000 and £250,000 are taxed at a tapered rate.
The Full Expensing Scheme, allowing companies to deduct 100% of the cost of eligible plant and machinery, has been made permanent.
🧒 6. Child Benefit Changes
From April 2025, the High Income Child Benefit Charge threshold rises from £50,000 to £60,000. It is also being gradually tapered up to £80,000, meaning more families will retain their full entitlement.
👩💼 7. Pension and Savings Changes
The Annual Allowance for pension contributions remains at £60,000.
The Lifetime Allowance was officially abolished from April 2024 – this continues into 2025/26.
The ISA allowance remains at £20,000.
Need Help Navigating the New Tax Year?
At Clear Start Accountants, we understand that staying up to date with tax changes can be overwhelming. Whether you're self-employed, running a business, or looking to optimise your personal finances, our expert team is here to help you make the most of your money in 2025/26.
📞 Contact us today to book a free consultation.
