TL;DR: every 2026/27 number in one place
Use this as a quick reference. Every figure is for the 6 April 2026 to 5 April 2027 tax year, applies to England, Wales, and Northern Ireland unless flagged Scotland.
Income tax (rUK)
| Item | 2026/27 | vs 2025/26 |
|---|---|---|
| Personal allowance | £12,570 | unchanged (frozen) |
| PA taper start | £100,000 | unchanged (frozen) |
| PA fully tapered at | £125,140 | unchanged (frozen) |
| Basic rate (20%) cap | £37,700 | unchanged (frozen) |
| Higher rate (40%) cap | £125,140 | unchanged (frozen) |
| Additional rate (45%) above | £125,140 | unchanged |
National Insurance (Class 1)
| Item | 2026/27 | vs 2025/26 |
|---|---|---|
| Lower Earnings Limit | £6,708 | +£208 (RPI uplift) |
| Primary Threshold (employee) | £12,570 | unchanged (frozen) |
| Upper Earnings Limit | £50,270 | unchanged (frozen) |
| Employee main rate (PT to UEL) | 8% | unchanged |
| Employee additional rate (above UEL) | 2% | unchanged |
| Secondary Threshold (employer) | £5,000 | unchanged from April 2025 |
| Employer NI rate (above ST) | 15% | unchanged from April 2025 |
Dividend tax
| Item | 2026/27 | vs 2025/26 |
|---|---|---|
| Dividend allowance | £500 | unchanged (frozen) |
| Basic rate (in basic IT band) | 10.75% | +2 pp (was 8.75%) |
| Higher rate (in higher IT band) | 35.75% | +2 pp (was 33.75%) |
| Additional rate (above £125,140) | 39.35% | unchanged |
Corporation tax
| Item | 2026/27 |
|---|---|
| Small profits rate (≤ £50,000) | 19% |
| Marginal-relief band (£50k–£250k) | 26.5% effective marginal |
| Main rate (≥ £250,000) | 25% |
| Marginal relief fraction | 3/200 |
Pension allowances + student loan thresholds
| Item | 2026/27 |
|---|---|
| Pension annual allowance | £60,000 |
| Threshold income (taper trigger) | £200,000 |
| Adjusted income (taper trigger) | £260,000 |
| Tapered floor | £10,000 |
| Plan 1 student loan threshold | £26,900 |
| Plan 2 student loan threshold | £29,385 |
| Plan 4 (Scotland) threshold | £33,795 |
| Plan 5 threshold (frozen) | £25,000 |
| Postgrad threshold (frozen) | £21,000 |
VAT
| Item | 2026/27 |
|---|---|
| Standard rate | 20% |
| Registration threshold | £90,000 |
| FRS joining threshold | £150,000 |
| FRS exit threshold (VAT-incl) | £230,000 |
| Limited Cost Trader rate | 16.5% |
What actually changed for 2026/27
Five concrete changes hit contractor pay packets on 6 April 2026, all from Autumn Budget 2025 (delivered 26 November 2025) or its precursor announcements.
1. Dividend rates rose 2 percentage points
The big one for limited company contractors. Basic-rate dividend tax went from 8.75% to 10.75%, higher-rate from 33.75% to 35.75%. The additional rate stayed at 39.35%. For a typical £500/day outside-IR35 Ltd contractor extracting ~£60,000 of dividends a year, that's an extra £1,200/year of dividend tax compared to 2025/26.
The Treasury rationale was “closer alignment between employed and self-employed taxation.” The practical effect is that the umbrella vs Ltd gap narrows slightly at higher day rates because the Ltd route loses some of its efficiency advantage.
2. The threshold freeze got extended to April 2031
Personal allowance, basic-rate cap, and higher-rate threshold were all frozen from 2021/22 through 2027/28 originally. Autumn Budget 2025 extended the freeze a further three years to 5 April 2031. This is the single biggest quiet tax rise in modern UK history because it relies on inflation to drag earners across thresholds without any policy change. See the next section for the cumulative effect.
3. NI Class 1 Lower Earnings Limit uplifted by RPI
From £6,500 to £6,708, a 3.2% RPI uplift. The Primary Threshold (£12,570) and Upper Earnings Limit (£50,270) stayed frozen along with the income tax thresholds. This matters mainly for state pension qualification at the margins.
4. Student loan thresholds uplifted (Plans 1, 2, 4)
Plan 1 went from £26,065 to £26,900. Plan 2 from £28,470 to £29,385. Plan 4 (Scottish students) from £32,745 to £33,795. All annual RPI uplifts. Plan 5 (£25,000) and Postgrad (£21,000) remain frozen, as they have been since their respective introductions.
5. Class 2 NI voluntary rate uplifted
From £3.50/week to £3.65/week (4.3% uplift), with the small profits threshold rising £6,845 to £7,105. Class 2 itself has been effectively abolished since April 2024 for mandatory purposes, but voluntary contributions remain available for self-employed people maintaining state- pension qualification.
What stayed the same: the threshold freeze story
The single biggest force in UK tax in 2026/27 isn't a change. It's a non-change: the threshold freeze.
Personal allowance has been £12,570 since 2021/22. The basic-rate cap of £37,700 and higher-rate threshold of £125,140 (it became £125,140 not £150,000 from 2023/24) have similarly been frozen. Originally the freeze was meant to end in April 2028. Autumn Budget 2025 extended it three more years to April 2031.
What this means in practice: as wages rise with inflation, more workers cross each threshold each year, and the Treasury collects more tax without legislating a single rate increase. The Office for Budget Responsibility's November 2025 fiscal report estimated the cumulative effect of the freeze 2022 to 2031 at:
- About 4 million additional taxpayers brought into income tax (people who would have stayed below the personal allowance under indexation)
- About 3 million additional higher-rate taxpayers (people who would have stayed in the basic-rate band under indexation)
- An estimated £40+ billion of additional annual tax revenue by 2030/31 vs the pre-freeze trajectory
For a typical £500/day contractor whose nominal day rate tends to track inflation, the effective tax rate creeps upward year after year as more of their earnings push through higher bands. This is why contractor finance planning increasingly emphasises pension contributions and other pre-band-stacking strategies: every pound moved outside the income-tax flow is a pound that's no longer affected by frozen-threshold drag.
Walkthrough: a £500/day outside-IR35 Ltd contractor in 2026/27
A typical scenario: 220 working days × £500/day = £110,000 of revenue through a single-director limited company. £12,570 director salary, the rest as dividends.
Company side
- Revenue: £110,000
- Director salary: −£12,570
- Employer NI on salary: −£1,135 (£7,570 × 15%)
- Accountancy: −£1,200/year
- Other expenses: −£500/year
- Pre-tax profit: £94,595
- Corporation tax (marginal-relief band): −£21,318
- Distributable profit: £73,277
Personal side
- Salary: £12,570 (within personal allowance, £0 IT, £0 EE NI)
- Dividends: £73,277
- Dividend allowance: £500
- Taxable dividends: £72,777, of which £37,200 in basic band (10.75%) + £35,577 in higher band (35.75%)
- Dividend tax: −£16,718
- Net to pocket: £69,129/year
Compared to 2025/26: the same scenario netted £70,338 last year. The 2pp dividend rate hike costs this contractor £1,209 of net pay year-on-year.
Try the full chain at your specific day rate in the outside-IR35 Ltd calculator, or see the line-by-line walkthrough at the £500/day worked example.
Walkthrough: a £400/day inside-IR35 umbrella contractor in 2026/27
220 working days × £400/day = £88,000 of assignment rate from the agency to the umbrella. Dividend tax doesn't apply (no Ltd) so the 2pp dividend rate hike misses this contractor. But the freeze on PAYE thresholds bites here instead.
Umbrella deductions (before PAYE)
- Assignment rate: £88,000
- Umbrella margin: −£1,150 (~£25/week × 46 working weeks)
- Employer NI (15% on gross above £5,000): about −£10,300
- Apprenticeship levy (0.5%): about −£345
- Gross taxable salary: ~£76,200
PAYE deductions
- Personal allowance: £12,570
- Income tax: £37,700 × 20% + £25,930 × 40% = £17,912
- Employee NI: £37,700 × 8% + £25,930 × 2% = £3,535
- Net to pocket: ~£54,750/year
Compared to 2025/26:the same scenario netted ~£54,800 last year. The umbrella contractor at this level is largely insulated from the 2026/27 changes because the dividend rate hike doesn't affect them and their NI / IT thresholds were already frozen.
That said, the threshold freeze still costs this contractor real money compared to a hypothetical world where thresholds had been indexed to inflation since 2021. Try the full chain at your specific day rate in the inside-IR35 umbrella calculator, or see line-by-line at the £300/day worked example.
VAT in 2026/27
Standard rate of 20% unchanged. The registration threshold stays at £90,000 (raised from £85k in April 2024). The Flat Rate Scheme's rules and rates haven't moved either: 14.5% sector rate for IT consultants, 14% for management consultants, and the punitive 16.5% Limited Cost Trader rate that catches most service contractors.
For Ltd contractors approaching the £90,000 turnover threshold during 2026/27, the FRS-vs-standard-VAT decision is sharper than ever. Most service contractors fail the LCT test and end up paying 16.5%, which after losing input VAT recovery often beats standard VAT by a small margin or loses to it entirely. See our VAT FRS calculator to run the test on your specifics, or read the full Limited Cost Trader explanation for why it bites the way it does.
Pension allowances in 2026/27
The pension annual allowance stays at £60,000 (raised from £40k by the March 2023 Budget). The taper rules (kicks in at £200k threshold income or £260k adjusted income, reduces £1 per £2 above £260k, floored at £10k) all unchanged. The Money Purchase Annual Allowance also remains at £10,000. The Lump Sum Allowance (£268,275) and Lump Sum and Death Benefit Allowance (£1,073,100) are unchanged from their April 2024 introduction.
With dividend rates having risen 2 percentage points, pension contributions look more attractive than ever as an extraction route from a Ltd. The employer pension contribution multiplier (£ in pension pot per £ of forgone net dividends) is now typically 1.7–2.0× for higher-rate dividend territory, up from 1.5–1.85× in 2025/26 because the dividend route lost more efficiency. See our contractor pension calculator for the multiplier at your specific profit level, or the long-form pension via limited company guide for the practical setup.
Student loans in 2026/27
The split-system continues. Plans 1, 2, and 4 thresholds uplifted by RPI; Plan 5 and Postgrad frozen. The cumulative effect over time means Plan 5 borrowers (English students from August 2023) are progressively worse off vs Plan 2 borrowers each year as nominal earnings rise but Plan 5's £25,000 threshold stays nailed.
Repayment rates unchanged: 9% above threshold for any undergrad plan (single deduction at the lowest threshold if multiple plans held), plus 6% above £21,000 for Postgrad. Combined max rate for someone with both undergrad + Postgrad is still 15%. The most common combination remains Plan 2 + Postgrad, model that specifically in our Plan 2 + Postgrad calculator, or compare across plans in the multi-plan calculator. For the comparison piece on whether Plan 5 is actually worse than Plan 2 (yes, for most borrowers), see our Plan 5 vs Plan 2 blog post.
What might change next
Spring Statement 2026 (delivered 3 March 2026) confirmed no mid-year changes, a deliberate departure from the multi- announcement pattern of recent years. The next opportunity for contractor-relevant changes is Autumn Budget 2026, scheduled for late November 2026, with any changes generally taking effect from 6 April 2027.
Genuinely-likely changes (based on Treasury policy statements and OBR commentary):
- Dividend rates further. The 2pp hike at Autumn 2025 was framed as part of an alignment trajectory between employed and self-employed taxation. Another 1–2pp rise is plausible at Autumn 2026 if Treasury fiscal needs demand it.
- Threshold freeze further extension. April 2031 is now the freeze end-date but extensions are cheaper than rate rises politically. Extending to April 2034 wouldn't surprise.
- Dividend allowance abolition. The dividend allowance has shrunk from £5,000 to £500 since 2017. Abolishing it entirely (cost to a typical Ltd director: £53–£197/year of extra tax) is on the table each Budget.
- Pension annual allowance reduction. The £60k figure was generous from a fiscal perspective. Some speculation in financial media about reducing it back to £50k or £40k.
- IR35 reform tinkering. The 2024 off-set provisions (allowing already-paid CT and dividend tax to offset deemed PAYE liability) were a quiet contractor- friendly reform. More such tweaks possible without headline-grabbing rate changes.
Genuinely-unlikely changes: outright IR35 abolition (the Treasury values the deterrent effect too much), Plan 5 rollback (the policy is locked in), or Class 2 NI reinstatement (it was abolished in 2024 and bringing it back would be politically awkward).
We update this page within 24 hours of any contractor- relevant Budget or Statement announcement. Bookmark and check back at Budget time.
Dig deeper
Every calculator and guide on the site, organised by topic.
Take-home + tax
- Take-home pay calculator , full PAYE chain
- Inside-IR35 umbrella calculator , day rate to net via umbrella
- Outside-IR35 Ltd calculator , full Ltd money flow
- Dividend tax calculator , band-by-band breakdown
- Salary vs dividend optimiser , find the optimal director salary
Compare + decide
- Umbrella vs Ltd calculator
- Inside vs outside IR35 comparison
- IR35 status checker , case-law weighted
VAT + pension + structures
- VAT Flat Rate Scheme calculator
- Limited Cost Trader test explained
- Contractor pension via Ltd calculator
- Salary sacrifice pension calculator
- Pension via limited company guide
Student loans
- Plan 2 + Postgrad calculator
- Multi-plan calculator
- Plan 5 vs Plan 2: which is worse?
- Student loans for contractors guide
Long-form guides
Sources
Every figure on this page traces back to one of the following primary sources, all linked at our sources page:
- gov.uk: income tax rates, NI rates, dividend tax, corporation tax rates, VAT, student loan thresholds
- gov.scot: Scottish income tax bands (Scottish Budget 13 January 2026)
- HMRC VAT Notice 733: Flat Rate Scheme rules including the Limited Cost Trader test
- Deloitte Tax Tables 2026/27 (post-Autumn Budget 2025, published 26 November 2025)
- Office for Budget Responsibility, Fiscal Risks and Sustainability Report (November 2025)
- Institute for Fiscal Studies, English Student Loan System 2024 update
- Spring Statement 2026 confirmation document (3 March 2026)
See our methodology for how every calculation on the site is built and verified. Every calculator runs 290+ unit tests against HMRC textbook values before deployment.