New Tax Year 2026/27 — What’s Changed?

The new tax year started on 6 April 2026. For most employed workers, the headline figures look familiar — but that’s part of the problem. While rates haven’t changed, frozen thresholds, rising wages, and several specific rule changes mean many people will be paying more and taking home less than they realise.

Here’s a complete rundown of what’s changed, what hasn’t, and what it means for your pay in 2026/27.

Income tax — unchanged, but the freeze bites harder

All income tax rates and thresholds are unchanged for 2026/27:

England, Wales and Northern Ireland only. Scottish rates are unchanged from 2025/26.

The personal allowance has been frozen at £12,570 since 2021/22 and will remain there until at least 2030/31. The higher rate threshold at £50,270 has also been frozen since 2021.

Why does this matter? Because wages are rising while the tax-free amount stays the same. Every pay rise you receive is taxed in full — at 20% or more — without any compensating increase in your personal allowance. Economists call this fiscal drag: the government collects more tax revenue without formally raising rates. The OBR estimates the freeze is equivalent to a 2–3% income tax rate increase for the average worker over its duration.

National Insurance — employee rates unchanged

Employee National Insurance contributions are unchanged for 2026/27:

Employer NI also remains unchanged at 15% above the £5,000 secondary threshold. These employer rates increased in April 2025 and are held at those levels for 2026/27.

National Living Wage — up from 1 April 2026

The National Living Wage and National Minimum Wage rose from 1 April 2026:

A full-time worker on the National Living Wage will see their annual pay rise by around £977. The above-inflation increase for 18–20 year olds is part of the government’s longer-term move towards a single minimum rate for all workers aged 18 and over.

Student loan repayment thresholds — updated, plus a new Plan 5

Repayment thresholds have risen and a brand new Plan 5 has been introduced from April 2026:

Plan 5 applies to students who started university in England from September 2023 onwards. If you started before then, you’ll be on Plan 2. Note that our salary calculator currently shows Plans 1, 2, and 4 — we’ll be adding Plan 5 shortly.

Statutory pay rates — up from April 2026

Weekly rates for statutory family leave and sick pay have increased:

The first six weeks of Statutory Maternity Pay remain at 90% of average weekly earnings.

The biggest SSP change: the Lower Earnings Limit eligibility threshold has been removed from April 2026. Previously, employees had to earn at least £125 per week to qualify. From April 2026, all employees — including those on very low hours or wages — are entitled to Statutory Sick Pay.

Home working relief — removed for employees

From 6 April 2026, employees can no longer claim tax relief directly from HMRC for the costs of working from home (typically based on a £6 per week flat rate).

Employers can still reimburse employees tax-free for home-working costs — but if your employer doesn’t offer this, you can no longer claim it yourself. This affects anyone who has been claiming the home-working flat rate directly via HMRC online or their self-assessment return. If you’re in any doubt, check with your employer whether a reimbursement policy is in place.

New employer benefit — flu vaccines, eye tests and home equipment

From 6 April 2026, employers can reimburse employees tax-free for flu vaccines, eye tests, and home-working equipment — even if the employee paid for them personally first. Under the old rules, the employer generally had to pay directly. The change simplifies things and removes a common source of tax confusion for employees who worked from home.

Making Tax Digital — live from April 2026 (self-employed and landlords)

This change affects self-employed people and landlords, not employees on PAYE.

Making Tax Digital for Income Tax went live on 6 April 2026. Self-employed individuals and landlords with gross income over £50,000 must now keep digital records and submit quarterly updates to HMRC using compatible software, replacing the single annual self-assessment return. The threshold drops to £30,000 from April 2027.

What hasn’t changed

• Personal allowance: £12,570
• Basic rate threshold: £50,270
• Income tax rates: 20%, 40%, 45%
• Employee NI rates: 8% and 2%
• Employer NI rate: 15% (unchanged from April 2025)
• Auto-enrolment minimum contributions: unchanged
• ISA limits: unchanged
• Employment Allowance: £10,500
• Corporation Tax rates: unchanged

What it means for your take-home pay in 2026/27

If your salary has increased since last year, you’ll be paying more in income tax and National Insurance — not because rates have risen, but because frozen thresholds mean a larger slice of your pay is taxable. Every £1,000 pay rise within the basic rate band costs you an extra £280 in combined income tax and NI (20% + 8%).

Use the free OS Payroll salary calculator to see exactly what you should be taking home in 2026/27 — updated for all current rates, covering student loan plans, pension contributions, Scottish rates, and tax codes.

→ Try the free salary calculator

Sources: HMRC Rates and Thresholds 2026/27, House of Commons Library, Low Pay Commission, ATT, Moneysoft. This post is for general information only and does not constitute financial or tax advice.