Personal tax continues to shift, even when headline rates look familiar. Freezes to thresholds, smaller allowances, and administrative updates all change what you pay and how you plan. For the 2025/26 tax year, the personal allowance remains £12,570, with higher rate tax starting at £50,270 and additional rate at £125,140. But the picture is about more than rates. The dividend allowance is now £500, the capital gains tax annual exempt amount is £3,000, and the High Income Child Benefit Charge (HICBC) now starts at £60,000. These changes affect employees, directors, landlords, investors, and retirees in different ways.

Why does this matter? Fiscal drag means more people pay higher rates because thresholds are frozen while wages and pensions rise. The Office for Budget Responsibility estimates Income Tax receipts of about £330.7bn in 2025/26, underlining how much is at stake for households and the Exchequer (OBR, 2025). Inflation has also been sticky through 2025, with CPI running at 3.8% in the year to August 2025, which puts further pressure on budgets and pushes more income into higher bands (ONS, 2025). Against this backdrop, taking stock of your personal tax position before 5 April 2026 can help you keep more of what you earn, invest, and save.

If you want tailored guidance, our personal tax team can review your position and build a plan around your goals.

Personal allowances and rate bands: What stays the same in 2025/26

For UK taxpayers, the core structure is unchanged this year. The personal allowance is £12,570. Basic rate applies up to £37,700 of taxable income, higher rate runs from £37,701 to £125,140, and additional rate applies above £125,140. Note that your personal allowance tapers away once adjusted net income exceeds £100,000, disappearing entirely at £125,140. That taper effectively creates a 60% marginal band between £100,000 and £125,140. It’s one of the first things we look at when planning bonuses, dividends, pension contributions, or charitable gifts.

If you live in Scotland, income tax bands and rates differ for earned income. If you are unsure which set of rules applies, ask us to confirm your residency status for tax purposes.

Dividends and investments: Smaller allowances, bigger impact

The dividend allowance is £500 for 2025/26. That means the first £500 of dividend income sits outside tax, then your marginal dividend rate applies: 8.75% basic, 33.75% higher, and 39.35% additional. Directors and investors who relied on the former £2,000 and £1,000 allowances should review drawings and portfolio yield. Consider:

• ISA usage: Use your ISA subscription to shelter interest and dividends.
• Pension contributions: Can reduce adjusted net income and preserve allowances.
• Capital structure: For owner-managed businesses, re-balance between salary, pension, and dividends with care.

Interest on savings may still fall within the personal savings allowance (£1,000 basic rate, £500 higher rate, nil for additional rate), but the starting rate for savings and savings nil rate band interactions can be fiddly. We can model the combinations to avoid unexpected liabilities.

Capital gains tax: The £3,000 allowance shapes timing

The capital gains tax annual exempt amount is £3,000 for 2025/26. That lower buffer puts more routine disposals in scope, especially for share portfolios outside ISAs. Basic rate taxpayers pay 10% on most assets and 18% on residential property gains, while higher or additional rate taxpayers pay 20% and 24% respectively on those categories. Smart steps include:

• Bed and ISA: Move investments into ISAs to shelter future gains.
• Loss harvesting: Use realised losses to offset gains in the same or future years.
• Couple planning: Transfers between spouses/civil partners: Can be made on a No Gain/No Loss basis, letting you share ownership and use two annual exemptions.

If you are selling a UK residential property that creates a gain, remember the 60-day CGT reporting and payment rule. Build that into your timelines to avoid penalties.

The personal tax effect of frozen thresholds

Threshold freezes turn steady pay rises into higher effective tax. Two data points bring this home. The OBR expects Income Tax to raise around £330.7bn in 2025/26, reflecting both earnings growth and more people moving into higher bands (OBR, 2025). Alongside that, inflation at 3.8% in the year to August 2025 continues to lift nominal incomes, nudging more taxpayers into higher brackets over time. Planning to manage your adjusted net income can make a tangible difference, particularly around the £50,270 and £100,000 thresholds.

Child Benefit and families: The new HICBC starting point

From 2024/25 onwards, the HICBC starts when the higher earner in a household has income over £60,000, and is fully clawed back by £80,000. That position continues into 2025/26. Many families who opted out of Child Benefit in earlier years should consider opting back in to protect National Insurance credits and receive payments if they now fall below the new limits. You can also choose to receive the benefit and repay via Self Assessment or via PAYE coding. Check the current HMRC guidance before you change your claim (HMRC, 2025).

Personal tax planning opportunities for 2025/26

You do not need exotic schemes to improve outcomes. A mix of routine actions, timed well, can reduce your bill and improve cashflow:

• Pension contributions: Can reclaim higher or additional rate relief and reduce adjusted net income. Watch annual allowance, tapering, and carry forward.
• Gift Aid donations: Can extend your basic rate band and reduce HICBC exposure.
• Salary versus dividend: Owner-managers, keep salary at a sensible level for NI and pension, then assess dividends against the £500 allowance and higher rate triggers.
• Spousal transfers: May use two personal allowances and bands more efficiently.
• Capital gains timing: Splitting disposals across 5 April can use two £3,000 exemptions and manage rate bands.
• VCT/EIS/SEIS reliefs: Offers income tax relief and CGT advantages. Suitability and risk require careful advice.

Compliance and deadlines: Avoid penalties, keep options open

With more people inside Self Assessment due to dividends, rental income, or CGT, keeping ahead of deadlines matters. Submitting early offers practical gains: faster refunds, time to correct coding notices, and space to plan second payments on account due on 31 July. If you have property gains, the 60-day rule runs alongside self assessment – don’t wait to complete your annual return.

You can use our dates and deadlines page to keep on top of key milestones, or ask us to set reminders.

A personal tax checklist for the rest of the year

If you do nothing else, work through these quick wins before 5 April:

• Pensions and allowances: Check remaining annual allowance and employer matching.
• ISAs: Use your ISA allowance for cash and stocks.
• Dividend planning: Estimate dividends to avoid unnecessary higher rate charges.
• CGT buffer: Use the £3,000 exemption where it makes sense.
• Child Benefit: Reassess your position under the £60,000–£80,000 HICBC rules.
• PAYE codes: Review that benefits, underpayments, and HICBC are coded correctly.

How we can help with personal tax in 2025

Personal tax planning is about timing, allowances, and getting the details right. For 2025/26, the allowance freeze, lower dividend and CGT buffers, and updated Child Benefit rules put more households inside Self Assessment and more income into higher rate bands. The trend is clear – plan earlier, and plan around your thresholds. Even small changes, such as rerouting a year-end bonus into your pension or bringing forward ISA funding, can improve your outcome and preserve allowances that would otherwise taper away.

We start with your goals, then map income, investments, and family claims across the tax year. That includes modelling your adjusted net income around £50,270 and £100,000, checking whether Gift Aid, pension contributions, or spousal transfers can restore allowances, and reviewing dividend policy if you run a company. We also review Child Benefit claims and PAYE codes so you are not caught by unexpected deductions. If property sales are on the horizon, we will time disposals, manage reliefs, and handle the 60-day CGT report. Our role is simple: reduce your tax exposure within the rules, keep you compliant, and free up time so you can focus on what matters.

If you would like a personal review, contact us and we will respond promptly. We will assess your situation, explain the options in plain language, and make a clear plan for the rest of 2025/26.