The new financial year for 2026/27 starts this week. If you are tax planning in Cheshire and Oswestry, whilst national insurance and VAT remain unchanged, there are still a number of other changes to be mindful of.
The headline rates of basic, higher and additional rate income tax remain the same, maintained at 2022/23 levels and scheduled to stay unchanged until at least 2031. It is likely that this ‘fiscal drag’ will see more workers pulled into higher tax bands, even when not earning more in real terms.
Other areas to look out for are the planned increase to capital gains tax, which is rising from 14% to 18%, and the hike in dividend taxes, which now stand at 10.75% for the basic rate and 35.75% for the higher rate. The additional dividend rate remains unchanged.
Elsewhere, venture capital trust (VCT) income tax relief is being reduced from 30% to 20%, whilst Air Passenger Duty goes up on short haul flights, by £2 on economy seats and £4 on premium or business class tickets. The fuel duty freeze, which was introduced in 2011, is scheduled to be phased out later this year, after which fuel duty will go up in line with inflation. It remains to be seen whether a prolonged economic crisis due to ongoing geopolitical events will influence a change in government thinking.
Homeworkers are losing their weekly £6 tax relief, the TV licence fee is increasing from £174.50 to £180 annually, while electric vehicle owners will now be liable for 4% Benefit in Kind (BIK), which rises to 5% from 2027/28.
