Spring Budget 2026: UK Tax Changes Explained
Income tax rates unchanged, Personal Allowance frozen at £12,570, employer NI locked at 15% with the secondary threshold cut to £5,000, and capital gains tax on assets now 24% at the higher rate. Here is what each change means for your finances.
Key takeaways
- Income tax rates are unchanged: 20%, 40%, 45%.
- Personal Allowance frozen at £12,570 — fiscal drag continues until at least 2028.
- Employer NI rate is 15% (up from 13.8% from April 2025).
- Employer NI secondary threshold cut to £5,000 (down from £9,100 from April 2025).
- Employment Allowance raised to £10,500 to partially offset the employer NI rise.
- CGT higher rate on non-residential assets: 24% (from 30 October 2024).
- CGT Annual Exempt Amount: £3,000 per individual.
Income Tax: Rates Unchanged, but Fiscal Drag Bites
The Spring Budget 2026 made no changes to income tax rates or the Personal Allowance. For 2026/27, the bands remain:
| Band | Taxable income | Rate |
|---|---|---|
| Personal Allowance | Up to £12,570 | 0% |
| Basic rate | £12,571 – £50,270 | 20% |
| Higher rate | £50,271 – £125,140 | 40% |
| Additional rate | Over £125,140 | 45% |
The Personal Allowance has been frozen at £12,570 since 2021/22 and remains frozen until at least April 2028. In a normal year, thresholds rise with CPI inflation. With inflation running above 2% for several years, the freeze is equivalent to a real-terms tax rise: the same nominal salary buys less but attracts proportionally more tax because the tax-free slice does not grow with it.
This effect — known as fiscal drag — is expected to drag around 4 million additional people into income tax and 3 million into the higher-rate band over the freeze period. Even a modest annual pay rise of 3–4% progressively erodes the value of the Personal Allowance in real terms.
Calculate your income tax
Enter your salary or self-employment income to see your 2026/27 income tax bill and effective rate.
Open income tax calculator →Employer National Insurance: 15% Rate, £5,000 Threshold
The most significant payroll change of the current parliament took effect in April 2025, announced in the Autumn Budget 2024. The Spring Budget 2026 confirmed no further changes — these rates continue into 2026/27:
- Employer NI rate: 15% (raised from 13.8%)
- Secondary threshold: £5,000 per year (cut from £9,100)
- Employment Allowance: £10,500 per year (raised from £5,000)
Together, these changes significantly increase the cost of employing staff, particularly at lower wage levels. An employer with a worker on the National Living Wage (approximately £23,800 for full-time in 2026/27) now pays employer NI on £18,800 of earnings (£23,800 minus the £5,000 threshold) at 15% — a total of £2,820 per year per worker, compared with around £2,008 under the old 13.8% rate and £9,100 threshold.
Worked example: employer NI on a £30,000 salary
Employer NI cost on a £30,000 salary in 2026/27:
- Earnings above threshold: £30,000 − £5,000 = £25,000
- Employer NI at 15%: £25,000 × 15% = £3,750 per year
- Under old rules (13.8%, £9,100 threshold): £20,900 × 13.8% = £2,884
- Extra annual cost per employee: £866
The Employment Allowance of £10,500 means eligible employers can offset this additional cost across their workforce. A small business with 3–4 employees may pay little or no employer NI at all; larger employers absorb the full change.
Calculate employer NI costs
Model the 15% employer NI rate and £5,000 threshold for your payroll, including the Employment Allowance offset.
Open employer NI calculator →Capital Gains Tax: Higher Rate on Assets at 24%
Capital gains tax rates on non-residential assets were raised in the Autumn Budget of October 2024 and remain in place for 2026/27. No further changes were made in the Spring Budget 2026.
| Asset type | Basic-rate band | Higher/additional rate |
|---|---|---|
| Shares, crypto, other assets | 18% (was 10%) | 24% (was 20%) |
| Residential property | 18% (unchanged) | 24% (was 28%) |
| Business assets (BADR) | 14% (transitional) | 14% (within £1m lifetime limit) |
The Annual Exempt Amount remains at £3,000 per individual in 2026/27 — the level set from April 2024 after being cut from £12,300 in 2022/23.
For most investors, the most significant CGT change is the alignment of rates: shares and investment assets now attract the same 18%/24% rates as residential property. Previously, higher-rate investors paid 20% on shares but 28% on property — the Autumn Budget 2024 converged both at 24% and raised the shares lower rate from 10% to 18%.
Business Asset Disposal Relief (BADR) on qualifying business sales is available at a reduced rate — currently 14% for 2026/27 (rising to 18% in future years), within a £1 million lifetime limit.
Calculate your CGT bill
Enter your gain, asset type and income to calculate capital gains tax at the current 18%/24% rates.
Open CGT calculator →Take-Home Pay: What the Freeze Means in Pounds
For an employee, the practical effect of frozen thresholds combined with annual pay rises is a gradually rising effective tax rate. Here is how a selection of salary levels look in 2026/27 versus earlier years (England, standard NI, no student loan):
| Gross salary | Approx. take-home 2022/23 | Approx. take-home 2026/27 | Change |
|---|---|---|---|
| £25,000 | £20,652 | £20,502 | −£150 |
| £35,000 | £27,652 | £27,252 | −£400 |
| £50,000 | £37,052 | £36,502 | −£550 |
| £60,000 | £41,452 | £40,852 | −£600 |
Approximate figures for illustrative comparison. Actual take-home depends on NI thresholds (which have also changed), pension contributions, and other deductions. Use the calculator below for a precise 2026/27 figure.
See your exact take-home pay
Calculate your 2026/27 net salary after income tax, employee NI, pension and student loan.
Open take-home pay calculator →Spring Budget 2026 — In-Depth Articles
For a deeper dive into each area of the Budget, read the full analysis series:
Higher-Rate Taxpayer Guide 2026/27
Complete guide to income tax, NI, CGT, dividends and allowances for earners above £50,270.
CGT on Property UK 2026
Residential 18%/24% rates, Private Residence Relief, 60-day reporting and Annual Exempt Amount.
Pension Drawdown Strategy 2026
Sequencing drawdown to minimise income tax under frozen thresholds.
Stamp Duty: Additional Property Surcharge 2026
The 5% surcharge on second homes and buy-to-let purchases explained.
Spring Budget 2026 Tax Summary
| Tax | 2026/27 position | Change from prior year |
|---|---|---|
| Personal Allowance | £12,570 | No change (frozen since 2021/22) |
| Basic-rate band upper limit | £50,270 | No change (frozen) |
| Income tax basic rate | 20% | Unchanged |
| Income tax higher rate | 40% | Unchanged |
| Employer NI rate | 15% | +1.2pp from April 2025 |
| Employer NI secondary threshold | £5,000 | Down from £9,100 from April 2025 |
| Employment Allowance | £10,500 | Up from £5,000 from April 2025 |
| CGT rate — higher rate (assets) | 24% | Up from 20% from October 2024 |
| CGT rate — basic rate (assets) | 18% | Up from 10% from October 2024 |
| CGT Annual Exempt Amount | £3,000 | No change (cut in April 2024) |
This page is general information updated to reflect the Spring Budget 2026 and applies to England and Wales (income tax rates differ in Scotland). Always verify current rates with HMRC or a qualified tax adviser before making financial decisions.
Frequently asked questions
Did income tax rates change in Spring Budget 2026?
No. The Spring Budget 2026 left income tax rates unchanged: basic rate remains 20%, higher rate 40%, and additional rate 45%. The Personal Allowance is also unchanged at £12,570, but it remains frozen at that level through to 2028, meaning fiscal drag continues to pull more earners into higher bands each year as wages rise.
When did employer National Insurance rise to 15%?
Employer National Insurance increased from 13.8% to 15% from 6 April 2025, announced in the Autumn Budget of October 2024. The Spring Budget 2026 made no further changes to this rate — the 15% rate continues unchanged into 2026/27.
What is the employer NI secondary threshold in 2026/27?
The employer NI secondary threshold (the point at which employers begin paying NI on each employee's earnings) was cut from £9,100 to £5,000 per year from April 2025. This remained in place through the Spring Budget 2026. Employers pay 15% NI on all earnings above £5,000 per employee per year.
What is the Employment Allowance in 2026/27?
The Employment Allowance was increased to £10,500 per year from April 2025 to partially offset the higher employer NI rate and lower threshold. Eligible employers (most businesses except sole directors with no employees) can deduct up to £10,500 from their employer NI bill each tax year.
What is the capital gains tax rate on assets in 2026/27?
From 30 October 2024, CGT rates on non-residential assets (shares, crypto, business assets) were raised: the higher rate increased from 20% to 24%, and the basic rate from 10% to 18%. These rates apply in 2026/27. Residential property CGT rates were also set at 18%/24%, aligning the two schedules. The Annual Exempt Amount remains £3,000 per individual.
What does the frozen Personal Allowance mean for workers in practice?
With the Personal Allowance frozen at £12,570 until 2028, every year wages rise without a corresponding rise in the threshold means more earnings become taxable. This is 'fiscal drag' or 'stealth tax'. Someone earning £30,000 in 2022/23 who receives a 5% pay rise each year will cross into a higher tax bracket years before the freeze ends — paying more in real terms even though no rate changed.