Top UK Tax Changes for 2025/26: What Individuals, Families and Business Owners Need To Know

The start of a new tax year always brings change, but the 2025/26 tax year includes several updates that will be particularly important for employees, business owners, families and landlords.

Understanding these developments now can help you plan ahead, avoid surprises, and make better financial decisions throughout the year.

1. Income tax thresholds remain frozen

The personal allowance and tax bands are unchanged. While this sounds simple, the effect is significant: as salaries rise, more taxpayers drift into higher tax bands. This “fiscal drag” means individuals and families are likely to face higher taxes even without earning much more.

2. National Insurance changes

Several National Insurance updates apply from April 2025, including changes to employer NIC thresholds and a higher Employment Allowance for qualifying businesses. Business owners should revisit their payroll structure to ensure they’re optimising contributions.

3. Capital Gains Tax adjustments

The annual CGT exempt amount has been reduced again, meaning more gains will now be taxable. For individuals planning asset sales — including property investors and business owners — accurate forecasting and careful timing are increasingly important.

4. Dividend allowance cut

The tax-free dividend allowance has dropped to £500. This is a notable change for company directors and business owners who rely on dividend income. Remuneration plans may need to be updated to account for the additional tax.

5. Overhaul of the non-dom regime

Significant reforms to the UK’s system for non-UK-domiciled taxpayers come into effect from 6 April 2025, replacing the former rules with a residence-based system. Clients with overseas income or assets may need to take specialist advice.

6. What these changes mean for planning

With allowances shrinking and thresholds frozen, personalised tax planning is more valuable than ever. Consider:

• Reviewing your salary/dividend mix

• Planning disposals to minimise CGT

• Making pension contributions before year-end

• Optimising family allowances

• Ensuring your bookkeeping software and payroll reflect the latest NIC rules

Final thoughts

The 2025/26 changes may not grab headlines, but they create meaningful shifts for many taxpayers. A proactive review now can help you manage liabilities, stay compliant, and take advantage of the reliefs still available. If you’d like help reviewing your position, we’re here to support you with tailored tax advice.

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