The 2025/26 tax year brings several pivotal changes to the UK’s fiscal landscape. While some thresholds remain frozen, the Autumn Budget introduced significant shifts in National Insurance for employers and Capital Gains Tax rates that every taxpayer needs to understand. We have prepared a guidance for UK Tax Rates 2025/26 tax year.
At Ascend Accounts Ltd, we believe in proactive planning. This guide breaks down the essential rates and thresholds you need to know to stay compliant and tax-efficient starting 6 April 2025.
1. Income Tax: The Frozen Thresholds
The personal allowance and tax bands remain unchanged for the 2025/26 tax year. This means as earnings rise with inflation, more taxpayers may move into higher brackets—a phenomenon known as “fiscal drag.”
| Tax Band | Taxable Income | Tax Rate |
| Personal Allowance | Up to £12,570 | 0% |
| Basic Rate | £12,571 to £50,270 | 20% |
| Higher Rate | £50,271 to £125,140 | 40% |
| Additional Rate | Over £125,140 | 45% |
Pro Tip: If your income exceeds £100,000, your Personal Allowance is reduced by £1 for every £2 earned, creating an effective tax rate of 60%. To reinstate your Personal Allowance, consider making Private Pension Contributions. By contributing to a pension, you reduce your “adjusted net income” back below the £100,000 threshold, potentially saving thousands in tax while boosting your retirement pot.
2. National Insurance (NI) Rates & Thresholds 2025/26
The 2025/26 tax year introduces a significant rise in the cost of employment. While employee rates remain stable, employers face a higher rate and a substantially lower starting threshold.
National Insurance Rates
| NI Class | Earnings/Profits Band | Rate |
| Class 1 Employee | £242 to £967 per week (Primary Threshold to UEL) | 8% |
| Over £967 per week | 2% | |
| Class 1 Employer | Over £96 per week (Secondary Threshold) | 15% |
| Class 3 (Voluntary) | Flat rate per week | £17.45 |
| Class 4 (Self-Employed) | £12,570 to £50,270 | 6% |
| Over £50,270 | 2% |
National Insurance Thresholds (Class 1)
It is crucial to note the divergence between the point where employees start paying (Primary Threshold) and where employers start paying (Secondary Threshold).
| Threshold Type | Weekly | Monthly | Yearly |
| Primary Threshold (Employee) | £242 | £1,048 | £12,570 |
| Secondary Threshold (Employer) | £96 | £417 | £5,000 |
| Lower Earnings Limit (LEL) | £125 | £542 | £6,500 |
| Upper Earnings Limit (UEL) | £967 | £4,189 | £50,270 |
Note: The Employment Allowance has increased to £10,500 to help smaller businesses offset the increased employer NI costs.
3. Corporation Tax
Corporation tax rates remain consistent with the tiered system. However, the calculation can be complex if your profits fall between the lower and upper limits.
- Small Profits Rate (19%): For profits of £50,000 or less.
- Main Rate (25%): For profits exceeding £250,000.
- Marginal Relief: Provides a tapered rate for profits between £50,000 and £250,000.
You can calculate your potential liability using the official HMRC Marginal Relief Calculator.
4. VAT: Threshold Stability
The VAT registration threshold remains at the level set in early 2024, providing stability for growing small businesses.
- Registration Threshold: £90,000 (Taxable turnover in a 12-month period).
- Deregistration Threshold: £88,000.
- Standard Rate: 20% | Reduced Rate: 5%
5. Capital Gains Tax (CGT) on Properties
Property CGT rates are now aligned with other assets following the recent budget updates, meaning there is no longer a “surcharge” specifically for residential property.
- Annual Exempt Amount: £3,000.
- Basic Rate Taxpayers: 18%.
- Higher/Additional Rate Taxpayers: 24%.
Note: Residential property disposals (that are not your main home) must still be reported and the tax paid within 60 days of completion.
6. Capital Gains Tax on Other Assets & Shares
The main rates of CGT have been increased to match property rates, effective for disposals in the 2025/26 tax year.
- Standard Assets (Shares, etc.): 18% (Basic Rate) and 24% (Higher/Additional Rate).
- Business Asset Disposal Relief (BADR): The preferential rate for qualifying business sales increases from 10% to 14% for 2025/26.
How Ascend Accounts Ltd Can Help
Navigating these changes—particularly the new National Insurance landscape and pension planning—requires expert guidance. Whether you are a limited company director or a high-earner looking to protect your personal allowance, Ascend Accounts Ltd provides the tailored support you need.
Contact us today to schedule a tax planning review for the 2025/26 year and help you understand UK Tax Rates 2025/26.