Tax Updates
Concise summaries of the UK tax position that matters for owner-managed businesses — VAT, payroll, corporation tax, dividends, R&D, Making Tax Digital and more. Sourced from GOV.UK and HMRC.
Last reviewed against GOV.UK and HMRC guidance on 7 August 2026.
The VAT registration threshold is £90,000 and the deregistration threshold is £88,000. The standard rate of VAT remains 20%. A useful checkpoint for businesses trading near the threshold on a rolling 12-month basis.
GOV.UK — VAT thresholdsFor 2026/27, employer Class 1 NIC is charged at 15% on earnings above an annual secondary threshold of £5,000. Eligible employers can claim Employment Allowance of up to £10,500 against that bill — eligibility conditions apply and not every employer qualifies. Modelling employer cost is essential before pay reviews.
GOV.UK — Rates and thresholds for employers 2026 to 2027The small profits rate of 19% applies to profits of £50,000 or less, and the main rate of 25% to profits above £250,000, with Marginal Relief potentially available between the two limits. These limits are reduced for short accounting periods and where there are associated companies — worth reviewing for group structures.
GOV.UK — Corporation Tax ratesThe tax-free Dividend Allowance is £500. For 2026/27 the dividend rates are 10.75% (ordinary/basic), 35.75% (upper/higher) and 39.35% (additional). Combined with the frozen personal allowance, this affects the optimal salary and dividend mix for many directors.
GOV.UK — Tax on dividendsThe Annual Exempt Amount for individuals is £3,000. Main CGT rates are 18% on gains within any remaining basic-rate band and 24% above it, so the rate depends on your other taxable income. Business Asset Disposal Relief is charged at 18% for qualifying disposals from 6 April 2026. Plan disposals — and the use of spouse allowances — accordingly.
GOV.UK — Capital Gains Tax ratesThe first mandatory phase started on 6 April 2026 for qualifying sole traders and landlords whose combined qualifying gross income from self-employment and property exceeded £50,000 in 2024/25. The threshold is over £30,000 for starting from 6 April 2027 and over £20,000 from 6 April 2028. Exemptions can apply — check HMRC's eligibility guidance for your position.
GOV.UK — When to use Making Tax Digital for Income TaxFor accounting periods beginning on or after 1 April 2024, the SME and RDEC schemes were replaced by the merged R&D Expenditure Credit scheme, alongside Enhanced R&D Intensive Support (ERIS) for eligible loss-making R&D-intensive SMEs. Qualifying conditions are detailed and not every SME will be eligible — claim mechanics and rates changed materially.
GOV.UK — Merged scheme and Enhanced R&D Intensive SupportFrom 1 April 2026 the National Living Wage (21 and over) is £12.71 per hour; the 18–20 rate is £10.85; the under-18 rate is £8.00; and the apprentice rate is £8.00. The apprentice rate applies to apprentices under 19, or aged 19 and over in the first year of their apprenticeship — otherwise the rate for their age applies. A meaningful cost input for hospitality, retail and care employers.
GOV.UK — National Minimum Wage ratesSummaries reflect publicly available information from GOV.UK and HMRC at the time of writing and are for general guidance only. Tax rules change frequently and individual circumstances vary — please speak with us for tailored advice before acting on any of the above.
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