Each new tax year introduces a range of updates, and while some thresholds remain unchanged for 2026/27, a number of targeted changes will have a direct impact on business owners and shareholders. Understanding these developments early allows for more effective planning and informed decision-making.
Income tax: higher dividend tax rates
Income tax thresholds remain broadly aligned with the 2025/26 tax year. The personal allowance continues at £12,570, and the basic rate band remains at £37,700.
The principal change is an increase in the rates applied to dividend income from 6 April 2026. Dividends within the basic rate band will be taxed at 10.75%, increased from 8.75%. Dividends within the higher rate band will be taxed at 35.75%, increased from 33.75%. The additional rate remains unchanged at 39.35%.
This adjustment increases the overall tax cost for individuals who extract profits via dividends, particularly owner-managed businesses where dividends form a key part of remuneration.
Corporation tax: increased compliance costs and charges
Two notable changes take effect in relation to corporation tax.
The section 455 tax charge, which applies to loans made by close companies to participators that remain outstanding nine months and one day after the end of the accounting period, will increase to 35.75% for loans and advances made on or after 6 April 2026. This aligns the charge with the higher dividend rate.
In addition, revised penalties will apply to late-filed corporation tax returns where the filing deadline falls on or after 1 April 2026. The updated penalty structure is as follows:
- £200 for missing the filing deadline
- £400 where the return is three months late
- £1,000 for a third consecutive failure to file on time
- £2,000 where the return is three months late for a third consecutive failure
These changes represent a more stringent approach to compliance and increase the financial consequences of late filing.
Capital gains tax: higher rates on qualifying disposals
The rate of capital gains tax applicable to gains qualifying for Business Asset Disposal Relief and Investors’ Relief will increase to 18% from 6 April 2026. This follows the increase to 14% introduced in April 2025.
The continued upward movement in these rates increases the tax cost associated with qualifying business disposals and investment exits.
VAT: relief for donations of business goods
From 1 April 2026, a new VAT relief will apply to certain donations of business goods to charities. Where the relevant conditions are met, these donations will no longer be treated as a deemed supply for VAT purposes.
The relief is subject to specific eligibility criteria, including value limits and exclusions for certain categories of goods.
Summary
Although many headline thresholds remain unchanged, the 2026/27 tax year introduces a series of focused changes that increase tax exposure in key areas, particularly for company owners and investors. Higher dividend tax rates, increased section 455 charges, enhanced penalties for late filing, and rising capital gains tax rates all contribute to a more demanding tax environment.
At A&C Chartered Accountants, we support clients in navigating these changes with clarity and confidence, ensuring that tax positions are managed proactively and aligned with wider business objectives.