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United Kingdom tax guide 2026
The United Kingdom runs a three-band income tax with a generous tax-free personal allowance, separate National Insurance on earnings, and its own rate schedules for dividends and capital gains. For newcomers, the story changed in 2025: the old non-dom regime is gone, replaced by a clean 4-year exemption on foreign income and gains for new arrivals.
- Rate range
- 20% / 40% / 45% (+ National Insurance up to 8%)
- Key allowance
- £12,570 personal allowance — frozen until April 2031
- Tax year
- 6 April – 5 April
- Filing deadline
- 31 January online (31 October paper)
Taxes covered
- Income tax45%
45% above £125,140; 40% from £50,270; National Insurance adds up to 8% on top — and the personal allowance tapers away above £100,000.
- Dividend tax39.35%
Dividend rates 10.75% / 35.75% / 39.35% by band, above a £500 tax-free amount; no National Insurance on dividends.
- Capital gains tax24%
18% within the basic band, 24% above; £3,000 annual exemption; main home fully exempt; entrepreneurs pay 18% on £1m lifetime gains.
- Crypto tax18% / 24%
Crypto follows the standard capital gains rates with the £3,000 exemption; no holding-period relief; trading and mining are income.
- Social security8%
Employee National Insurance: 8% between £242 and £967 a week, 2% above — uncapped at the top but light by European standards.
- Inheritance tax40%
40% above a £325,000 nil-rate band (+£175,000 for a home left to children); spouses exempt; 7-year rule on gifts.
- Withholding tax0% / 20%
No withholding on dividends; 20% on interest, patent royalties and rents to non-residents; payroll withholding on UK workdays.
Special regimes
- FIG — the foreign income and gains regime
Arrive after 10 years away and your foreign income and gains are exempt from UK tax for your first 4 years of residence. Replaced the non-dom remittance basis from April 2025.
- Overseas workday relief
New arrivals can shelter pay for overseas workdays for 4 years, capped at the lower of £300,000 or 30% of net employment income.
- Individual Savings Account (ISA) wrapper
Up to £20,000 a year into Individual Savings Accounts — all dividends, interest and gains inside are tax-free for good.
- Scotland sets its own bands
Scottish residents face different income tax bands (19% starter up to a 48% top rate) on earnings — dividends and savings follow UK-wide rates.
Recent changes
- 2026-04Dividend tax rose 2 points: basic 10.75%, higher 35.75%. Business asset disposal relief rate rose to 18%.
- 2026-04Making Tax Digital: sole traders and landlords above £50,000 now file quarterly digital updates.
- 2025-11Autumn Budget froze the personal allowance and thresholds until April 2031, and set savings and property income rates to rise 2 points from April 2027.