Finance Flow Services - Bookkeeping & Tax

UK Tax Rates & Thresholds 2026/27 Quick Guide

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Income Tax

Personal Allowance - £12,570 (0%)

20% - £12,571 to £50,270
40% - £50,271 to £125,140
45% - £125,140+

National Insurance (Employees)

0% - up to £12,570
8% - £12,571 to £50,270
2% - £50,270+

Dividend Tax

Allowance: £500

10.75% (basic rate)
35.75% (higher rate)
39.35% (additional rate)

Corporation Tax

19% - profits up to £50,000
25% - profits over £250,000

Capital Gains Tax (CGT)

Allowance: £3,000

18% / 24% - property gains
10% / 20% - other assets

💡 Smart Moves

✔️ Max out ISA (£20,000 allowance)
✔️ Use pension contributions to reduce tax
✔️ Split income/dividends where possible

Plan smart. Stay efficient. Build wealth

Save this post so you’ve got it when planning ahead 💡

If someone you know could use a little clarity around their taxes, send this their way 🤝

Ready to get organised for the year ahead?

Drop me a DM to secure your 2026/27 slot

Make sure to use your trivial benefits before 5th of April.

You don’t have to pay tax on a benefit for your employee if all of the following apply:

it cost you £50 or less to provide it isn’t cash or a cash voucher
it isn’t a reward for their work or performance
it isn’t in the terms of their contract

Example trivial benefits:

£30 birthday gift 🎂
£40 Christmas hamper 🎄
Flowers for a life event 💐

This is known as a ‘trivial benefit’. You don’t need to pay tax or National Insurance or let HM Revenue and Customs (HMRC) know.

If you are a director of a close company (usually a small company owned by ≤5 shareholders):

You can still use trivial benefits

But there is a £300 total limit per tax year

Example:

6 × £50 benefits = £300 (OK)

7 × £50 = £350 → £50 becomes taxable

So if you haven’t used it yet, you can still give yourself up to £300 (e.g., 6 × £50 benefits) before 5 April to stay tax-free.

📞 07435799192
📧 [email protected]
🌐 www.financeflowservices.com

📢 Reminder: The UK’s Making Tax Digital rules mean businesses and landlords must keep digital records and submit tax information using compatible software to HM Revenue and Customs.

✅ MTD for VAT - Already mandatory for VAT-registered businesses
📅 MTD for Income Tax - Coming from April 2026 (for those earning £50,000+)
📅 Expanding April 2027 (for those earning £30,000+)

If you’re a sole trader or landlord, now is the time to prepare.

✔️ Check if you’re affected
✔️ Make sure you’re using compliant software
✔️ Avoid last-minute stress and penalties

Need help getting MTD ready? We’re already helping our clients move to digital smoothly and stress-free.

We use trusted MTD-compliant software and offer a full bookkeeping service.

If you want to start your digital journey with us today, please get in touch!

📞 07435799192
📧 [email protected]
🌐 www.financeflowservices.com

🚧 Running a construction business in the UK?

Make sure you’re claiming every allowance and relief your construction business is entitled to! 💡

Here are few quick tax tips every builder, contractor, and tradesperson should know.

For more information, click on the link below and read my blog:

https://www.financeflowservices.com/

Contact us today and let us guide you through it so you can focus on building, while we handle the numbers. 🏗️💰

Are you a UK Ltd company owner?

Want to take £60k out of your business tax-efficiently? 💰

❌ Don’t take it all as salary that’s usually the most expensive way thanks to Income Tax + National Insurance.

✅ The classic director setup looks like this:
- £12,570 salary
- No Income Tax
- Minimal National Insurance
- Qualifies for state pension credits
- Dividends for the rest (taxed lower than salary & No National Insurance at all)

Dividend tax rates (approx.):

• First £500 dividend allowance → 0%
• Basic rate → 8.75%
• Higher rate → 33.75%
• Additional rate → 39.35%

⚠️ Once total income goes over £50,270, higher-rate dividend tax kicks in so timing your dividends across tax years can make a big difference ⏳

🚀 The BIG one most directors miss:

Company pension contributions

💼 Paid by your company
📉 Reduce corporation tax
🙌 No personal tax when paid in
📈 Grow tax-free inside your pension

A common sweet spot strategy:

✔️ Small salary
✔️ £30–40k dividends
✔️ £10–20k company pension contribution

💡 Result: Often thousands saved vs PAYE, fully compliant with HM Revenue and Customs rules.

Works best for:

👤 Single-director UK Ltd companies
📊 Profitable businesses
📅 Owners planning long-term wealth, not just income

Smart structure = more money kept

📞 07435799192
📧 [email protected]
🌐 www.financeflowservices.com

Christmas 🎄 just around the corner, here’s your friendly reminder to make the most of those seasonal allowances.

🎁 Trivial Benefits - Perfect for small festive treats

Must be under £50 per person (including VAT)

No cash or cash-like gifts

Think chocolates, wine, flowers, small vouchers, etc.

Directors of close companies are limited to 6 per tax year

🎅 Branded Promotional Gifts

Branded promotional gifts that cost £50 or less per person in a tax year, and which clearly display your company’s branding, are generally allowable as a business expense.

Examples: branded mugs, notebooks, water bottles, calendars, desk plant pots, reusable coffee cups.

🥂 Staff Entertaining - Christmas party does count

Up to £150 per person each year (across of all annual events)

Event must be open to all employees

Applies even if you’re the only person on your payroll

Here’s a breakdown of the key points from the Autumn Budget 2025 (UK), delivered on 26 November 2025 what’s changed, what’s new, and what it means for you.

Tax Threshold Freeze Extended (Again) Tax thresholds will now be frozen until 2031, meaning you could be pulled into higher tax bands as your income increases.

Here’s what you need to know:

💷 Dividends (from April 2026)

Basic rate: increasing to 10.75%

Higher rate: rising to 35.75%

Additional rate: stays at 39.35%

💰 Savings Interest (from April 2027)

Basic rate: will rise to 22%

Higher rate: 42%

Additional rate: 47%

🏠 Property Income & Landlords (from April 2027)

Landlords (not trading through a company) will be taxed separately on property income at: 22% basic rate 42% higher rate 47% additional rate.

Mortgage interest and finance costs will still be given as a tax credit at 22% From April 2027, the personal allowance must be allocated against pension, employment or trading income first. This is to ensure the increased tax rates for other types of income will apply where possible.

👶 Two-Child Benefit Cap Scrapped From April 2026, parents will be able to claim Child Benefit for more than two children.

💼 Salary Sacrifice Pension Changes (From April 2029) From April 2029, National Insurance will apply to salary-sacrificed pension contributions over £2,000 per year.

👵 State Pension Increases (From April 2026)

Basic state pension rises by £440 per year

New state pension rises by £575 per year

💰 Cash ISA Reforms - But the £20,000 Limit Stays From April 2027, the amount you can put into a cash ISA will be capped at £12,000 per year (down from the current £20,000). BUT the £20,000 total ISA allowance still applies, so you can still make use of the full amount by investing the rest into stocks & shares ISAs.

Over-65s will still be able to use the full £20,000 allowance in cash ISAs if they prefer to keep things low risk.

⛽ Fuel Duty Frozen (Again!) Fuel duty stays at 52.95p per litre until September 2026

🚗 Mileage Tax for Electric Vehicles (From April 2028)

Electric cars: 3p per mile

Plug-in hybrids: 1.5p per mile

🧾 Wider Inheritance Tax Relief (From April 2026) Spouses will now be able to transfer 100% of their relief allowance, making it easier to pass on wealth tax-free.

💷 National Wage Increases (From April 2026)

Living wage rises to £12.71/hour (ages 21+)

18–20 year olds: £10.85/hour

16–17 & apprentices: £8/hour

Making Tax Digital (MTD) - What You Need to Know📌

Originally planned for earlier, but now delayed until April 2026.

From April 2026, it will apply to self-employed individuals and landlords with annual business or property income over £50,000.

From April 2027, it will extend to those earning over £30,000.

From April 2028, it will extend to those earning over £20,000.

💡 Purpose of MTD
Increase the accuracy of tax reporting
Reduce errors from manual data entry
Improve efficiency and make tax filing easier

👥 Who It Affects
VAT-registered businesses with a taxable turnover above £90,000
From April 2026, MTD for Income Tax Self-Assessment (MTD for ITSA) will apply to self-employed individuals and landlords earning over £50,000

🔗 Requirements Under MTD
Keep digital records (sales, purchases, VAT)
Use MTD-compatible software (e.g. Xero, FreeAgent, QuickBooks)
Ensure digital links between systems - no manual re-entry

📅MTD for VAT
Submit quarterly VAT returns via MTD software
Sign up for MTD through HMRC

💰 MTD for Income Tax
Send quarterly income and expense updates
Complete an End of Period Statement (EOPS) and Final Declaration at year-end

✨ Staying compliant with MTD helps streamline your tax process and keeps your business HMRC ready