The new financial year – key fiscal changes in 2026/27

The new financial year – a roundup of the key fiscal changes in 2026/27, their impact on your pocket, and what’s to come

By Tom Payne, Wealth Management Consultant

The new financial year introduced an abundance of changes to tax, pension, and National Insurance legislation. These revisions, coupled with the ongoing high cost of living, provide an opportune time for a financial review to assess how the key changes (good and bad!) are affecting your ability to make the most of your money.

Tax, pension and National Insurance changes

The Government has introduced several important changes to tax, pensions, and National Insurance legislation. Key movements from 6 April 2026 include:

• Business Asset Disposal Relief (BADR) – a tax relief that lowers the Capital Gains Tax (CGT) rate for the disposal of qualifying business assets – has increased from 14% to 18%¹.

• Annual CGT exemption remains at £3,000 for individuals and carried interest will no longer fall within the CGT regime. Carried forward losses cannot be offset against carried income arising from 6 April 2026.

• Agricultural Relief and Business Relief have been capped at a combined £2.5 million per person (£5 million for married couples or civil partners), with any excess taxed at 50%².

·       With a phasing in from April 2026 to March 2028, the State Pension age is increasing to age 67 for everyone born after 6 March 1961. The new (full) State Pension level is now £241.30 per week, representing an above inflationary rise of 4.8%³.

·       Married Couple’s Allowance has been increased by 3.8%, in line with the September 2025 Consumer Prices Index (CPI)¹.

·       The Personal Allowance level, together with the higher-rate and additional-rate Income Tax thresholds continue to remain frozen until 2030/31. In what’s known as ‘fiscal drag’, this will bring more employees into higher tax brackets as salaries increase.

·       From 6 April 2026, the dividend tax rates for basic- and higher-rate taxpayers increase by 2%, to 10.75% and 35.75% respectively, while the additional rate remains at 39.35%.

Inflation and the cost of living

There’s no let-up on the cost-of-living crisis. The CPI rose by 3.3% in the 12 months to March 2026, up from 3.0% the previous month, with the main culprit being the rise in fuel prices.

Fuel

The US-Iran war has pushed up the price of oil, as control issues over the Strait of Hormuz continue to squeeze energy supplies – triggering the biggest increase in fuel prices in more than three years.

Groceries

It’s been calculated that during a period of less than four years (April 2022 to February 2026) the cost of a ‘woman’s basket of food’ has increased by 30.1% (to £53.31 per week) and the ‘male basket’ by a staggering 35.9% to £59.18 per week⁴.

Purchasing behavior has reflected these price hikes, with consumers switching to cheaper, unbranded products and reducing the amount they buy.

Council Tax rises

English councils have instigated Council Tax rises of approximately 5% for the 2026/27 financial year, increasing a typical Band D bill by about £111 p.a. to £2,392, putting increasing pressure on household expenditure⁵.

There have been similar increases in Wales of 4-5% but even higher surges from Scottish councils, with average increases of between 4 and 10%⁵.

Mortgage rates

For borrowers, and particularly first-time buyers, the start of 2026 brought with it the hope for interest rate cuts. The impact of the US-Iran war has, however, meant a struggle to keep inflation under control, in turn putting pressure on the Bank of England’s interest rate decisions over the months to come. Any rate increases will automatically feed through to high-street lenders’ mortgage rates, causing a further blow to borrowers but naturally benefiting savers.

Future important changes

Of note for those with savings and investments: from April 2027, Income Tax on both rental profits and savings interest will see an increase of 2% across all bands, and most unused pension funds and pension death benefits will be included in your estate for Inheritance Tax purposes.

For high-net-worth individuals, the latter point might spark the need for an immediate review of intergenerational wealth planning.

What you can do

Every household situation is unique but for almost all, these changes bring about the need for a household budget and investments review.

Questions you might want to ask are, “What changes can I make to my savings and investments to make a positive change for my family?” and “How can I minimise the effects of changes to pension and Inheritance Tax (IHT) rules?”

Our advisers at Mattioli Woods can guide you through reviewing the impact of fiscal changes on your wealth. Book your confidential and complimentary initial meeting to discuss how you could protect your financial future.

¹ Tax and National Insurance Changes 2026-27 | Moorepay

² Agricultural Relief for Inheritance Tax – GOV.UK

³ Benefit and pension rates 2026 to 2027 – GOV.UK

⁴ Food Prices Tracker: February 2026 | Food Foundation

⁵ Money Saving Expert – Council Tax to rise on 1 April – how bills will change

Content correct at time of writing (May 2026).

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