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HMRC Updates
Income Tax: Personal allowance frozen at £12,570 CGT: Annual exempt amount is £3,000 NICs: Main Class 1 Employee NI rate reduced VAT: MTD system requirements fully enforced SDLT: First-time buyer relief threshold £425,000 Corporation Tax: Main rate 25% for profits over £250k IHT: Nil-rate band frozen at £325,000 Pension: Annual allowance set at £60,000
UK Tax Guide 2026/27 | Tax Rates, Calculators & Expert Help | UK Tax Hero Skip to main content
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Key figures

2026/27 at a glance.

Personal Allowance
£12,570
Corporation Tax main rate
25%
VAT registration threshold
£90k
CGT annual exempt amount
£3,000
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Common questions

UK Tax Guide 2026/27 FAQs

Fifty HMRC-sourced answers on compliance checks, nudge letters, investigations and tax rates.

What is an HMRC compliance check?
An HMRC compliance check is a civil review of your tax return or business records. HMRC uses these checks to ensure you have paid the correct tax. It is not a criminal investigation. However, you must respond by the deadline stated in the letter.
What triggers an HMRC compliance check?
HMRC compliance checks are triggered by risk indicators. For example, figures that differ from third-party data may prompt a review. In addition, late filings, unusual expenses or repeated losses can attract attention. Furthermore, HMRC selects some taxpayers randomly.
How long does an HMRC compliance check take?
A simple HMRC compliance check may conclude in a few weeks. However, complex cases can take several months. Therefore, responding promptly with accurate records helps avoid delays. HMRC does not publish fixed time limits for the check itself.
Are HMRC compliance checks random?
Yes. HMRC selects some taxpayers randomly for compliance checks. However, most checks follow risk indicators such as data mismatches or unusual expense patterns. Consequently, keeping accurate records reduces your risk significantly.
What is an HMRC compliance check letter?
An HMRC compliance check letter is the official notice that opens a check. It states the tax year under review and lists the information HMRC requires. Moreover, it gives you a deadline to respond. Ignoring this letter can lead to estimated assessments.
What is an HMRC compliance check questionnaire?
HMRC may send a compliance check questionnaire alongside the opening letter. This form asks detailed questions about specific entries on your return. You should answer each question fully and honestly. In addition, you can attach extra sheets if needed.
What are HMRC compliance check time limits?
HMRC must open a compliance check within strict time limits. For innocent errors, the window is four years after the tax year ends. For careless mistakes, it extends to six years. Moreover, deliberate tax evasion gives HMRC 20 years.
How far back can HMRC go in a compliance check?
HMRC can go back four years for innocent errors. Furthermore, they can go back six years for careless mistakes. For deliberate offshore non-disclosure, the limit is 20 years. Therefore, you should retain records for at least six years.
What happens if I ignore an HMRC compliance check?
Ignoring an HMRC compliance check can lead to serious consequences. HMRC may issue an estimated assessment of your tax liability. In addition, penalties and interest can apply. Therefore, you should always reply on time.
Can I appeal an HMRC compliance check decision?
Yes. You can appeal against an HMRC compliance check decision. Moreover, you can request a statutory review or take the case to the First-tier Tax Tribunal. A tax specialist can handle the appeal for you.
What is an HMRC nudge letter?
An HMRC nudge letter is part of HMRC's one to many compliance strategy. It suggests you may have underdeclared income. However, it is not a formal investigation. It gives you a chance to correct errors before an enquiry opens.
What should I do if I receive an HMRC nudge letter?
First, read the letter carefully. Second, check the tax year and income source mentioned. Third, review your records. If you find an error, use the Digital Disclosure Service or Worldwide Disclosure Facility to correct it.
What is the HMRC Digital Disclosure Service?
The Digital Disclosure Service is HMRC's online facility for correcting UK tax errors voluntarily. Using it before HMRC opens an enquiry counts as an unprompted disclosure. Consequently, this substantially reduces penalties.
What is the HMRC Worldwide Disclosure Facility?
The Worldwide Disclosure Facility is HMRC's required route for correcting offshore income or gains. HMRC states that simply amending a Self Assessment return is not sufficient for offshore matters. Therefore, you must use the WDF.
How do I respond to an HMRC nudge letter about crypto?
HMRC has issued crypto nudge letters using exchange data. If you receive one, review all your crypto disposals. Furthermore, check whether you reported them on SA108. If not, use the DDS or WDF to disclose gains before HMRC opens an enquiry.
What is an HMRC tax investigation?
An HMRC tax investigation is a formal enquiry into your tax affairs. It examines your returns for underpaid tax. Moreover, it can be a full enquiry into your entire return or an aspect enquiry into one part. You have the right to appoint a representative.
What is the HMRC Fraud Investigation Service?
The HMRC Fraud Investigation Service handles serious tax fraud cases. It uses civil and criminal investigation powers. Furthermore, it can issue Code of Practice 9 notices for suspected fraud. These cases require immediate specialist advice.
What are HMRC tax investigations time limits?
HMRC tax investigations have strict time limits. They can go back four years for innocent errors. Furthermore, they have six years for careless mistakes. For deliberate offshore non-disclosure, the limit is 20 years.
What penalties can HMRC impose after an investigation?
Penalties depend on behaviour. Innocent errors attract 0% to 30%. Careless errors range from 0% to 70%. Moreover, deliberate evasion can reach 100%. For offshore matters, penalties can reach 200% of the tax owed.
What is HMRC investigation insurance?
HMRC investigation insurance covers professional fees if HMRC opens an enquiry into your return. It does not cover the tax owed. Moreover, many accountants offer this as part of their service. Check your policy scope carefully.
What is the Income Tax Personal Allowance for 2026/27?
The Income Tax Personal Allowance for 2026/27 is £12,570. This is frozen at the 2021/22 level. Furthermore, it reduces by £1 for every £2 of income above £100,000. Therefore, it reaches zero at £125,140.
What are the Income Tax bands for 2026/27?
For England and Northern Ireland, the basic rate is 20% on £12,571 to £50,270. The higher rate is 40% on £50,271 to £125,140. Moreover, the additional rate is 45% on income over £125,140. Scottish rates differ.
How does PAYE work in the UK?
PAYE stands for Pay As You Earn. Your employer deducts Income Tax and National Insurance from your wages before paying you. Furthermore, HMRC receives this tax through Real Time Information. Your tax code tells your employer how much to deduct.
What is the National Insurance rate for employees in 2026/27?
Employees pay 8% Class 1 National Insurance on earnings between £12,570 and £50,270 per year. Furthermore, they pay 2% on earnings above £50,270. These rates apply from April 2024 onwards.
What is the Inheritance Tax threshold for 2026/27?
The Inheritance Tax nil-rate band is £325,000. Furthermore, the residence nil-rate band is £175,000. Both are frozen at current levels. Therefore, estates above these thresholds pay 40% on the excess.
What is the Capital Gains Tax annual exempt amount for 2026/27?
The Capital Gains Tax annual exempt amount is £3,000 for 2026/27. This was reduced from £6,000 in 2023/24 and £12,300 in 2022/23. Therefore, gains above this are taxable.
What are the CGT rates for 2026/27?
From 30 October 2024, the basic rate CGT is 18% and the higher rate is 24%. These rates apply to most assets including property and shares. Moreover, Business Asset Disposal Relief gives a 14% rate for qualifying disposals in 2026/27.
What is the dividend tax rate for 2026/27?
The dividend tax rates are 8.75% for basic rate taxpayers, 33.75% for higher rate and 39.35% for additional rate. Furthermore, the dividend allowance is £500 for 2026/27. Dividends within your Personal Allowance are tax-free.
What is the Marriage Allowance for 2026/27?
The Marriage Allowance lets you transfer £1,260 of your Personal Allowance to your spouse or civil partner. This can reduce their tax by up to £252 per year. However, you must earn below the Personal Allowance to qualify.
How do I claim tax relief for working from home?
You can claim tax relief for working from home if you are required to do so. The simplified rate is £6 per week. Furthermore, you can claim actual costs for heating, metered water and business phone calls. You cannot claim for broadband or rent.
What is the Corporation Tax rate for 2026/27?
The main Corporation Tax rate is 25% on profits over £250,000. Furthermore, the small profits rate is 19% on profits up to £50,000. Marginal relief applies between these thresholds. Therefore, the effective rate tapers from 19% to 25%.
What is the VAT registration threshold for 2026/27?
The VAT registration threshold is £90,000 from 1 April 2024. You must register if your taxable turnover exceeds this in any rolling 12-month period. Moreover, you can register voluntarily below this threshold.
What is the Construction Industry Scheme?
CIS is a scheme where contractors deduct tax from payments to subcontractors. Registered subcontractors suffer 20% deductions. Furthermore, unregistered subcontractors suffer 30%. Gross payment status means 0% deduction.
What is the Employment Allowance for 2026/27?
The Employment Allowance is £10,500 per year from April 2025. It reduces your employer Class 1 National Insurance liability. However, only one claim is allowed per business, including connected companies.
What is the employer National Insurance rate for 2026/27?
The employer National Insurance rate is 15% on earnings above the secondary threshold of £5,000 per year. This changed from April 2025. Furthermore, the Employment Allowance can offset up to £10,500 of this.
What is the Apprenticeship Levy threshold?
The Apprenticeship Levy applies to employers with an annual pay bill over £3 million. The rate is 0.5% of the total pay bill. Furthermore, employers receive a £15,000 allowance to offset against the levy.
What is Making Tax Digital for Income Tax?
Making Tax Digital for Income Tax requires qualifying taxpayers to keep digital records and send quarterly updates to HMRC. Furthermore, an end-of-period statement and final declaration replace the annual Self Assessment return.
Who must join MTD for Income Tax from April 2026?
Sole traders and landlords with total qualifying income above £50,000 must join MTD for Income Tax from April 2026. Furthermore, those with income above £30,000 must join from April 2027.
What is the trading allowance for 2026/27?
The trading allowance is £1,000 of gross trading income per year. If your income is £1,000 or less, you do not need to register for Self Assessment. Moreover, you cannot claim both the allowance and actual expenses.
What is Research and Development tax relief?
R&D tax relief rewards companies that carry out qualifying research. The merged scheme gives a 20% expenditure credit. Furthermore, loss-making R&D-intensive SMEs can claim Enhanced R&D Intensive Support with a higher benefit.
How is cryptocurrency taxed in the UK?
HMRC treats cryptoassets as property, not currency. Therefore, Capital Gains Tax applies to disposals. Furthermore, Income Tax applies to mining, staking and certain airdrops. The CGT annual exempt amount is £3,000.
What are the UK crypto CGT rates for 2026/27?
Crypto CGT rates are 18% for basic rate taxpayers and 24% for higher and additional rate taxpayers. These rates changed from 30 October 2024. Moreover, you report gains on SA108.
What is CARF and how does HMRC use it?
CARF is the Crypto-Asset Reporting Framework. From 2026, UK and global crypto exchanges must report user transaction data to HMRC automatically. Consequently, HMRC can cross-check this against your tax return before you file.
What is the Statutory Residence Test?
The Statutory Residence Test determines if you are UK tax resident. It has three parts: automatic UK tests, automatic overseas tests, and sufficient ties tests. Furthermore, HMRC publishes full guidance in RDR3.
What is the Foreign Income and Gains regime?
The FIG regime replaced the remittance basis from April 2025. New UK residents after 10 years of non-residence can claim 100% relief on foreign income and gains for their first four years. Therefore, they pay no UK tax on foreign income during this period.
What is the Temporary Repatriation Facility?
The TRF lets former remittance-basis users designate pre-April 2025 foreign income and gains at a flat 12% rate for 2025/26 and 2026/27. Furthermore, the rate rises to 15% in 2027/28. The facility closes permanently after 5 April 2028.
What is DAC7 and how does it affect side hustles?
DAC7 requires digital platforms to report seller income to HMRC. Therefore, HMRC receives data from platforms like Airbnb, eBay and Etsy. This does not introduce new tax. However, it means HMRC can check your return against platform data.
What is the side hustle trading allowance?
The trading allowance is £1,000 of gross income per year. You do not need to register for Self Assessment if you earn £1,000 or less. Furthermore, from 2027/28 a simplified reporting process will apply for income between £1,000 and £3,000.
How do I find a chartered accountant?
You can find a chartered accountant through the ICAEW directory or the ATT directory. Furthermore, UK Tax Hero offers a free matching service. We connect you with verified UK accountants and tax advisers within 24 hours.
How do I find a tax adviser?
You can find a tax adviser through the CIOT directory or the ATT directory. Moreover, UK Tax Hero matches you with qualified tax specialists for free. There is no charge to you and no obligation.

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