Legalize / United Kingdom / Public General Act

Finance Act 2026

Type Public General Act

Publication 2026-03-18

State In force

Department Statute Law Database

Source legislation.gov.uk

Reform history JSON API

Part 1 — Income tax, capital gains tax and corporate taxes

Income tax charge, rates and allowances

Reviews and appeals

1

Income tax is charged for the tax year 2026-27.

Main rates of income tax for tax year 2026-27

2

For the tax year 2026-27 the main rates of income tax are as follows—

(a) the basic rate is 20%,

(b) the higher rate is 40%, and

Default and savings rates of income tax for tax year 2026-27

3

(1) For the tax year 2026-27 the default rates of income tax are as follows—

(a) the default basic rate is 20%,

(b) the default higher rate is 40%, and

(2) For the tax year 2026-27 the savings rates of income tax are as follows—

(a) the savings basic rate is 20%,

(b) the savings higher rate is 40%, and

Increase in dividend ordinary and upper rates

4

(1) In section 8 of ITA 2007 (which provides, among other things, for the dividend ordinary rate and dividend upper rate)—

(a) in subsection (1) (the dividend ordinary rate), for “8.75%” substitute “10.75%”, and

(b) in subsection (2) (the dividend upper rate), for “33.75%” substitute “35.75%”.

(2) The amendments made by this section have effect for the tax year 2026-27 and subsequent tax years.

Savings rates of income tax for tax year 2027-28

5

For the tax year 2027-28 the savings rates of income tax are as follows—

(a) the savings basic rate is 22%,

(b) the savings higher rate is 42%, and

New rates of income tax on property income

6

(1) Part 1 of ITA 2007 (rates at which income tax is charged etc) is amended as follows.

(2) After section 6C insert—

(6D) The property basic rate, the property higher rate and the property additional rate for a tax year are the rates determined as such by Parliament for the tax year.

(3) After section 11C insert—

(11CA) (1) Income tax is charged at the property basic rate on an individual’s income which— (a) is property income, and (b) would otherwise be charged at the basic rate or the default basic rate. (2) Income tax is charged at the property higher rate on an individual’s income which— (a) is property income, and (b) would otherwise be charged at the higher rate or the default higher rate. (3) Income tax is charged at the property additional rate on an individual’s income which— (a) is property income, and (b) would otherwise be charged at the additional rate or the default additional rate. (4) Subsections (1) to (3) are subject to— - section 11A (income charged at Scottish rates), - section 11CB (income charged at the Welsh property basic, higher and additional rates: individuals), - any other provisions of the Income Tax Acts which provide for income to be charged at different rates of income tax in some circumstances. (5) Sections 16 and 16A have effect for determining the extent to which an individual’s property income would otherwise be charged at the basic, higher or additional rate or the default basic, default higher or default additional rate.

(4) After section 16 insert—

(16A) (1) This section has effect for determining— (a) which part of a Scottish taxpayer’s income consists of property income, (b) the rate at which income tax would be charged on a person’s property income apart from section 11CA, and (c) the rate at which income tax would be charged on the property income of a Welsh taxpayer apart from section 11CB. (2) It also has effect for all other income tax purposes except for the purposes of sections 535 to 537 of ITTOIA 2005 (gains from contracts for life insurance etc: top slicing relief). (3) If a person has property income but no dividend income or savings income, the property income is treated as the highest part of the person’s total income. (4) If a person— (a) has property income, and (b) dividend income or savings income (or both dividend income and savings income), the property income is treated as the part of the person’s total income immediately before the savings income or, if the person does not have savings income, immediately before the dividend income.

(5) After section 17 insert—

(17A) (1) This section applies for the purposes of the Income Tax Acts. (2) “Property income” is income which is— (a) chargeable under Chapter 3 of Part 3 of ITTOIA 2005 (the profits of a UK property business or an overseas property business), (b) chargeable under Chapter 7 of that Part (amounts treated as adjustment income under section 330), (c) chargeable under Chapter 8 of that Part (rent receivable in connection with a UK section 12(4) concern), (d) chargeable under Chapter 9 of that Part (rent receivable for UK electric-line wayleaves), and (e) chargeable under Chapter 10 of that Part (post-cessation receipts arising from a UK property business).

(6) In section 25 (reliefs and allowances deductible at Steps 2 and 3: supplementary), after subsection (3) insert—

(3A) Subsection (2) is also subject to a requirement that the reliefs and allowances in Steps 2 and 3 must be deducted from components of income other than property income, savings income or dividend income (so far as it would otherwise be possible to do so) before they are deducted from property income, savings income or dividend income.

(7) Schedule 1 makes amendments in connection with, or otherwise related to, provision made by this section and section 5 (including amendments concerning savings rates).

(8) The amendments made by this section and that Schedule have effect for the tax year 2027-28 and subsequent tax years.

Property rates of income tax for tax year 2027-28

7

For the tax year 2027-28 the property rates of income tax are as follows—

(a) the property basic rate is 22%,

(b) the property higher rate is 42%, and

Scottish and Welsh property rates set by Scottish Parliament and Senedd

8

(1) Schedule 2 makes provision for Scottish and Welsh property rates to be set by the Scottish Parliament and Senedd Cymru.

(2) This section and that Schedule come into force on such day as the Treasury may by regulations appoint.

(3) The amendments made by this section and that Schedule have effect in relation to—

(a) the tax year appointed by the Treasury by regulations, and

(b) subsequent tax years.

(4) The tax year appointed under subsection (3)—

(a) must be a tax year after the tax year 2026-27, and

(b) must begin on or after the day appointed under subsection (2).

(5) Regulations under this section may appoint different days for different purposes.

(6) For further provision about regulations under this section, see section 1014(1), (3) and (6)(b) of ITA 2007.

Freezing starting rate limit for savings for tax years 2026-27 to 2030-31

9

(1) For the tax years 2026-27, 2027-28, 2028-29, 2029-30 and 2030-31, the amount specified in section 12 (3) of ITA 2007 (the starting rate limit for savings) is “£5,000”.

(2) Accordingly, section 21 of that Act (indexation) does not apply in relation to the starting rate limit for savings for any of those tax years.

Basic rate limit and personal allowance for tax years 2028-29 to 2030-31

10

(1) Section 5 of FA 2021 (basic rate limit and personal allowance for tax years up to 2027-28) is amended as follows.

(2) In subsection (1) (which specifies the basic rate limit in section 10(5) of ITA 2007 as £37,700 for tax years up to 2027-28), for “and 2027-28” substitute “, 2027-28, 2028-29, 2029-30 and 2030-31”.

(3) In subsection (2) (which specifies the personal allowance in section 35(1) of ITA 2007 as £12,570 for tax years up to 2027-28), for “and 2027-28” substitute “, 2027-28, 2028-29, 2029-30 and 2030-31”.

(4) In subsection (3) (which makes consequential provision preventing the uprating of those amounts for the affected tax years), in the words after paragraph (b), for “and 2027-28” substitute “, 2027-28, 2028-29, 2029-30 and 2030-31”.

Corporation tax charge and rates

Charge and main rate for financial year 2027

11

(1) Corporation tax is charged for the financial year 2027.

(2) The main rate of corporation tax for that year is 25%.

Standard small profits rate and fraction for financial year 2027

12

For the purposes of Part 3A of CTA 2010, for the financial year 2027—

(a) the standard small profits rate is 19%, and

(b) the standard marginal relief fraction is 3/200ths.

Employee reliefs

Enterprise management incentives: thresholds and period for exercise

13

(1) In section 529 of ITEPA 2003 (scope of tax advantages: option must be exercised within 10 years)—

(a) in the heading, for “within 10 years” substitute “by the specified anniversary”;

(b) in subsection (2), for “tenth” substitute “specified”;

(2A) In this section, “specified anniversary” means— (a) in cases where the employer company is a specified Northern Ireland company, the tenth anniversary, and (b) otherwise, the fifteenth anniversary.

(2) Schedule 5 to ITEPA 2003 is amended as set out in subsections (3) to (7).

(3) In paragraph 7 (maximum value of options in respect of relevant company’s shares)—

(a) in sub-paragraph (1), after “exceed” insert—

(a) £6 million, or (b) where the employer company is a specified Northern Ireland company,

;

(b) in sub-paragraph (2), after “option if the” insert “applicable”;

(d) after sub-paragraph (5), insert—

(5A) If— (a) the grant of two or more share options at the same time causes only the limit in paragraph 7(1)(b) to be exceeded, and (b) the employer company in respect of some of the share options is not a specified Northern Ireland company, the share options in respect of which the employer company is a specified Northern Ireland company are, for the purposes of this paragraph, to be treated as having been granted before the other share options.

(4) In paragraph 12 (the gross assets requirement)—

(a) in sub-paragraph (1) after “exceed” insert—

(a) £120 million, or (b) where the company is a specified Northern Ireland company,

(b) in sub-paragraph (2) after “exceed” insert—

(a) £120 million, or (b) where the employer company is a specified Northern Ireland company,

(5) In paragraph 12A (the number of employees requirement)—

(a) in sub-paragraph (1) after “less than” insert—

(a) 500, or (b) where the company is a specified Northern Ireland company,

;

(b) in sub-paragraph (2) after “less than” insert “500 or, where the employer company is a specified Northern Ireland company,”

(6) In paragraph 36 (option to be capable of exercise within ten years)—

(a) in the italic cross-heading, for “10 years” substitute “the specified period”;

(b) in sub-paragraph (1), for “the period of 10 years” substitute “the specified period”;

(d) after sub-paragraph (2) insert—

(3) In this paragraph, the “specified period” means— (a) 15 years, or (b) where the employer company is a specified Northern Ireland company, 10 years.

(7) After paragraph 57E, insert—

(57F) In the EMI code, a “specified Northern Ireland company” means a company that— (a) has its registered office in Northern Ireland, and (b) carries on a trade involving— (i) a trade in goods, or (ii) the generation, transmission, distribution, supply, wholesale trade or cross-border exchange of electricity.

(8) In section 169I(7D)(b) of TCGA 1992 (material disposal of business assets)—

(a) for “tenth ” substitute “specified”;

(b) at the end insert “(with “specified anniversary” having the meaning given in section 529(2A) of that Act)”.

(9) The amendments made by subsections (1) to (8) come into force on 6 April 2026.

(10) On and after 6 April 2026, Schedule 5 to ITEPA 2003 has effect in relation to an option granted before 6 April 2026 as if the following paragraph were inserted after paragraph 37—

(37A) (1) Sub-paragraph (2) applies if— (a) on or after 26 November 2025, a fixed-date qualifying option is varied so as to delay the date on which it can be exercised, (b) the variation takes place on or before the tenth anniversary of the grant of the option, and (c) the variation results in an option that is capable of being exercised on a single date falling on or before the fifteenth anniversary of the grant of the option. (2) An option that is varied as described in sub-paragraph (1)— (a) continues to be a qualifying option for the purposes of the EMI code, and (b) is to be treated for the purposes of the EMI code as having been granted in its varied form. (3) In sub-paragraph (1)— (a) “fixed-date qualifying option” means a qualifying option granted before 6 April 2026 that is capable of being exercised on a single date set by reference to its date of grant, and (b) a reference to an option being varied is a reference to its being varied by written agreement between the person who granted the option and the person entitled to exercise it. (4) Sub-paragraph (2) does not apply in relation to an option if, at the time of variation, the employer company is a specified Northern Ireland company.

Enterprise investment scheme: increase in amounts and asset requirements

14

(1) Part 5 of ITA 2007 is amended as follows.

(2) In section 173A(1) (the maximum amount raised annually through risk finance investments requirement), for paragraphs (a) and (b) substitute—

(a) if at that date the issuing company is a knowledge-intensive company (see section 252A and subsection (5A)) and— (i) not a specified Northern Ireland company, £20 million; (ii) a specified Northern Ireland company, £10 million, and (b) if at that date the issuing company is not a knowledge-intensive company and— (i) not a specified Northern Ireland company, £10 million; (ii) a specified Northern Ireland company, £5 million.

(3) In section 173AA(1) (maximum risk finance investments at the issue date requirement), for paragraphs (a) and (b) substitute—

(a) if at the issue date the issuing company is a knowledge-intensive company (see section 252A) and— (i) not a specified Northern Ireland company, £40 million; (ii) a specified Northern Ireland company, £20 million, and (b) if at the issue date the issuing company is not a knowledge-intensive company and— (i) not a specified Northern Ireland company, £24 million; (ii) a specified Northern Ireland company, £12 million.

(4) In section 173AB(4) (maximum risk finance investments during period B requirement) for paragraphs (a) and (b) substitute—

Reading this document does not replace reading the official text published on legislation.gov.uk. Contains public sector information licensed under the Open Government Licence v3.0. We assume no responsibility for any inaccuracies arising from the conversion of the original CLML XML to this format.