Tax rates
2027/28

Personal tax

Income tax

Income tax rates 2027/28 (2026/27)

The government has announced that the basic rate band will be maintained at £37,700 until 5 April 2031. From 2031/32 onwards, thresholds are due to resume increasing annually in line with inflation.

Most trusts with up to £500 of net income have no income tax liability. Where net income exceeds this amount, the full amount is subject to income tax. In 2027/28, for discretionary and accumulation and maintenance trusts an income tax rate of 45% applies to income other than property, savings or dividends (2026/27: 45%). The rate of tax on savings and property income is 49% (2026/27: 45%). The rate of tax on dividend income is 39.35% (2026/27: 39.35%).

Income tax rates – Scotland

2027/28:

The Scottish Parliament has the power to set income tax rates and bands for non-savings, non-dividend income of Scottish resident taxpayers. With effect from 2027/28, the Scottish Parliament also has the power to set separate rates applicable in relation to property income, different from the rates applicable in relation to other non-savings, non-dividend income. (The UK-wide dividend and savings tax rates and bands above apply to the dividend and savings income of Scottish taxpayers.)

The 2027/28 Scottish Budget is due to be presented in draft on 3 December 2026. The proposed devolved income tax rates and bands for 2027/28 were therefore not known as at the date of publication of these tables.

2026/27:

The following six tax rates and bands for non-savings, non-dividend income apply in 2026/27:

Income tax rates – Wales

The Senedd has the power to vary the income tax rates (but not the bands) for non-savings, non-dividend income of Welsh resident taxpayers. With effect from 2027/28, the Senedd also has the power to set separate rates applicable in relation to property income. (The UK-wide dividend and savings tax rates and bands above will apply to the dividend and savings income of Welsh taxpayers.) The income tax rates for 2026/27 (and earlier years) were aligned with those in England and Northern Ireland.

The 2027/28 draft Welsh Budget is due to be published on 17 November 2026 and a final Welsh Budget is due to be published on 16 February 2027. The devolved income tax rates proposed for 2027/28 were therefore not known as at the date of publication of these tables.

Income tax allowances

The government has announced that the personal allowance for individuals will be maintained at £12,570 until 5 April 2031, after which date it will resume increasing annually in line with inflation.

At Budget 2026, the government announced that an income tax reduction – referred to as the ‘pension tax allowance (PTA)’ – will be introduced for the tax years 2027/28 to 2029/30 to ensure that pensioners whose only income consists of the State Pension will remain outside the scope of income tax. An automatic tax credit (worth up to £94 for the 2027/28 tax year) will be available to individuals who have reached State Pension age, equal to the tax that would otherwise arise on a year's worth of the new State Pension (2027/28: £13,037) in excess of the standard personal allowance (2027/28: £12,570). The credit will be tapered by £1 for every £3 of income between the relevant limits (2027/28: £13,037 and £13,319).

Income tax reliefs and incentives

At Budget 2025, the government announced that ISA, Lifetime ISA, Junior ISA and Child Trust Fund annual subscription limits will remain frozen at current levels until 5 April 2031.

Relief is available at the taxpayer's marginal rate of income tax for charitable donations via the Gift Aid and Payroll Giving schemes and for charitable gifts of quoted shares and securities and real property.

Pensions

Aggregate contributions made by employers and individuals to a money purchase (defined contribution) registered pension scheme attract an annual allowance charge to the extent they exceed the annual allowance for the tax year in which the pension input period ends, augmented by any brought forward unused relief from the previous three years. No charge arises where the member dies in the year or is medically assessed as unable to work ever again.

An annual allowance charge similarly applies to salary-related pension accrual where the inflation-adjusted increase in pension entitlement, multiplied by a valuation factor of 16, exceeds the annual limit. No charge applies where the member's active participation in the scheme has ceased. Where the annual limit is exceeded, tax is payable on the excess at the individual's marginal rate (i.e. normally 20%, 40% or 45% – Scottish rates, excluding the 19% starter rate, apply to Scottish residents). This is normally payable by the individual via self-assessment, but in some cases they may elect for the pension scheme to pay the tax instead.

The maximum tax-free pension commencement lump sum payable is the lowest of 25% of the value of an individual's uncrystallised fund, the available ‘lump sum allowance’ (normally £268,275) and one third of the amount crystallised for the payment of a pension or annuity for life, or as funds available for drawdown.

The aggregate tax-free elements of lump sums paid during a pension saver's lifetime and on death are capped at the ‘lump sum and death benefit allowance’ (normally £1,073,100). This allowance is only relevant where the pension saver dies before reaching age 75. Higher lump sum allowances are available for eligible individuals who have certain historical lifetime allowance protections in place. Both new allowances may be reduced under transitional rules if any pension benefits were crystallised before 6 April 2024.

Subject to the agreement of the scheme administrator, members of money purchase schemes who have reached the minimum pension age of 55 are able to take funds from their drawdown account flexibly – whenever they want, and in any desired amount. Members also have the option of taking an ‘uncrystallised funds pension lump sum’, 25% of which is tax-free. The tax-free element is limited to the amount of ‘lump sum allowance’ available.

If the member dies before age 75, any unused drawdown or undrawn uncrystallised funds can be paid as lump sums to dependants or nominees free of tax to the extent that they fall within the available ‘lump sum and death benefit allowance’ (subject to transitional rules). The excess is taxed at the recipient’s marginal tax rate. At Budget 2026, the government announced that the excess will no longer be taxed as pension income of the recipient, so will not count towards income thresholds embedded in the tax system (e.g. the £100,000 threshold above which the personal allowance is tapered). This change will have retrospective effect for relevant lump sum death benefits paid on or after 6 April 2024. Transitional provisions will apply the same approach to relevant payments made in the 2023/24 tax year.

If the member dies at age 75 or above, lump sums are taxable in full. Death benefit lump sums will normally be taxed as pension income of the recipient. In addition to tax on the income itself, these lump sums can create further tax charges due to counting towards income thresholds (e.g. they may trigger tapering of the personal allowance).

Any unauthorised lump sum is taxed on the member at rates of 40% or 55%, with a further charge on the scheme.

Making contributions to pensions is a long-term investment decision and individuals should take advice on the suitability of making pension contributions in their particular circumstances.

Company car, van and fuel benefits

Company car tax rates

A company car benefit is calculated by multiplying the car's list price (including selected optional accessories) by the appropriate percentage graduated according to the car's carbon dioxide (CO₂) emissions, fuel type and electric range (where applicable).

Appropriate percentage for cars

Employee contributions

The list price of the car is reduced by up to a maximum of £5,000 for capital contributions made by an employee. Employees' contributions towards private use reduce the taxable benefit pound for pound.

Private fuel benefit

Fuel benefit for company cars is calculated by applying the appropriate percentage for the car based on fuel type and CO₂ emissions to a pre-set figure which is £30,200 (2026/27: £29,200).

Van and van fuel benefit

The private use of vans attracts a scale charge of £4,310 (2026/27: £4,170). In addition, if free or subsidised fuel is provided for private use in a company van, a taxable fuel benefit will arise of £825 (2026/27: £798).

Optional Remuneration Arrangements

Where employees select a company car via either a salary sacrifice arrangement or instead of a cash allowance (where they have that choice), then rules, which came into effect from 6 April 2017, may affect the calculation of company car benefit. These rules do not affect cars with CO₂ emissions of 75g/km and below.

Where employees entered into arrangements on or after 6 April 2017, then their company car benefit will equal the greater of (i) the amount as calculated above, and (ii) the value of the cash pay given up (i.e. the gross salary sacrifice/gross cash allowance forgone).

Electric vehicles

The appropriate percentage for zero-emission electric cars for the purposes of company car tax is 5% for the 2027/28 tax year (2026/27: 4%). This will rise to 7%, 9%, and 10% in the three tax years 2028/29 to 2030/31 respectively.

The provision of workplace facilities for charging vehicles and electricity to employees is exempt from tax as a benefit in kind. The exemption applies to workplace charging provided for company cars and private cars (although there are certain criteria to be met for the private car exemption to apply). Similarly, no benefit in kind generally arises when a company reimburses the cost of charging a company car at home or at public charging points.

Approved mileage rates

Employers can make income tax- and NIC-free payments to employees using their own vehicle for business travel, as follows:

• Cars and vans:
  
  
  • 2026/27: 55p per mile for the first 10,000 business miles in the tax year and 25p per mile thereafter.
  • 2027/28 onwards: 55p per mile for the first 10,000 business miles in the tax year and 35p per mile thereafter.
  • For NIC purposes there is no mileage limit for the 55p per mile rate.
• Motorcycles – 24p per mile.
  
  
• Bicycles – 20p per mile.
  
  
• Passengers – 5p per passenger per business mile for carrying fellow employees in a car or van on journeys which are also work journeys for them. Only payments specifically for carrying passengers count and there is no relief if amounts paid are less than 5p (or nothing at all). Passenger payments are optional.

Business expenditure on leased cars

Corporation tax relief and income tax relief for expenses incurred by businesses on the hiring of cars can be restricted according to the CO₂ emissions of the car. From 1 April 2021 (for corporation tax) or 6 April 2021 (for income tax), 15% of the leasing expenses are generally disallowed if emissions exceed 50g/km.

Online car tax guide

For more detail, including vehicle excise duty rates and mileage allowance rates, see www.cartaxguide.co.uk. The guide will reflect the Budget 2026 announcements shortly.

Capital gains tax (CGT)

Annual CGT exemptions apply for individuals and trusts, as follows:

Gains realised on the disposal of an EIS or SEIS investment are exempt from CGT provided certain conditions are met, including that the shares are held for at least three years, and that both the investor and company remain eligible for EIS/SEIS throughout this period.

Up to 50% of capital gains of up to £200,000 realised on disposals of assets are exempt from CGT if the investment is a qualifying SEIS investment and appropriate claims are made.

At Budget 2026, the government announced that the lifetime limit for business asset disposal relief (formerly known as entrepreneurs' relief) will be reduced to £500,000 (2026/27: £1 million) with effect for qualifying disposals made on or after 6 April 2027. Qualifying gains made on disposals within the lifetime limit are subject to a reduced capital gains tax rate of 18% (2026/27: 18%).

Investors' relief, for external investors in unlisted trading companies, applies to newly-issued shares purchased on or after 17 March 2016, provided they are held for a minimum of three years from 6 April 2016, and subject to a lifetime limit of £10 million of gains on disposals made prior to 30 October 2024. From 30 October 2024 onwards, the lifetime limit for investors' relief is £1 million. This limit is separate from the lifetime limit of gains for business asset disposal relief. Gains qualifying for investors' relief are subject to a reduced capital gains tax rate of 18% (2026/27: 18%).

At Budget 2026, the government announced that a new CGT founders’ relief will be introduced for qualifying disposals of shares made from 6 April 2027. Such disposals will be eligible for a reduced 10% rate of capital gains tax up to a lifetime limit of £10 million (reduced by any business asset disposal relief or investors' relief obtained from 6 April 2027). A consultation on the detailed legislation for the new relief is taking place between 28 October and 30 November 2026.

There is no chargeable gain on the disposal of a single chattel if the gross consideration does not exceed £6,000.

Inheritance tax (IHT)

IHT is charged on an individual's estate at death, on gifts within seven years of death, and on chargeable lifetime transfers of value (e.g. a transfer to a trust). The nil rate band is £325,000. Cumulative chargeable transfers up to the limit of the nil rate band do not result in an IHT charge. To the extent that chargeable transfers exceed the nil rate band, the tax rate is 20% for lifetime transfers where the donor survives seven years, and 40% for transfers on death and in the three years preceding death. A tapered inheritance tax rate applies to gifts made between three and seven years before death. When a surviving spouse or civil partner dies, relief is due on that death in respect of any unused proportion of the nil rate band of the spouse or civil partner who died first. This is in addition to any unused nil rate band of the survivor.

From 6 April 2025, chargeability to inheritance tax on non-UK assets is based on the concept of ‘long-term residence’. Those who are ‘long-term UK resident’ at the time a chargeable event (including death) arises are subject to inheritance tax on worldwide assets rather than UK assets only. This status will normally apply where the individual has been resident for at least 10 of the preceding 20 tax years, but special rules apply to those who have already left the UK or who have spent fewer than 20 tax years in the UK by the time they leave.

With effect from 6 April 2027, the value of most unused pension savings and death benefits will be brought within the scope of an individual's estate for inheritance tax purposes. This is in addition to any income tax charges that may apply.

Business Property Relief (BPR) and Agricultural Property Relief (APR) were restricted with effect from 6 April 2026. These reliefs were previously uncapped and could reduce the taxable value of certain assets by 50% or 100%. The scope of assets that can attract 100% relief has been reduced, and the amount of relief at 100% is capped at £2.5 million. Relief at 50% is available on qualifying assets in excess of the cap. The cap is due to be maintained at £2.5 million until 5 April 2031. The £2.5 million allowance (or any unused element thereof) is transferable to a spouse or civil partner on death, including in circumstances where the first death was before 6 April 2026.

Transfers on or after 6 April 2025 between spouses or civil partners who are both long-term UK residents are exempt, as are transfers between spouses or civil partners where neither is a long-term UK resident. When a transferor spouse or civil partner is a long-term UK resident and a transferee spouse or civil partner is not, the spouse exemption is limited to the level of the IHT nil rate band. Also, a non-long-term UK resident spouse or civil partner can elect to be treated for IHT as long-term UK resident. If they do so, the full spouse/civil partner exemption will be due. Similar rules applied to transfers before 6 April 2025, but they were based on the domiciles of the spouses rather than long-term residence. These rules are still relevant if death occurs within seven years of the transfer.

Where 10% or more of a person's net estate is left to charity, the rate of IHT is reduced to 36%.

An additional residence nil rate band (RNRB) was introduced with effect from 6 April 2017, which applies when a residence is passed to a direct descendant. The RNRB is £175,000. Any unused RNRB can be transferred to a surviving spouse or civil partner. It will also be available when a person downsizes or ceases to own a home and assets of an equivalent value, up to the value of the additional nil-rate band, are passed on death to direct descendants. There is a tapered withdrawal of the RNRB for estates with a net value of over £2 million, at a rate of £1 for every £2 over this threshold.

At Budget 2025, it was announced that the IHT nil rate band will be maintained at £325,000, the RNRB will be maintained at £175,000, and the residence nil rate taper will continue to start at £2 million, until 5 April 2031.

National Insurance Contributions

Class 1 (employees and employers) rates 2027/28

Employees' qualifying business travel and subsistence expenses are excluded from earnings for Class 1 NICs purposes. Employers can pay up to 55p per mile to employees travelling on business in their own cars without incurring a NIC charge. This rate applies, for NICs purposes, irrespective of the business mileage incurred.

An employment allowance of £10,500 per year is available to eligible employers to offset against their employer Class 1 NICs. If two or more companies are ‘connected’, only one company can claim the allowance.

Employers are not required to pay employer Class 1 NICs in respect of the wages they pay to employees under the age of 21 up to £967 per week.

For apprentices under the age of 25, the apprentice upper secondary threshold is also £967 per week. This means that employers will not be required to pay employer Class 1 NICs in respect of the wages they pay to eligible apprentice employees under the age of 25 up to £967 per week.

A NICs relief is available for employers who hire armed forces veterans until 5 April 2028. This relief applies in respect of employer Class 1 NICs on the earnings paid to qualifying armed forces veterans. The relief is only available for 12 consecutive months from the veteran's first day of civilian employment, and applies a 0% Secondary Class 1 NICs rate on earnings up to the veteran upper secondary threshold (£967 per week).

There is also a NICs relief for employers who hire employees that are reasonably expected to spend 60% or more of their working time in a single designated Freeport or Investment Zone tax site in which the employer has business premises. This relief applies a 0% Secondary Class 1 NICs rate on up to £25,000 of the annual earnings paid to each qualifying employee. The relief is available for a period of three years per new employee.

Class 1A NICs (employers providing benefits-in-kind and termination payments)

Employers are liable to Class 1A NICs at 15% on most benefits-in-kind subject to income tax. Scale rate allowances covered by an approval notice or benefits-in-kind included in a PAYE settlement agreement are not subject to Class 1A NICs (but see below). Certain other benefits are specifically exempt from both income tax and Class 1A NICs or are subject to Class 1 NIC rather than Class 1A.

Class 1A NICs also apply to taxable termination payments above £30,000.

Class 1B NICs (employers settling tax liabilities via PAYE settlement agreements)

Class 1B NICs are employer-only contributions, similar to Class 1A, payable by employers on the value of the tax and on certain benefits paid via PAYE settlement agreements. The rate for 2027/28 is 15% and contributions are payable by 19 October following the end of the tax year, along with the tax under the PAYE settlement agreement.

Class 2 NICs (self-employed, voluntary)

Class 2 NICs are weekly flat-rate contributions which can be paid voluntarily by self-employed individuals with profits under £7,355 (2026/27: £7,105) who choose to pay Class 2 to get access to contributory benefits, including the State Pension.

Up to 2025/26, Class 2 NIC could also be paid voluntarily by certain individuals working overseas who are not liable to pay compulsory UK NICs. Since 6 April 2026, individuals working outside the UK are no longer able to pay Class 2 NICs voluntarily.

Class 3 NICs (voluntary)

Since 6 April 2026, individuals submitting new applications in respect of periods during which they live abroad are only eligible to pay Class 3 NICs if they have either previously lived in the UK for 10 consecutive years, or paid at least 10 years of NICs while in the UK.

Class 4 NICs (self-employed)

At Budget 2025, the government announced that the upper profits limit will be maintained at £50,270 until 5 April 2031.

The lower profits limit has been aligned with the income tax personal allowance for individuals since 2023/24. This is due to be maintained at £12,570 until 5 April 2031.

Apprenticeship Levy

Some employers are required to pay the Apprenticeship Levy. The Levy is set at a rate of 0.5% of an employer's annual pay bill and is collected through the PAYE system.

The pay bill is the total amount of earnings liable to employer Class 1 NIC, including earnings below the secondary threshold. Similarly, where the age-related secondary percentage of NIC is 0%, e.g. for employees under the age of 21, such earnings are included in calculating the pay bill.

Employers receive an annual allowance of £15,000 to offset against payment of the Levy. Where two or more companies are connected, they must share the £15,000 allowance between them. Employers receiving a full £15,000 allowance will therefore only have to pay the Levy if they have pay bills in excess of £3 million per year. 

Following an announcement around Autumn Budget 2024, the government has started to reform the way employers' funds from paying the Apprenticeship Levy can be used. This is to transform the Apprenticeship Levy into a more flexible Growth and Skills Levy.
 

Indirect taxes

Value Added Tax (VAT)

VAT registration is required where taxable supplies exceed £90,000 for the previous 12 months or are expected to do so within the next 30 days. The deregistration threshold is £88,000.

With effect from 1 October 2026, the Value Added Tax (Supplies of Domestic Electricity) Order 2026 provides for a temporary zero rate to apply to qualifying supplies of domestic electricity in England, Scotland and Wales instead of the 5% reduced rate. At Budget 2026, the government announced that it would extend this temporary zero rate until 30 June 2027. At the time of writing, the 5% reduced rate continues to apply to supplies in Northern Ireland. HM Treasury stated at Budget 2026 that “Extended VAT relief is expected to apply in Northern Ireland from April 2027” – at the time of writing, no further detail is available.

Insurance premium tax (IPT)
 

The standard rate of insurance premium tax applying to most general insurance is 12%. Life and other long-term insurance is exempt.

A higher rate applies to some mechanical breakdown and travel insurance, and insurance sold with certain goods. The higher rate is 20%.

Stamp taxes on property

Stamp duty land tax (SDLT) – England and Northern Ireland only

SDLT applies to purchases of properties in England and Northern Ireland. SDLT rates for residential properties apply to slices of consideration rather than to all the consideration.

The SDLT bands and rates for residential purchases from 1 April 2025 are provided in the table below:

For example, SDLT of £2,000 is ordinarily payable on a residential property bought on or after 1 April 2025 for £225,000, made up of nothing on the first £125,000, and £2,000 (2%) on the remaining £100,000.

Reduced rates are available for first-time buyers purchasing a single dwelling (and intending to occupy the purchased dwelling as their only or main residence). For purchases on or after 1 April 2025, those claiming the first-time buyers' relief pay no SDLT on the first £300,000 of the consideration, and pay 5% on any excess over £300,000, but no relief is available where the total consideration is more than £500,000.

Higher rates of SDLT apply to purchases of additional residential properties such as second homes and buy-to-let properties acquired for more than £40,000. The higher rates will levy an additional 5% on the total price paid for the property such that, as shown below, the nil rate band will increase to 5% and so on up to the top slice of SDLT (which increases to 17%):

Purchasers will not incur the additional charge if they replace a main residence which has been sold within the last 36 months. Where the purchaser has paid the additional charge because they have not been able to sell their previous main residence before the acquisition of the new property, they will be able to claim a refund if they then sell their previous main residence within 36 months.

A higher rate of 17% may apply to all the consideration where certain ‘non-natural’ persons, such as a company, purchase an interest in a single residential property and consideration of more than £500,000 is attributable to the property. This 17% charge will apply instead of the normal SDLT rates unless a relief is available to disapply the 17% rate. The reliefs available are broadly the same as those available in respect of ATED (discussed below).

An additional 2 percentage point SDLT surcharge on top of the above rates applies to non-UK residents purchasing residential property in England and Northern Ireland. The charge applies to non-resident individuals and non-natural persons including companies, trusts and partnerships, as well as to UK-incorporated close companies with non-resident shareholders.

SDLT for non-residential or mixed use properties applies the same progressive slice system as for residential property so that SDLT will be chargeable on the portion of the purchase price which falls within each tax band as set out below:

For example, SDLT of £3,250 is payable on a non-residential property bought for £275,000, made up of nothing on the first £150,000, £2,000 (2%) on the next £100,000 and £1,250 (5%) on the remaining £25,000.

The relevant consideration is determined by aggregating the consideration of all linked transactions. The relevant consideration is the VAT-inclusive amount or value of any consideration given by the purchaser (or persons connected with him/her) in money or money's worth.

Although no SDLT will be payable until the relevant consideration exceeds the nil rate band, a transaction may nonetheless be notifiable (such that an SDLT land transaction return is required) where the relevant consideration is £40,000 or more.

Where six or more residential properties are acquired in a single transaction, they are treated as non-residential property, such that instead of the residential rates, the rates applicable to commercial or mixed property will apply.

Until 30 September 2031, relief from SDLT in full is available for purchases of land and buildings within a Freeport tax site in England, where Freeport tax sites have been designated, subject to a control period of up to three years and the land being acquired and used in a qualifying manner.

Until 30 September 2034, relief from SDLT in full is available for purchases of land and buildings within an Investment Zone tax site in England, where Investment Zone tax sites have been designated, subject to a control period of up to three years and the land being acquired and used in a qualifying manner.

SDLT will also be charged on the grant of a lease under which rent is payable at the rate of 1% of the net present value of the (VAT-inclusive) rent payable over the term of the lease, to the extent that value exceeds £125,000 in the case of residential property and £150,000 in the case of other property. A 2% SDLT rate also applies in respect of the grant of a lease of mixed use or non-residential property where the net present value (NPV) of the rent exceeds £5m. From 1 May 2026, no SDLT is payable on the net present value of the rent under assured tenancies under the Housing Act 1988.

SDLT is also charged on any premium paid by the tenant on the grant of the lease at the rate applicable to residential, non-residential or mixed-use properties, as set out above.

Land and buildings transaction tax (LBTT) – Scotland only

Note: the 2027/28 draft Scottish Budget is scheduled for 3 December 2026.

LBTT (instead of SDLT) applies to property purchases in Scotland. A progressive system is used.

As of 28 October 2026, the following LBTT rates apply to slices of consideration in the following bands:

For example, LBTT of £3,350 is payable on a residential property in Scotland bought for £275,000, made up of nothing on the first £145,000, £2,100 (2%) on the next £105,000 and £1,250 (5%) on the remaining £25,000.

As for SDLT, an additional LBTT charge (the additional dwelling supplement – ADS) applies to purchases of investment properties and second homes for more than £40,000. There are, however, some technical differences between the SDLT and LBTT regimes. For transactions on or after 5 December 2024, the ADS has been set at 8 percentage points.

Generally, leases of residential property that are under 175 years are exempt from LBTT.

For chargeable leases, LBTT is payable at the rate of 1% of the net present value of the (VAT-inclusive) rent payable over the term of the lease, to the extent that value exceeds £150,000. With effect for transactions entered into after 6 February 2020, the rate applicable to chargeable non-residential leases rises to 2% to the extent the net present value exceeds £2 million.

A relief from LBTT for first-time buyers came into force on 30 June 2018. Subject to conditions, the relief raises the 0% threshold for eligible first-time buyers purchasing a dwelling to £175,000. First-time buyers purchasing a dwelling above £175,000 are also entitled to a relief on the portion of the price below the threshold.

Land transaction tax (LTT) – Wales only

Note: the 2027/28 Welsh draft Budget is scheduled for 17 November 2026. The Senedd is due to consider and agree a full Budget in February 2027.

LTT (instead of SDLT) applies to property purchases in Wales. A progressive system is used.

As of 28 October 2026, LTT rates apply to slices of consideration in the following bands:

For example, LTT of £3,000 is ordinarily expected to be payable on a residential property in Wales bought for £275,000 after 10 October 2022, made up of nothing on the first £225,000, and £3,000 (6%) on the remaining £50,000.

Unlike for the equivalent taxes in the rest of the UK, there is no specific relief from LTT for the purchase of dwellings by first-time buyers.

As with SDLT, increased LTT charges apply to purchases of investment properties and second homes for more than £40,000. There are, however, some technical differences between the SDLT and LTT regimes. For transactions with an effective date on or after 11 December 2024, the following rates and bands apply:

For chargeable leases, LTT will be charged on the grant of a lease of non-residential property under which rent is payable at the rate of 1% of the net present value (NPV) of the (VAT-inclusive) rent payable over the term of the lease, to the extent that value exceeds £225,000, and at a 2% rate where the NPV of the rent exceeds £2 million.

Stamp taxes on shares
 

Currently, stamp duty and stamp duty reserve tax (SDRT) generally apply to transfers of UK shares (being shares in a company that is incorporated in the UK or which maintains its share register in the UK) and UK securities at a rate of 0.5% of the consideration given by the purchaser. Payment of the appropriate amount of stamp duty (or a valid claim for relief from stamp duty) generally cancels the charge to SDRT. As such, SDRT is generally only paid in the context of electronic trading, where shares are held in dematerialised form.

Share transfers where the value of the chargeable consideration is £1,000 or less are exempt from stamp duty, provided they do not form part of a larger transaction or series of transactions where the combined value of the consideration exceeds £1,000 and a certificate confirming this is given on the reverse of the instrument of transfer.

There is a higher 1.5% rate of stamp duty and SDRT which applies to certain transfers of shares to depositary receipt issuers and persons providing clearance services.

Subject to certain exclusions, the initial and subsequent buyers of shares in a listed UK company will not incur the 0.5% SDRT charge for three years following the listing. UK Listing Relief will apply in respect of companies first listed on a UK regulated market on or after 27 November 2025. The UK Listing Relief will not apply to stamp duty or to the higher 1.5% rate SDRT charge.

The government intends to replace stamp duty and SDRT with a new tax – Securities Transfer Tax (STT) – with effect from a yet-to-be-announced date in late 2027. STT will be a mandatory, single self-assessed tax on securities, maintaining a standard 0.5% rate of tax and a higher-rate of 1.5%. For a four-year period following commencement, transitional arrangements will apply to transfers of securities that are entered into before the commencement date but on which stamp duty or SDRT is not due to be reported or paid until on or after that date.

Annual tax on enveloped dwellings (ATED)
 

There is an ATED charge in respect of single interests in UK residential property valued at more than £500,000 held by ‘non-natural’ persons, such as companies. ATED generally increases each year based on inflation. The annual charges for 2027/28 (1 April 2027 – 31 March 2028) are set out below:

Relief from ATED is available for certain businesses and investors. Reliefs are available to, amongst others, property rental businesses, property developers and property traders. Relief must be claimed annually.

For the five chargeable periods 2023/24 to 2027/28, the taxable value of a property for ATED purposes is the market value of the property on 1 April 2022 if the property was owned on this date; otherwise, the market value of the property on acquisition is used.

Properties need to be revalued, and thus may move into a different ATED band, if there is a substantial acquisition of an additional chargeable interest in a dwelling or a substantial disposal of part of a chargeable interest where the acquisition cost or disposal proceeds are £40,000 or more. For transactions not at arm's length, for example, gifts or sales between connected persons, market values should be used.
 

Business tax

Corporation tax
 

Corporation tax rates

Certain companies with taxable profits of £50,000 or less pay a small profits rate of 19%, and companies with profits between £50,000 and £250,000 pay tax at the main rate of 25% reduced by a marginal relief. Limits are reduced proportionally for short accounting periods and where there are ‘associated companies’.

At Autumn Budget 2024, the government confirmed its intention to cap the main rate of corporation tax at 25% for the duration of the current parliament, and to maintain the small profits rate and marginal relief at current rates and thresholds.

Several sector-specific corporation taxes or surcharges, outside of the scope of this document, can apply to the taxable profits of companies operating in certain industries. These include the surcharge on banking companies, the residential property developer tax, and the North Sea oil and gas ring fence profits regime. Budget 2026 announced a temporary increase in the bank surcharge, from 3 percentage points to 6 percentage points, with effect from 1 January 2027 to 31 March 2028.

A 6 percentage point surcharge can apply to the taxable profits of companies within the scope of the ‘unassessed transfer pricing profits’ (UTPP) anti-avoidance rules, which replaced diverted profits tax (DPT) with effect for accounting periods commencing on or after 1 January 2026.

Corporation tax payments

Large and very large companies pay corporation tax in instalments. Companies that are neither large nor very large must pay corporation tax by nine months and one day after the end of the accounting period.

Large companies are broadly those with taxable profits of more than £1.5 million and a corporation tax liability in excess of £10,000 for a 12-month accounting period. The £1.5 million threshold is reduced pro rata for the number of ‘associated companies’ and for accounting periods of less than 12 months. The £10,000 is also reduced proportionately for shorter accounting periods. The government plans to introduce secondary legislation to amend the definition of taxable profits for these purposes such that, "from April 2027", Research & Development Expenditure Credits, Audio-Visual Expenditure Credits, and Video Games Expenditure Credits will no longer be included when determining whether a company is within the instalment payment regime.

In a 12-month accounting period, four instalments are payable as follows:

• 6 months and 13 days from the first day of the accounting period;
• 3 months after the first instalment;
• 3 months after the second instalment; and
• 3 months and 14 days from the last day of the accounting period.

Large companies are not required to make instalment payments in the first year in which the £1.5 million threshold is reached unless their profits exceed £10 million. The £10 million threshold is also reduced pro rata for the number of ‘associated companies’ and for accounting periods of less than 12 months.

Very large companies are broadly those with annual taxable profits of more than £20 million and a corporation tax liability in excess of £10,000 for a 12-month accounting period. As above, the £20 million threshold is reduced pro rata where it has ‘associated companies’. The £20 million and £10,000 limits are also reduced proportionately for shorter accounting periods.

In a 12-month accounting period, four instalments are payable as follows:

• 2 months and 13 days from the first day of the accounting period;
• 3 months after the first instalment;
• 3 months after the second instalment; and
• 3 months after the third instalment.

Different instalment arrangements apply for ‘ring-fence’ profits and the bank levy.

Capital expenditure

An enhanced 100% capital allowance rate is available for companies investing in main rate and special rate plant and machinery for use in Freeport tax sites, where Freeport tax sites have been designated. The enhanced rate is available until 30 September 2031 for Freeport tax sites in England, with the equivalent date in Scotland and Wales being 30 September 2034. Similarly, an enhanced 10% rate of Structures and Buildings Allowances is available for the construction or renovation of non-residential structures and buildings within designated Freeport tax sites where the structure or building is brought into use on or before 30 September 2031 in England and September 2034 in Scotland and Wales.

An enhanced 100% capital allowance rate is available for companies investing in qualifying plant and machinery for use in an Investment Zone tax site, where Investment Zone tax sites have been designated. Similarly, an enhanced 10% rate of SBAs is available for qualifying expenditure on non-residential structures and buildings within designated Investment Zone tax sites. A 30 September 2034 sunset date applies.

Tax relief is available for the cost of intangible assets (including goodwill and intangible property). This will, in most cases, be the level of amortisation/impairment recognised in the accounts. A fixed rate of 4% per annum may be applied on election. For intangible software, an election can be made to treat such costs as eligible for capital allowances instead of amortisation deductions. However, for goodwill and certain customer-related intangible fixed assets acquired on or after 8 July 2015 no amortisation or fixed-rate deduction is allowed. For such assets, debits arising on realisation are treated as non-trading debits. For purchases made on or after 1 April 2019, relief for acquired goodwill was partially re-instated for the acquisition of businesses with eligible intellectual property.

Patent box

The Patent box regime effectively enables companies to apply a lower rate of corporation tax to profits attributable to patented products, processes and services. The relief provides for an effective corporation tax rate of 10% on the patented profits, achieved by deducting an additional amount from trading profits. The benefit is broadly limited by reference to the company's R&D expenditure on developing, licensing, or acquiring patents.

Research and development (R&D) relief: revenue costs

Finance Act 2024 introduced a new merged R&D regime to replace the previous R&D Expenditure Credit (RDEC) and small and medium-sized enterprise (SME) schemes, and a new additional tax relief for loss-making, R&D intensive SMEs (‘enhanced R&D intensive support’ – ERIS).

The new regimes apply for accounting periods beginning on or after 1 April 2024 and have the following features:

• For contracted out R&D, the credit is claimed by the customer where it is reasonable to assume that the customer intended or contemplated that R&D of that sort would be done, except in certain circumstances where the customer is not entitled to relief (e.g. charity or overseas company).
• For contracted out R&D and externally provided workers (EPWs), relief is available on 65% of the qualifying cost for payments to unconnected parties.
• Restrictions apply to limit qualifying expenditure on contracted out R&D and EPWs in relation to R&D undertaken overseas. Relief will only be available for R&D carried out overseas where there are necessary conditions that are present in the overseas location but not in the UK and that it would be wholly unreasonable to replicate in the UK. Conditions may include geographical, environmental or social conditions and legal or regulatory requirements, but cost and availability of workers are specifically excluded.
• Where two companies are in a contractual relationship and one moves into the new R&D regime ahead of the other, transitional provisions apply to prevent relief being available twice or not at all.
• Subsidised expenditure qualifies for relief, but contributions to independent R&D no longer qualify.
• The cash credit payable is capped at £20,000 plus three times the amount paid in respect of PAYE and Employee Class 1 NIC liabilities. A company is exempt from the cap if its employees are creating, preparing to create or actively managing intellectual property, and qualifying R&D expenditure does not include more than 15% of spend relating to connected party subcontractors or connected party externally provided workers.
• A going concern requirement applies.

For the merged RDEC regime:

• Claimants receive relief for R&D expenditure via a taxable, above-the-line credit at a rate of 20% of qualifying R&D spend.
• Loss-making companies are subject to a notional tax deduction of 19% rather than the current corporation tax rate of 25%, delivering a net benefit of 16.2% versus 15% for taxpaying companies.

For the additional relief for loss-making, R&D intensive SMEs (ERIS):

• A company meets the R&D intensity condition if its qualifying R&D expenditure is at least 30% of its total expenditure for the period, with a 12-month grace period.
• The additional deduction is 86% of qualifying R&D expenditure and the repayable tax credit will be claimed at a rate of 14.5%. This will provide a benefit equivalent to up to 27p in the pound.
• Special provisions apply to certain Northern Ireland companies.

General rules for R&D reliefs

An SME for R&D purposes is a company which, together with certain related enterprises, meets the EU definition of an SME but with higher limits such that it has fewer than 500 employees and either turnover not exceeding €100 million or total assets not exceeding €86 million.

The meaning of R&D for tax purposes is set out in section 1006 of the Income Tax Act 2007, supplemented by updated government guidelines issued on 7 March 2023 (and given force by the Research and Development (Prescribed Activities) Regulations 2023 (SI 2023/293)). This version of the guidelines has been updated to include pure mathematics within the definition of R&D for tax purposes for accounting periods beginning on or after 1 April 2023. For accounting periods beginning on or after 1 April 2023 qualifying expenditure also includes data and cloud computing costs.

At Budget 2026, the government announced that the requirement to submit a claim notification form will be removed for R&D claims made on or after 1 April 2027. An Additional Information Form (AIF) is required for all R&D tax relief claims submitted on or after 8 August 2023. The government is planning to simplify the AIF with effect from autumn 2027.

Global minimum tax (Pillar Two)

The UK has introduced rules to implement the global anti-base erosion (GloBE) or ‘Pillar Two’ model rules and commentary published by the OECD/G20 Inclusive Framework on BEPS. These are designed to ensure a global minimum level of taxation of 15% for multinational enterprise groups with annual consolidated revenue of at least EUR 750 million.

An IIR (income inclusion rule, named the ‘multinational top-up tax’ or ‘MTT’ in UK legislation) applies for accounting periods beginning on or after 31 December 2023. The UK has also enacted a qualified domestic minimum top-up tax (sometimes referred to as a QDMTT, and named ‘domestic top-up tax’ or ‘DTT’ in UK legislation), also applicable for accounting periods beginning on or after 31 December 2023. With effect for accounting periods beginning on or after 31 December 2024, the multinational top-up tax includes a UTPR (sometimes referred to as the undertaxed profits rule or the undertaxed payments rule).

Digital services tax (DST)

A digital services tax (DST) applies to in-scope revenue earned from 1 April 2020, with payment due nine months and a day after the end of the accounting period.

DST is a 2% tax on the revenues of large businesses that provide a social media platform, search engine or online marketplace to UK users. There is an allowance of £25 million, which means a group's first £25 million of revenues derived from UK users is not subject to DST.

DST applies if more than £500 million of global revenues arise to the group in connection with any in-scope digital services and more than £25 million of those revenues are linked to the participation of UK users.

The government remains committed to developing an internationally agreed solution, via the G20/OECD Inclusive Framework, to the tax challenges arising from digitalisation and has committed to repeal DST once an appropriate global solution is in place.