April 2025 Tax Changes: The Complete Guide to What's Different in 2025-26
The 2025-26 UK tax year began on 6 April 2025. This guide covers every change relevant to individuals — employees, self-employed people, pensioners, and investors — in one place, so you can understand your position without piecing together multiple announcements.
Income Tax — No Rate Changes, Thresholds Still Frozen
Income tax rates are unchanged for 2025-26:
- Personal allowance: £12,570 (frozen since April 2021)
- Basic rate (20%): £12,571 – £50,270
- Higher rate (40%): £50,271 – £125,140
- Additional rate (45%): above £125,140
The thresholds have now been frozen for four tax years. With wages rising — including the 6.7% NLW increase and public sector pay awards — a larger proportion of income is taxable for most workers. The OBR projects that by 2027-28 the income tax take will be at its highest share of GDP since the 1940s.
Scotland: Scottish income tax rates also unchanged, with the Starter Rate (19%) applying to £12,571–£15,397, the Scottish Basic Rate (20%) to £15,398–£27,491, the Intermediate Rate (21%) to £27,492–£43,662, the Higher Rate (42%) to £43,663–£75,000, the Advanced Rate (45%) to £75,001–£125,140, and the Top Rate (48%) above £125,140. Compare Scotland vs England take-home pay.
Employee National Insurance — Unchanged at 8%
Employee NICs remain at 8% on earnings between £12,570 and £50,270 per year, and 2% on earnings above £50,270. The primary threshold is £12,570 (unchanged). No change from 2024-25.
Employer National Insurance — Significant Rise
The most significant change for employment dynamics:
- Employer NI rate: 13.8% → 15% (from 6 April 2025)
- Secondary threshold: £9,100 → £5,000
- Employment Allowance: £5,000 → £10,500
This was legislated in the National Insurance Contributions (Secondary Class 1 Contributions) Act 2025. The combined effect raises the cost of employment for most businesses, with knock-on effects on hiring and wage growth.
National Living Wage — £12.21 from 1 April 2025
The NLW rose to £12.21 from 1 April 2025 (the NLW date is always 1 April, a week before the tax year date). Full 2025 rates:
- 21 and over: £12.21/hour
- 18-20: £10.00/hour
- 16-17: £7.55/hour
- Apprentice: £7.55/hour
State Pension — £230.25 per Week
New State Pension: £230.25/week (£11,973/year), up from £221.20 in 2024-25 — a 4.1% increase. Basic State Pension (pre-2016 retirees): £176.45/week. Both rises were determined by the earnings measure of the triple lock.
Pension Annual Allowance — £60,000 Unchanged
No change to the annual pension contribution allowance of £60,000. The Lifetime Allowance was abolished in 2023-24 and has not been reintroduced. The Money Purchase Annual Allowance (for those who have accessed flexible drawdown) remains at £10,000.
ISA Allowances — £20,000 Unchanged
ISA allowance: £20,000. Lifetime ISA: £4,000 (counts toward the £20,000 limit). Junior ISA: £9,000. No change from 2024-25.
Capital Gains Tax — 2024 Changes Still Apply
The CGT rates from the October 2024 Budget remain in force: 18% (basic rate, shares/other assets) and 24% (higher rate, shares and residential property). Annual exempt amount: £3,000. Business Asset Disposal Relief rate: 14% for disposals in 2025-26 (rising to 18% in 2026-27). Use our CGT calculator.
Dividend Allowance — £500
The dividend tax-free allowance remains at £500 for 2025-26. Dividend tax rates: 8.75% (basic), 33.75% (higher), 39.35% (additional). No change from 2024-25.
Conclusion
The 2025-26 tax year is characterised by continuity on employee-facing rates and meaningful change in the employment cost environment. For individuals, the frozen thresholds continue to deliver fiscal drag, while the NLW and State Pension increases provide some protection for lower-income workers and pensioners. Run your salary through our calculator to see your exact 2025-26 take-home pay.