Income Tax applies to earnings, pensions, savings, dividends and more, with different bands across the UK nations.

Individuals can be liable to Income Tax at any age. There are special rules to stop parents avoiding tax by putting assets into their children’s names.

The tables below shows the tax rates you pay in each band if you have a standard Personal Allowance of £12,570.

If you earn over £100,000 in any tax year your personal allowance is gradually reduced by £1 for every £2 of adjusted net income over £100,000 irrespective of age. This means that any taxable receipt that takes your income over £100,000 will result in a reduction in personal tax allowances. This means your personal Income Tax allowance would be reduced to zero if your adjusted net income is £125,140 or above.

For the current tax year if your adjusted net income is likely to fall between £100,000 and £125,140 you would pay an effective marginal rate of tax of 60% as your £12,570 tax-free personal allowance is gradually withdrawn.

If your income sits within this band you should consider what financial planning opportunities are available in order to avoid this personal allowance trap by trying to reduce your income below to £100,000.

With a £50bn shortfall looming, the Chancellor may need to revisit last year’s Corporation Tax roadmap commitments.

As this year’s Autumn Budget approaches, it is an interesting time to revisit the Corporation Tax Roadmap published alongside last year’s Budget on 30 October 2024.

The roadmap sets out the government’s plans for Corporation Tax and a small number of other business taxes over the course of the parliament.

These commitments included:

• Capping the headline rate of Corporation Tax at 25% for the duration of parliament, the lowest rate in the G7.
• Retaining the small profits rate and marginal relief at current rates and thresholds.
• Maintaining the capital allowances system, including permanent full expensing and the £1 million annual investment allowance.
• Maintaining the generosity of R&D reliefs.
• Collaborating with companies on simplification and improving user experience, including HMRC’s path forward on digitisation.
• Developing a new process for increasing the tax certainty available in advance for major investments.

Almost a year later, the Chancellor is facing a significant budget shortfall that could be as high as £50 billion, driven by multiple issues including weak growth, persistent inflation, high debt interest costs and widening deficits.

The government has also committed not to raise income tax, National Insurance or VAT for working people, and to restore frozen tax thresholds in line with inflation from 2028–29.

It remains to be seen whether any of the major commitments outlined in the roadmap and in previous promises to the voting public will be rolled back.

From April 2026, the self-employed and landlords must use MTD for IT, but exemptions may apply in limited cases.

If you are self-employed or a landlord with income over £50,000, you will need to prepare for digital record keeping, quarterly updates and a new penalty system. While most affected taxpayers will be required to comply, there are limited exemptions available.

You can apply for an exemption if you believe you are digitally excluded. HMRC will consider applications on a case-by-case basis once the process opens.

You may be eligible if:

• it is not practical for you to use software to keep or submit digital records – this could be due to age, disability, location, or another reason; or
• you are a practising member of a religious society or order whose beliefs are incompatible with electronic communication and digital record keeping.

In addition, if HMRC has already confirmed that you are exempt from Making Tax Digital for VAT, you will need to contact them again once the MTD for IT application process opens. HMRC will then review your exemption. If your circumstances remain the same then HMRC will confirm you are also exempt from MTD for IT. If not, you will need to reapply.

Some taxpayers are automatically exempt from MTD for IT and do not need to apply.

These include:

• trustees, including charitable trustees and trustees of non-registered pension schemes
• individuals without a National Insurance number, applicable only if one is not held by 31 January before the start of the tax year
• personal representatives of someone who has died
• Lloyd’s member, in relation to your underwriting business 
• non-resident companies

If you are automatically exempt, you do not need to apply for an exemption. If you do not use MTD for IT, you must continue to report your income and gains by submitting a self-assessment tax return if required.

You can claim tax relief on pension contributions up to 100% of earnings, but exceeding the annual allowance may trigger charges. Tax relief is paid on pension contributions at the highest rate of income tax paid.

The first 20% of tax relief is usually automatically applied by your employer with no further action required if you are a basic-rate taxpayer. If you are a higher rate or additional rate taxpayer, you can claim back any further reliefs on your self-assessment tax return.

There is an annual allowance for tax relief on pensions of £60,000. There is also a three year carry forward rule that allows you to carry forward any unused amount of your annual allowance from the last three tax years if you have made pension savings in those years.

If your total pension contributions are excessive and you exceed the annual allowance, you may face a tax charge. Your pension provider should inform you if you exceed the limit within their scheme, but if you have multiple pensions, you will need to request statements from each provider to check your position. You or your pension provider must pay any tax due from exceeding the limit.

You must report the charge in the ‘Pension savings tax charges’ section of your self-assessment tax return or use form SA101 if filing by paper. This is required even if your pension provider paid all or part of the tax due. You can still claim tax relief on contributions. HMRC does not tax anyone for going over their annual allowance in a tax year if they retired and took all their pension pots because of serious ill health or they died.

From 6 April 2027, new measures first announced in the Autumn Budget 2024 will come into force. These changes will bring most unused pension funds and death benefits into the scope of Inheritance Tax (IHT) from April 2027. This represents a major change to the tax treatment of pensions on death and will significantly broaden the IHT net by capturing assets that were previously excluded from tax.

Individuals with significant pension savings should review their estate plans carefully. Beneficiaries inheriting unused pension funds or death benefits may now face an IHT charge, making forward planning essential. Under the revised rules, personal representatives will be responsible for reporting and paying any IHT due, rather than pension scheme administrators.

There are important exclusions to note. Death-in-service benefits paid from registered pension schemes and dependants’ scheme pensions from either defined benefit arrangements or collective money purchase schemes will not fall within the scope of IHT. These will continue to be treated as before.

These reforms follow a technical consultation which concluded in January 2025 and led to changes in how liability is assigned. The new approach has raised concerns about potential issues such as payment delays, added administrative burden, and data privacy risks. As a result, close cooperation between personal representatives and pension providers will become increasingly important to ensure compliance and efficient estate administration.