The Spring Statement
2026
creates an effective marginal rate of 60%. This rate of tax will be different in Scotland or if the income affected is dividends. It’s important to be aware of the extra tax you will pay if you receive more income, such as a bonus or an additional pension drawdown. If it takes you across one of the thresholds for higher tax rates, you may end up keeping less than you expect. It may also be possible to enjoy more tax relief for pension contributions or charitable donations if your income is above those thresholds. The main ones are:
In 2026/27, the basic and higher rates on dividend income over £500 will rise by two percentage points to 10.75% and 35.75%; the additional rate will remain 39.35%. Estimates of dividend income may be included in a PAYE coding, but in general, the tax on dividend income is paid through self-assessment. This means that the extra tax for 2026/27 will not be payable until 31 January 2028. In the meantime, if you have a personal or family company which pays you dividends, it will be worth re-examining how you take profits out of the company. Recent changes to National Insurance Contributions and dividends may change the optimum balance between salary, dividends and other possible benefits such as pension contributions. The higher rate also applies to tax payable by close companies (broadly, those under the control of five or fewer shareholders) on ‘loans to participators’ that are not repaid to the company within 9 months of the end of the accounting period. This therefore also increases to 35.75% for loans advanced on or after 6 April 2026. Dividends arising in an ISA or a qualifying VCT are not taxed and do not count towards the £500 allowance. The increase in the tax rate makes ISAs relatively more attractive. Winter fuel payment In July 2024, the Chancellor announced restrictions on the Winter Fuel Payment, which up to then had been paid to all those above State Pension age. In the following winter, they were restricted to pensioners receiving certain benefits or pension credit. After a campaign by her own backbenchers, in June 2025 the Chancellor restored the payment – £200 or £300, depending on circumstances – to all pensioners for winter 2025/26. However, it will be clawed back through the tax system from anyone with income of over £35,000. This can be avoided by disclaiming the payment in advance. The threshold of £35,000 will remain fixed for the duration of this Parliament. If you received the payment this winter, and your income for 2025/26 will be above that limit, you should expect to see an addition to your tax for the year. The way this works is simple but harsh: if your income is £35,001, the whole £200 or £300 will be clawed back. Savings income and property income The savings allowance remains £1,000 for basic rate taxpayers, £500 for 40% taxpayers and nil for 45% taxpayers. People with savings income above these limits may have to declare it in order to pay tax.
l £50,270: 40% tax rate (except Scotland – see below)
l £60,000: High Income Child Benefit Charge starts l £100,000: loss of personal allowance and tax-free childcare
£125,140: 45% tax
l
Student loans The repayment threshold for Plan 2 student loans will be frozen at £29,385 for three years from April 2027, affecting those who started their courses between 1 September 2012 and 31 July 2023. This means that graduates are likely to be liable for higher repayments as their income increases above that level, in the same way that freezing income tax thresholds and allowances increases income tax.It will not increase the outstanding loan itself, but it will require faster repayment of it. Although student loan repayments are not ‘tax’, the effect on take-home pay is the same: above the threshold, the 9% acts as an increase in the marginal rate of tax.
Dividend income The dividend allowance exempts some dividend income from tax, although that income still counts towards the higher rate thresholds. For 2026/27, the allowance is unchanged at £500. As HMRC does not routinely receive information about dividends received by taxpayers, this low limit is likely to require people to file tax returns (or contact HMRC by telephone) to declare even small tax liabilities on dividends.
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