Quidkit
← All posts

What's changing with your money in 2026/27? (No jargon, promise)

15 June 2026

Let's be honest — most of us open a letter from HMRC with the same feeling we'd have opening a mysterious bill. But the 2026/27 tax year brought some changes that actually matter for your everyday wallet, and they're not all bad news.

Here's what's different, what it means for you, and what (if anything) you can do about it.

The tax bands are frozen — and that's a bigger deal than it sounds

You've probably heard "tax bands are frozen until 2028" and glazed over. Fair enough. But here's the bit that actually affects you:

Normally, tax-free allowances and the point where you start paying higher tax go up each year with inflation. That's how it's supposed to work — your pay rise keeps its value, and you don't get dragged into a higher tax bracket just for keeping up with rising prices.

But right now, none of those thresholds are moving. So if you got a cost-of-living raise this year, congratulations — you're earning more, but you might also be paying a higher percentage of it in tax. It's called fiscal drag, and it's the sneakiest tax rise there is, because it doesn't look like one.

In plain English: If your salary went up from £50,000 to £52,000, you're not just paying tax on the extra £2,000. Some of your original £50,000 is now being taxed at a higher rate too, because the threshold for higher-rate tax (£50,270) stayed exactly where it was.

"Freeze" doesn't mean nothing changes. It means you change tax brackets while the goalposts stay put.

Scottish rates got a shake-up

If you live in Scotland, your tax system is different from the rest of the UK — and this year the Scottish Government tweaked the starter and basic rate bands.

The starter rate (19%) now covers up to £16,537 of your taxable income, and the basic rate (20%) runs from there to £29,526. These bands shifted slightly, so some people on lower incomes will keep a few more pounds than before.

But the headline stays the same: if you're a higher earner in Scotland, you're paying more in income tax than you would in England. The top rate kicks in at 48% over £125,140, and the advanced rate (45%) starts at just £75,000.

Translation: Scotland is more progressive on tax. If you earn well, you pay more. If you earn less, you might see a tiny bit more breathing room this year.

Stamp duty got pricier for second homes

Buying a second home or a buy-to-let property? The government whacked up the surcharge.

In England and Northern Ireland, the stamp duty surcharge on additional properties jumped from 3% to 5% back in October 2024, and that's still in effect.

In Scotland, the Land and Buildings Transaction Tax (LBTT) surcharge on additional dwellings is now 8% — up from 6%.

So that £200,000 second home in Scotland? You're paying £16,000 in extra tax before you even start on the standard rates. It's a big number, and it's clearly aimed at cooling the buy-to-let market and freeing up homes for first-time buyers.

What this means for normal people: If you're a first-time buyer, you're unaffected (and in England, you still get relief on homes up to £300,000). If you were thinking of buying a holiday home or a rental property, run the numbers carefully — the tax bill is significantly higher than it was two years ago.

Good news: the State Pension went up

Let's have some positive news. The full new State Pension rose by 4.8% to £241.30 per week — that's £12,547.60 a year.

The "triple lock" means it rises by whichever is highest out of inflation, average earnings growth, or 2.5%. This year, earnings growth won, so pensioners got a solid bump.

If you're still working, this is worth knowing for two reasons:

  1. It's a reminder to check your National Insurance record — you need 35 qualifying years for the full amount.
  2. When you're planning your pension, don't forget the State Pension exists. Some people focus entirely on their private pension and forget there's a government chunk waiting for them too.

Student loan thresholds moved (but not by much)

If you're repaying a student loan, the thresholds you need to watch changed for 2026/27:

The rate is still 9% of anything you earn above your plan's threshold (6% for Postgraduate). And if you have both an undergraduate loan and a Postgraduate loan, you pay both — 9% on earnings above the undergraduate threshold, plus 6% above the PG threshold.

The bit nobody tells you: If you have two undergraduate plans (say Plan 1 and Plan 2 from different uni years), you don't pay twice. You repay 9% over the lower threshold. That's one of the commonest mistakes people make when checking their payslip.

Dividend and savings tax went up — for people with investments

This one mostly affects investors and anyone with significant savings or side income.

The dividend tax rates rose:

Your dividend allowance (the amount you can earn before paying any tax) is now down to just £500 — it was £2,000 a few years ago. So if you have a modest investment portfolio, you're more likely to owe a small tax bill than you used to be.

If you have savings or investments: Your ISA allowance is still £20,000. ISAs shelter both income and gains from tax, so if you haven't used yours, it's worth prioritising.

So what do you actually do about all this?

Honestly, most of these changes you can't avoid — they're the rules of the game. But understanding them means you can make better choices:

The figures in this article reflect the 2026/27 tax year, verified as of June 2026. Tax rules change every year, and individual circumstances vary. This isn't financial advice — just the facts, explained simply.

Check your take-home pay →