UK updates 2026/27 tax rates

Why it matters

The House of Commons Library updated its annual briefing on UK direct tax rates and allowances on April 7, confirming the main settings for the 2026/27 tax year that began on April 6. The note says rates and allowances were confirmed in the 2025 Budget and covers income tax, national insurance contributions, capital gains tax and inheritance tax. A separate Library briefing published on April 13 restated that the UK state pension is, in principle, subject to income tax. For people planning a move abroad, including to Spain, the update is a reminder that UK source-country tax rules do not disappear when tax residence changes. ### Which UK tax-year change triggered the update? The House of Commons Library said the new UK tax year started on April 6, 2026, and published its “Direct taxes: Rates and allowances for 2026/27” briefing the next day. The paper says the 2026/27 rates and allowances were confirmed in the 2025 Budget. (commonslibrary.parliament.uk) The Library describes the paper as a summary of the main direct taxes paid by individuals, including income tax and national insurance contributions. A separate Library introduction to UK taxes says rates and allowances for 2025/26 and 2026/27 are set out in HM Revenue & Customs’ overview of tax legislation and rates, updated on December 5, 2025. (commonslibrary.parliament.uk) ### Does the state pension count as taxable income? The House of Commons Library said on April 13 that the UK state pension is liable to income tax, though pensioners are unlikely to pay tax in practice if their only income is the state pension. That distinction matters because tax liability and tax actually due are not the same thing. (commonslibrary.parliament.uk) The point is often misunderstood because many pensioners do not face an actual income tax bill if their total taxable income stays within available allowances. But the Library’s wording is explicit that the state pension itself is taxable in principle. ### What else in the pension tax rules matters in 2026/27? (commonslibrary.parliament.uk) The House of Commons Library said in its April 7 pension tax relief briefing that, in 2026/27, people can contribute up to 60,000 pounds into pension schemes without paying income tax, subject to the annual allowance rules. The paper says the annual allowance is tapered for higher earners, with the reduction beginning above 260,000 pounds of adjusted income and stopping when the allowance reaches 10,000 pounds. (commonslibrary.parliament.uk) The same briefing says people with earnings below that level can still contribute up to 3,600 pounds a year including tax relief. Another Library paper published the same day says pension contributions are generally tax-free on the way in, while pension income is taxed when paid out. ### Why does this matter for someone moving to Spain? (commonslibrary.parliament.uk) The UK Library papers deal with UK tax law, not Spanish tax treatment. But for a UK pensioner becoming resident in Spain, the UK rules still matter because the income starts with a UK source and may carry UK tax characteristics before Spanish residence rules and any treaty position are applied. (commonslibrary.parliament.uk) That means a retiree with a UK state pension, private pension or pension death benefits may need to map each item twice: once under UK rules and once under Spanish rules. The Library material does not provide Spanish tax advice, but it establishes the UK side of that analysis. ### Are pension inheritance rules changing next? (commonslibrary.parliament.uk) Express reported on May 26 that HMRC had updated pensioners on a coming inheritance tax change affecting pensions. A related Express report published on May 20 said certain pension pots will be included in estate calculations from April 2027. (commonslibrary.parliament.uk) April 2027 is the next concrete date to watch. Until then, the current 2026/27 tax-year briefings from the House of Commons Library remain the published reference point for UK direct tax rates, allowances and the tax treatment of the state pension. (commonslibrary.parliament.uk) (express.co.uk)

Key numbers

• The House of Commons Library updated its 2026/27 direct tax briefing on April 7, after the UK tax year began on April 6, 2026.
• From April 2027, HMRC plans to bring some unused pension funds and death benefits into inheritance tax calculations.
• The House of Commons Library updated its annual briefing on UK direct tax rates and allowances on April 7, confirming the main settings for the 2026/27 tax year that began on April 6.
• The note says rates and allowances were confirmed in the 2025 Budget and covers income tax, national insurance contributions, capital gains tax and inheritance tax.

What happens next

• The House of Commons Library said the new UK tax year started on April 6, 2026, and published its “Direct taxes: Rates and allowances for 2026/27” briefing the next day.
• But for a UK pensioner becoming resident in Spain, the UK rules still matter because the income starts with a UK source and may carry UK tax characteristics before Spanish residence rules and any treaty position are applied.
• (commonslibrary.parliament.uk) That means a retiree with a UK state pension, private pension or pension death benefits may need to map each item twice: once under UK rules and once under Spanish rules.

Sources

• commonslibrary.parliament.uk
• commonslibrary.parliament.uk
• commonslibrary.parliament.uk
• express.co.uk

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