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UK Freelancer Tax Rates & Thresholds: 2025/26 vs 2026/27 Complete Reference
Last updated: 11 March 2026 · Bookmark this page — we update it when rates change
Every tax rate, threshold, and allowance a UK freelancer or sole trader needs — on one page. Yellow highlights show changes between years. Red highlights show frozen thresholds (effective tax rises).
Changed from prior year
Frozen (effective increase via fiscal drag)
Income Tax Rates
| Band | 2025/26 Rate | 2025/26 Threshold | 2026/27 Rate | 2026/27 Threshold |
|---|
| Personal Allowance | 0% | £12,570 | 0% | £12,570 (frozen) |
| Basic Rate | 20% | £12,571 – £50,270 | 20% | £12,571 – £50,270 |
| Higher Rate | 40% | £50,271 – £125,140 | 40% | £50,271 – £125,140 (frozen) |
| Additional Rate | 45% | Over £125,140 | 45% | Over £125,140 |
Personal Allowance taper: For every £2 earned above £100,000, your Personal Allowance reduces by £1. It reaches zero at £125,140. This creates an effective 60% tax rate between £100,000 and £125,140.
National Insurance (Self-Employed)
| Class | 2025/26 | 2026/27 |
|---|
| Class 2 (flat rate) | £3.45/week (if profits above £12,570) | £3.45/week (frozen) |
| Class 4 (main rate) | 6% on £12,570 – £50,270 | 6% on £12,570 – £50,270 |
| Class 4 (upper rate) | 2% above £50,270 | 2% above £50,270 |
💡 Compared to employees: Employee NI is 8% (main) + 2% (upper). Self-employed Class 4 is 6% + 2%. You pay less NI but get fewer state benefits (no statutory sick pay, maternity pay, etc.).
VAT
| Item | 2025/26 | 2026/27 |
|---|
| Standard Rate | 20% | 20% |
| Reduced Rate | 5% | 5% |
| Zero Rate | 0% | 0% |
| Registration Threshold | £90,000 | £90,000 |
| Deregistration Threshold | £88,000 | £88,000 |
| Flat Rate Scheme (FRS) | Various (sector-dependent) | Various (sector-dependent) |
VAT registration: You must register when your taxable turnover exceeds £90,000 in any rolling 12-month period, or if you expect to exceed it in the next 30 days alone.
Check your VAT position →
Dividend Tax (for Ltd company directors)
| Rate | 2025/26 | 2026/27 |
|---|
| Dividend Allowance | £500 | £500 (frozen) |
| Basic Rate | 8.75% | 8.75% |
| Higher Rate | 33.75% | 33.75% |
| Additional Rate | 39.35% | 39.35% |
Capital Gains Tax
| Item | 2025/26 | 2026/27 |
|---|
| Annual Exempt Amount | £3,000 | £3,000 (frozen) |
| Basic Rate (most assets) | 18% | 18% |
| Higher Rate (most assets) | 24% | 24% |
| Residential Property (basic) | 18% | 18% |
| Residential Property (higher) | 24% | 24% |
| Business Asset Disposal Relief | 14% (lifetime limit £1m) | 14% (lifetime limit £1m) |
Pension
| Item | 2025/26 | 2026/27 |
|---|
| Annual Allowance | £60,000 | £60,000 |
| Money Purchase Annual Allowance | £10,000 | £10,000 |
| Lifetime Allowance | Abolished | Abolished |
| Tax Relief | At your marginal rate | At your marginal rate |
💡 Freelancer pension tip: Pension contributions reduce your taxable profit. If you earn £55,000, a £5,000 pension contribution saves you £2,000 in Income Tax (40% rate) plus NI savings. Consider maximising before tax year end.
Tax year end planning guide →
Trading & Property Allowances
| Allowance | Amount | Notes |
|---|
| Trading Allowance | £1,000 | No need to report self-employed income under £1,000 |
| Property Allowance | £1,000 | No need to report rental income under £1,000 |
| Savings Starter Rate | £5,000 at 0% | Only if non-savings income below £17,570 |
| Personal Savings Allowance (basic) | £1,000 | Tax-free savings interest |
| Personal Savings Allowance (higher) | £500 | Tax-free savings interest |
Student Loan Repayment Thresholds
| Plan | Threshold | Rate |
|---|
| Plan 1 (pre-2012) | £24,990 | 9% |
| Plan 2 (post-2012) | £27,295 | 9% |
| Plan 4 (Scotland) | £31,395 | 9% |
| Plan 5 (from 2023) | £25,000 | 9% |
| Postgraduate Loan | £21,000 | 6% |
Self-employed: Student loan repayments are calculated on your tax return and collected through self-assessment, not PAYE. They're based on your profit (not revenue).
HMRC Mileage Rates (Approved Mileage Allowance Payments)
| Vehicle | First 10,000 miles | Above 10,000 miles |
|---|
| Cars and vans | 45p/mile | 25p/mile |
| Motorcycles | 24p/mile | 24p/mile |
| Bicycles | 20p/mile | 20p/mile |
Calculate your mileage claim →
HMRC Penalty Rates
| Offence | Penalty |
|---|
| Late filing (1 day) | £100 |
| Late filing (3 months) | £10/day for 90 days (max £900) |
| Late filing (6 months) | £300 or 5% of tax due |
| Late filing (12 months) | £300 or 5% (serious cases up to 100%) |
| Late payment (30 days) | 5% of tax outstanding |
| Late payment (6 months) | Further 5% |
| Late payment (12 months) | Further 5% |
| Late payment interest rate | Bank of England base rate + 2.5% |
Calculate your penalty → · 3-month penalty guide →
Key Dates 2026
| Date | Event |
|---|
| 5 April 2026 | End of 2025/26 tax year |
| 6 April 2026 | Start of 2026/27 tax year + MTD ITSA for income >£50k |
| 31 July 2026 | Second payment on account deadline |
| 5 October 2026 | Registration deadline for new self-employed (2025/26) |
| 31 October 2026 | Paper tax return deadline |
| 31 January 2027 | Online filing + payment deadline for 2025/26 |
Use of Home as Office (Simplified Expenses)
| Hours worked per month | Flat rate deduction |
|---|
| 25–50 hours | £10/month |
| 51–100 hours | £18/month |
| 101+ hours | £26/month |
Related tools & guides
📦 Need help with your tax return?
The Getting-Paid Toolkit includes tax checklists, expense categories, HMRC letter templates, and step-by-step guides for UK freelancers.
Get the toolkit — £19 →
Landolio helps UK freelancers and small businesses get paid and stay compliant. We update this page when rates change. Home · Blog · Free tools