New tax year changes: how much will you have to pay in 2025/26?

A range of tax rises will come into force for the new tax year on 6 April as well as some benefits increases.

Income tax bands remain frozen which means higher bills as wages increase. National Insurance rates will change for businesses which will impact employees at some stage.

Plus for homebuyers, tax bills will soar as the stamp duty holiday ended on 31 March. This means higher stamp duty bills as thresholds come down from levels temporarily raised in September 2022 to lower the cost of moving house.

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The tax rises come on top of April household bill increases, such as for council tax, water and broadband.

Gas and electricity bills increased for millions of households on 1 April, as the latest energy price cap took effect. The annual bill for a household using a typical amount of gas and electricity has gone up to £1,849 per year, an increase of £111.

The good news for some is that a higher rate of state pension and child benefit are coming into force.

We've run through 10 key changes that are coming into effect for the 2025/26 tax year.

1. Income tax rises

Without an annual increase to the thresholds (for England and Wales) within which we pay income tax, our bills rise.

The policy of not increasing allowances in line with the cost of living – known as fiscal drag – forces millions of earners to pay more tax as wages go up either with an annual pay rise or a promotion offering a bigger salary. It means more people become higher rate taxpayers.

Income tax changes in Scotland

If you live in Scotland, the way that income tax is calculated is slightly different. Everyone still has a £12,570 personal allowance. Then there are tiers – starter rate, basic rate and intermediate rate.

From 6 April, the starter rate band will increase by 22.6% and the basic rate band will increase by 6.6%. This will increase the thresholds for paying both the basic and intermediate rate of tax by 3.5%.

This increase is significantly above inflation, which is 1.7%, based on the Consumer Price Index from September 2024.

2. Stamp duty increases

Home buyers will now face larger costs when buying a home with the so-called stamp duty holiday now ended.

First-time buyers need to start paying stamp duty when buying a home worth £300,000.

Previously the threshold had been £425,000, which means buyers will go from paying nothing to paying £6,250 on stamp duty for a property of this value. Plus, the maximum price of a property benefiting from the first-time buyer discount will fall from £625,000 to £500,000.

For all other movers, the nil rate threshold will return from £250,000 to the previous level of £125,000.

3. National Insurance hikes for businesses

From 6 April 2025, the National Insurance contributions rate employers must pay will increase by 1.2 per, from 13.8% to 15%.

While this isn’t a direct increase for individuals, it’s going to make it more expensive to employ people so it’s likely that employers will look to offset the extra costs.

Pay rises could be curtailed or cut and perks taken away.

4. Capital gains tax changes

If you’re planning to sell business assets in the new tax year and beyond, changes to Business Asset Disposal Relief (BADR) and Investors’ Relief (IR) – previously known as Entrepreneur’s Relief – could lead to higher capital gains tax bills.

The tax rate on gains increases on 6 April from 10% to 14%. It will rise in stages, reaching 18% from 6 April 2026.

5. State pension rise

The state pension will increase by 4.1% from 6 April 2025. This means that the full new state pension is now £230.25 per week, or £11,973 per year – up from £11,502 in the previous tax year.

Those who reached state pension age after 6 April 2016, will receive the new state pension.

For those on the full basic state pension, payments have risen from £169.50 per week to £176.45 per week, amounting to £9,175 a year.

6. Child benefit increases

The rate of child benefit will rise by 1.7%. That will mean families with one child will receive £26.05 a week for the first or only child and £17.25 a week for other children.

There is no limit to how many children families can claim for.

The rules around child benefit changed on 6 April 2024 so that a parent earning between £50,000 and £80,000 receives some or all of the benefit.

Child benefit tax return rules are changing, meaning parents affected by the high income child benefit charge (HICBC) will soon be able to pay the charge through their payslip.

7. Student loan thresholds

Student loan repayment thresholds will increase for the 2025/26 tax year for borrowers on Plan 1, Plan 2, and Plan 4 loans. The threshold on the postgraduate loan (Plan 3 loans) remains unchanged at £21,000.

Repayments for student loans are automatically triggered if your income (before tax) goes over the weekly or monthly threshold for your plan. You'll pay 9% of the income you earn over the threshold to the Student Loan Company (SLC).

8. Holiday let tax changes

If you have a holiday home that you rent out, then you will pay higher tax bills from 6 April.

The favourable tax treatment for Furnished Holiday Lettings (FHLs) is being abolished with effect from 6 April which means FHL properties will be treated the same as other property income.

One major change is that mortgage interest on FHLs will no longer be allowed as a deduction from rental income for income tax purposes.

9. Non-doms

So-called “non-dom” status will no longer be part of the tax system in the UK from 6 April.

If you lived outside the UK for at least 10 years, there will be a four-year exemption period, but after that, all your earnings outside the UK will be subject to tax here.

This change removes a significant inheritance tax break for those who have been in the UK for 10 of the last 20 years.

10. Council tax hikes

Most households (in England) will see a hike to the amount they pay in council tax from April.

According to data from the Ministry of Housing, Communities and Local Government (MHCLG), 293 of the 384 authorities are using the maximum flexibility available in 2025/26, while 56 are close to the maximum.

The average council tax per dwelling will be £1,770 in 2025-26.