Tax Planning for the 2026/27 Tax Year
As the new tax year began on 6th April 2026, it is important for individuals and business owners to review their financial position and plan ahead. Effective tax planning is not about avoiding tax — it is about ensuring you make full use of the allowances and reliefs available to you under current legislation.
When searching for accountants in Coventry, understanding the key changes for 2026/27 can make a significant difference to your overall tax position. At Cheylesmore Accountants we support clients with proactive, compliant tax planning all year round.
Understanding the 2026/27 Tax Landscape
For the 2026/27 tax year, many thresholds remain unchanged. The standard Personal Allowance remains at £12,570, and income tax rates continue at 20%, 40% and 45%.
However, the continued freeze on thresholds which have been confirmed to remain in place until at least 2030, means more taxpayers may find themselves paying higher tax rates as incomes rise.
As experienced Coventry accountants, we are already seeing how this fiscal drag is impacting both individuals and business owners.
Key Tax Planning Opportunities for 2026/27
1. Make Full Use of Your Personal Allowance
Planning opportunities may include:
Pension contributions to reduce taxable income
Charitable donations through Gift Aid
Reviewing income timing where possible
Careful income planning can help retain valuable tax-free allowances.
2. Review Dividend Income and Business Structure
For company directors and shareholders, dividend tax remains a key consideration.
For 2026/27:
Dividend allowance remains £500
Tax rates on dividends have increased to 10.75% (basic rate) and 35.75% (higher rate)
This increase makes it more important to review how income is extracted from a business. A combination of salary, dividends and pension contributions should be assessed annually.
Make sure to choose an accountancy firm that offers proactive business tax planning—not just compliance—is essential.
3. Maximise ISA and Pension Allowances
Tax-efficient saving remains one of the most straightforward planning strategies.
For 2026/27:
ISA allowance remains at £20,000 per year
Pension annual allowance remains at £60,000
Income and gains within an ISA are tax-free, making them a valuable long-term planning tool. Similarly, pension contributions benefit from tax relief and can reduce your taxable income.
4. Consider the Impact of Frozen Thresholds
While there are limited headline changes, frozen thresholds continue to increase the effective tax burden over time.
As noted in industry guidance, this can result in:
More income falling into higher tax bands
Reduced take-home income despite pay increases
Increased tax exposure for business owners and landlords
This reinforces the need for ongoing tax planning rather than a once-a-year review.
5. Preparing for Making Tax Digital (MTD)
From April 2026, Making Tax Digital for Income Tax begins to apply to individuals with self-employed or property income over £50,000.
This introduces:
Quarterly reporting requirements
Digital record-keeping
Increased administrative responsibility
Working with experienced an experienced accounting firm like ours will ensure you remain compliant while streamlining your processes.
6. Use Available Allowances and Reliefs
There are several smaller allowances that can still provide meaningful tax savings:
£1,000 trading allowance for side income
£1,000 property allowance for rental income
Personal savings allowance for interest income
Capital gains tax planning through annual exemptions
Even where these amounts appear modest, they can reduce overall tax liability when used effectively.
Why Early Tax Planning Matters
Tax planning is most effective when carried out early in the tax year, not just before the filing deadline. Many opportunities—such as pension contributions or investment reliefs—require time to implement properly.
For individuals and businesses alike, taking action early provides:
Greater flexibility
Improved cash flow management
Reduced risk of unexpected tax bills
Work with Experienced Coventry Accountants
At Cheylesmore Accountants, we provide tailored tax planning for the 2026/27 tax year, helping clients stay compliant while making informed financial decisions.
As proactive accountants, our services go beyond year-end compliance. We work with you throughout the year to identify opportunities, manage risk and support your long-term financial goals.
If you are looking for a Coventry based team of accountants to support your tax planning, we would be pleased to assist. Get in touch today to discuss how we can help you prepare for the 2026/27 tax year.
