New Tax Year 2026/27: What's Changed and What Chester Families Should Do Now

The new tax year started on 6 April, and with it comes a raft of changes that will affect families and individuals across Chester, Wrexham and beyond. Some of these changes have been well publicised, while others have crept in quietly and could catch people off guard.

Whether you are employed, self-employed, saving into a pension, or simply trying to make your money go further, now is the time to take stock. Here is what has changed for 2026/27 and, more importantly, what you can do about it.

Your State Pension Just Got a Boost

Thanks to the triple lock, the full new State Pension has risen by 4.8% to £241.30 per week - an increase of roughly £575 over the year. If you are on the older basic State Pension, your weekly rate has gone up to £184.90.

That is welcome news, but there is an important detail worth paying attention to. At £241.30 per week, the full new State Pension now sits just £34 per year below the personal allowance of £12,570. That means if you have any other income at all - a small private pension, rental income, savings interest, or part-time work - you could find yourself paying income tax on it.

If you are already retired or approaching retirement, it is worth understanding exactly where you stand so there are no surprises when HMRC comes knocking.

Tax Thresholds Are Still Frozen - and That Matters More Than You Think

One of the biggest changes this year is not really a change at all. Income tax thresholds have been frozen since 2021, and they will remain frozen until at least 2028 - with some thresholds now locked in place until 2031.

What does this mean in practice? The personal allowance remains at £12,570, the higher-rate threshold stays at £50,270, and the additional rate kicks in at £125,140. None of these figures have moved, even as wages have continued to rise.

This is sometimes called "fiscal drag" or "stealth tax." If you received a pay rise this year, you may now find yourself paying tax at a higher rate than before, even though the rates themselves have not changed. Someone earning £48,000 two years ago who has since had modest pay rises could now be a higher-rate taxpayer at 40%, without ever feeling significantly better off.

This is one of the most common issues we see with clients across Chester and Wrexham. Many people do not realise they have been pulled into a higher tax band until they see their P60 in May.

Dividend Tax Rates Have Gone Up

If you are a company director taking dividends, or you hold investments outside of an ISA, this one is important. From April 2026, dividend tax rates have increased:

• Basic rate: up from 8.75% to 10.75%

• Higher rate: up from 33.75% to 35.75%

• Additional rate: up from 39.35% to 41.25%

The dividend allowance remains at just £500, so most people receiving dividends will feel the impact of these changes. If you are a limited company director in the Chester or Wrexham area, it is well worth reviewing your salary and dividend strategy with a financial adviser to make sure you are being as tax-efficient as possible.

ISA and Pension Allowances Have Reset

The good news is that your annual allowances have reset for the new tax year, giving you a fresh opportunity to save and invest tax-efficiently.

Your ISA allowance for 2026/27 is £20,000 - but it is worth knowing that from April 2027, the cash ISA allowance for those under 65 is expected to drop to £12,000. That makes this year a particularly good time to make the most of the full £20,000 if you can.

The Junior ISA allowance remains at £9,000 for children, and the pension annual allowance stays at £60,000 (or 100% of your earnings, whichever is lower). If you did not use your full pension allowance in the last three tax years, you may be able to carry it forward - a valuable strategy for higher earners looking to reduce their tax bill.

Making Tax Digital Has Arrived

If you are self-employed or a landlord with income over £50,000, a significant change has just come into effect. Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) launched on 6 April 2026, and it requires you to keep digital records and submit quarterly updates to HMRC using compatible software.

This is a major shift from the old system of filing a single annual tax return. It applies to sole traders and landlords first, with the threshold expected to drop to £30,000 in April 2027.

If this applies to you, you will need to make sure your record-keeping is up to scratch and that you are using HMRC-compatible software. Your accountant should be able to help with the practicalities, but it is worth understanding how this change fits into your broader financial picture.

Business Asset Disposal Relief - A Higher Rate

For business owners thinking about selling, the rate of Business Asset Disposal Relief (formerly Entrepreneurs' Relief) has risen again. From April 2026, the rate is now 18%, up from 14% the year before. The lifetime limit remains £1 million.

If you are a business owner in Chester or Wrexham considering your exit strategy, the timing of a sale could make a real difference to your tax position. This is an area where early planning can save significant sums.

What Should You Do Now?

The start of a new tax year is the best time to take a step back and review where you stand. Here are five things worth doing this month:

Check your tax code. Make sure your employer or pension provider is using the right one. You can check this through your HMRC personal tax account.

Review your savings strategy. With ISA allowances at £20,000 for potentially the last time, consider whether you are making the most of tax-free saving.

Top up your pension. If you have unused annual allowance from previous years, you could carry it forward and make a larger contribution this year - reducing your income tax bill in the process.

Think about your dividend strategy. If you are a company director, the new higher rates make it worth reviewing how you take income from your business.

Book a financial review. The changes this year are not dramatic on their own, but together they add up. A conversation with an independent financial adviser can help you see the full picture and spot opportunities you might be missing.

How Cummins Financial Advisers Can Help

At Cummins Financial Advisers, we help families, individuals, and business owners across Chester and Wrexham make sense of these kinds of changes. We take the time to understand your circumstances and build a plan that works for your life - not just your tax return.

Whether you want a full financial review, help with your pension strategy, or simply a conversation about where you stand, we are here to help.

Get in touch today to book your new tax year financial review. Call us on 01244 571050 or contact us here.

The value of investments can go down as well as up, and you may get back less than the amount invested. The Financial Conduct Authority does not regulate taxation advice. The information in this article is for general guidance only and does not constitute personal financial advice. You should seek independent advice based on your individual circumstances.