Reference · UK 2026/27
UK Solicitor Tax Rates 2026/27
Quick reference for the rates and thresholds that matter most to UK solicitors and law firm partners. Income tax bands, NI, corporation tax, BADR, dividend tax, FA 2014 Salaried Member rules, SRA Accounts Rules thresholds, PII minimums.
UK 2026/27 general rates
| Item | Rate / Threshold | Note |
|---|---|---|
| Personal allowance | £12,570 | Tapered above £100,000; fully removed at £125,140 |
| Basic-rate income tax | 20% | Income £12,571–£50,270 |
| Higher-rate income tax | 40% | Income £50,271–£125,140 |
| Additional-rate income tax | 45% | Income above £125,140 |
| Employee NI (basic) | 8% | Earnings £12,570–£50,270 |
| Self-employed Class 4 NI | 6% / 2% | 6% on £12,570–£50,270, 2% above. Class 2 abolished April 2024 |
| Employer NI | 15% | Earnings above £5,000/year — raised in Autumn Budget 2024 |
| Employment Allowance | £10,500 | Off employer NI bill; multi-employee firms qualify |
| Corporation tax (small profits) | 19% | Profits up to £50,000 |
| Corporation tax (main) | 25% | Profits above £250,000 |
| Corporation tax (marginal band) | Up to 26.5% | Effective marginal rate on profit £50,000–£250,000 |
| Dividend allowance | £500 | First £500 of dividends tax-free |
| Dividend tax basic / higher / additional | 10.75% / 35.75% / 39.35% | Above £500 allowance. Basic and higher rates rose 2 points from 6 April 2026 |
| CGT (basic / higher) | 18% / 24% | Aligned to residential property rate from 30 Oct 2024 |
| CGT annual exempt amount | £3,000 | |
| BADR rate (2026/27) | 18% | On qualifying gains up to £1m lifetime limit. Rose from 14% on 6 April 2026 |
| BADR rate (2025/26, historical) | 14% | Previous year rate; 10% before 6 April 2025 |
| AIA (Annual Investment Allowance) | £1,000,000 | Excludes cars, land, buildings |
| SBA (Structures and Buildings) | 3% / year | On post-29 October 2018 commercial premises spend |
| VAT registration threshold | £90,000 | Rolling 12-month basis from 1 April 2024 |
| Self-Assessment online deadline | 31 January | Following the end of the tax year |
| MTD ITSA threshold | £50,000 | From 6 April 2026 (sole-trader income above £50k). Drops to £30k from April 2027, £20k from April 2028 |
Legal-sector specifics
| Item | Value | Note |
|---|---|---|
| FA 2014 Salaried Member rules | Conditions A + B + C | All three must be met for LLP member to be deemed employee for tax |
| Condition A threshold | ≥80% | Disguised salary as % of total reward |
| Condition C threshold | <25% | Capital contribution as % of disguised salary |
| SRA Accounts Rules reconciliation cap | 5 weeks | Rule 8.3 maximum interval — NOT monthly |
| SRA Accountant's Report deadline | 6 months | After firm's accounting period end |
| Rule 12.2 de minimis exemption | £10,000 / £250 | Peak client money / average balance — both must be met |
| PII minimum cover (unincorporated) | £2m | Per claim, no aggregate at this level |
| PII minimum cover (incorporated) | £3m | Per claim, no aggregate at this level |
| PII run-off cover minimum | 6 years | Post-cessation under SRA Minimum Terms and Conditions |
| Section 162 incorporation relief | Defers CGT | On goodwill when unincorporated trade transferred to a company for shares |
| Goodwill amortisation (post-1 April 2019) | 6.5% / year | Tax-deductible over 15-year notional period |
Frequently asked
- What is the BADR rate for 2026/27?
- Business Asset Disposal Relief rose to 18% on qualifying gains from 6 April 2026 (up to the £1m lifetime limit), up from 14% in 2025/26 and 10% before that. On the full £1m limit the move from 14% to 18% is £40,000 of additional CGT. For partners who planned a sale or retirement around the change, the timing mattered.
- Are LLPs subject to corporation tax?
- No. LLPs are tax-transparent for income tax — members are taxed personally on their share of profit. The LLP itself doesn't file a corporation tax return. Same treatment as a general partnership; the LLP's separate legal personality gives liability protection but doesn't create a separate tax person.
- What's the current VAT threshold for legal services?
- £90,000 of taxable turnover on a rolling 12-month basis (raised from £85,000 on 1 April 2024). Legal services including conveyancing are standard-rated at 20% — NOT exempt. Many consultant solicitors register voluntarily below the threshold to reclaim input VAT on costs.
Want these applied to your firm?
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