2026 money changes: wage increases and state pension update

The National Living Wage is due to rise in April 2026 and the State Pension age will increase to 67 from April for people born after April 1981.

2026 brings several planned changes to wages, pensions, taxes and savings rules in the UK. The National Living Wage is set to rise in April 2026 with larger percentage increases for younger workers. The State Pension age will rise to 67 from April for people born after April 1981. Other announced measures include dividend tax adjustments, a wider rollout of Making Tax Digital, changes to ISA allocation rules and a rail fare freeze in England. Key points: - The National Living Wage increases from April 2026: 18–20 year olds to £10.85 (an 8.5% rise), apprentices and 16–17 year olds to £8.00 (a 6% rise), and those aged 21 and over to £12.71 (a 4.1% rise). For a full-time employee aged over 21 this was reported as worth about an extra £900 a year. - From 6 April 2026 the dividend allowance remains at £500 but dividend tax rates on amounts above the allowance change: basic-rate dividend tax moves to 10.75% (from 8.75%), upper-rate to 35.75% (from 33.75%), and the additional-rate dividend rate is reported as remaining at 39.35%. - Making Tax Digital expands from April 2026 so sole traders and property businesses with turnover of £50,000 or more must submit quarterly reports and keep digital records; thresholds are scheduled to fall to £30,000 in April 2027 and £20,000 in 2028. - The State Pension age rise to 67 begins in April 2026 for those born after April 1981, and the change is set in law. - ISA rules for 2026/27 remain at a £20,000 allowance, but from April 2027 the cash component will be limited to £12,000 while the overall £20,000 allowance continues; an exception is reported for people over 65. - For the first time in three decades, regulated rail fares in England are reported as frozen for the coming year; fares outside regulated categories and those in devolved nations may change. Summary: Several measures take effect from April 2026, including the National Living Wage rise, dividend tax changes, the State Pension age increase and the wider Making Tax Digital rollout. ISA allocation rules change from April 2027 and further Making Tax Digital thresholds are scheduled for 2027 and 2028. Undetermined at this time.