Treasury Minister Chris Thomas MHK emphasised financial discipline and investment in services alongside a substantial rise in the personal allowance while unveiling his first Budget in Tynwald on Tuesday 17th February 2026.
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Today I am pleased to announce an increase in the personal tax allowance from April of £2,250 so that individuals will start paying on annual earnings over £17,000 and jointly assessed couples from £34,000. This is triple the £750 proposed until the budget revisions took place a few weeks ago, and that proposed £750 rise was already triple the only other rises since 2021.
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This change to the personal tax allowance means that the higher rate of income tax — frozen at 21% — now becomes payable at an income over £23,500. This means someone working up to 35 hours a week on the new hourly minimum wage rate would not pay tax at the higher rate.
I have no changes to announce to income tax rates or bands or to the tax allowance taper or to the tax cap. However, there will be more help for people who provide TT Homestay this year as the tax allowance will rise from £2,350 to £2,500.
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Turning now to National Insurance, today I am announcing a 4.8% increase in Class 1 National Insurance thresholds and limits, saving many of our Island’s working people £45.76 per year.
Therefore, the Earnings Threshold at which employees and employers begin paying NI will increase from £168 to £176 per week. Combined with the Personal Allowance increase, an individual earning £25,000 will be £518.26 better off annually.
The Lower Earnings Limit will rise from £125 to £129 per week, following the UK changes announced on 26 November 2025.
The Upper Earnings Limit will increase from £1,032 to £1,082 per week.
For the coming year, there will be no increase in National Insurance rates. In particular there will be no change to employers’ National Insurance contributions for the new financial year, enabling businesses to plan with confidence. This will mean employers will save up to £53.25 per year for each employee. Contrasting this with the UK an employer in the Isle of Man will pay almost £1,000 less per year per employee on a salary of £25,000 ensuring the Isle of Man remains an attractive and competitive place to do business.
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The National Insurance Holiday Scheme will continue for returning Manx students.
I hope this is a step in a journey towards supporting employed and self- employed people with lower and middling earnings, putting more money in Islanders’ pockets.
In relation to payroll, the following were announced:
Tax
- The personal tax allowance will increase by £2,250 for individuals and £4,500 for jointly-assessed couples. In total, the personal tax allowance for individuals will rise to £17,000 for individuals and £34,000 for jointly-assessed couples
- The permitted maximum tax deduction for nursing expenses will increase from £12,500 to £15,000
- There’ll be more help for people who provide TT Homestay this year as the tax allowance will rise from £2,350 to £2,500
National Insurance (NI)
- Increasing National Insurance Class 1 Primary and Secondary Thresholds and Class 4 Lower Profits Limit by 4.8% will mean workers keep more money through starting to pay NI on earnings of £176 a week rather than £168. Class 2 and 3 thresholds will also increase by 4.8%
- There will be no change to employers’ National Insurance contributions for the new financial year, enabling businesses to plan with confidence and support their employees
Minimum Wage April 2026
The Minimum Wage have also been confirmed for the Isle of Man
PAYadvice.UK 19/2/2026 updated 20/2/2026