Want to understand what Kumberi does? Start with How It Works →
Our Calculation Methodology
Complete transparency on how we calculate your financial projections
Why Transparency Matters
We want you to understand the numbers. Below you'll find the official tax rates and allowances we reference, the assumptions we use by default, and clear steps you can take to check any calculation yourself.
What official rates we use and why
How we update figures after government announcements
Simple ways you can verify outcomes for your scenario
Core Calculation Principles
1. Unified Reference Data
All UK financial regulations, tax thresholds, and pension allowances are managed in a single, authoritative source within our system. This eliminates inconsistencies and ensures every calculation uses identical, up-to-date values.
Single Authoritative Source
Rather than scattering numbers across the product, we keep a single, authoritative reference for all UK tax rates and allowances. When official figures change, we update that reference so every calculation stays consistent and accurate.
2. Tax Year Awareness
UK tax years run from 6 April to 5 April. Kumberi automatically determines the correct tax year for your scenario based on your chosen dates and applies the appropriate rates.
3. Future Projection Handling
For scenarios extending beyond the current published rates (e.g., projections into years when rates have not yet been published), we use the latest known rates to ensure conservative, realistic planning.
4. Historical Accuracy
We maintain historical rates for past tax years. This ensures scenarios starting in previous years use the rates that were actually in effect at that time, providing accurate historical tracking and year-over-year comparisons.
Current Tax Rates & Allowances (2026-27)
Income Tax
| Item | Amount | Notes |
|---|---|---|
| Personal Allowance | £12,570 | Frozen until April 2031 (Budget 2025) |
| Basic Rate (20%) | £12,571 - £50,270 | Frozen until April 2031 (Budget 2025) |
| Higher Rate (40%) | £50,271 - £125,140 | Frozen until April 2031 (Budget 2025) |
| Additional Rate (45%) | Over £125,140 | Frozen until April 2031 (Budget 2025) |
Pension Allowances
| Allowance | Amount | Notes |
|---|---|---|
| Annual Allowance | £60,000 | Max annual pension contributions with tax relief |
| Lump Sum Allowance | £268,275 | Max tax-free lump sum (replaced LTA from April 2024) |
| Money Purchase Annual Allowance | £10,000 | After accessing pension flexibly |
| Minimum Access Age | 55 (rising to 57 in 2028) | Earliest age to access pension savings |
| State Pension Age | 67 | Current state pension age |
| State Pension (Full) | £12,547.60/year (£241.30/week) | 2026-27 full new State Pension rate (GOV.UK) |
Investment & Savings Allowances
| Item | Amount | Notes |
|---|---|---|
| ISA Annual Limit | £20,000 | Tax-free savings limit per year (frozen until April 2031, Budget 2025) |
| Lifetime ISA Limit | £4,000 | With 25% government bonus (max £1,000/year) |
| CGT Annual Exempt Amount | £3,000 | Tax-free capital gains per year |
| Letting Relief (per person) | £40,000 | Additional CGT relief for former main residence |
Official Sources
Figures on this page are checked against GOV.UK income tax rates and related HMRC guidance when we update the platform.
How We Keep Rates Current
UK financial regulations change regularly, typically announced in the Autumn Budget and Spring Statement. Here's how we ensure Kumberi stays current:
Active Budget Monitoring
We monitor all HMRC announcements, budget statements, and legislative changes affecting UK financial planning. When official figures change, we update our central reference data within days of publication so your scenarios reflect the latest rules.
Verification Against Official Sources
Every rate we use is verified against official HMRC and GOV.UK publications, including GOV.UK income tax rates. We keep clear source references so our updates are auditable and traceable.
Historical Rate Tracking
We maintain a historical record of past tax years' rates. This allows scenarios to use the correct rates for their time period and enables accurate year-over-year analysis.
Future Projection Transparency
When projecting beyond published rates, we clearly indicate that future values use the latest known rates and may change when new rates are announced. Conservative assumptions help avoid over-optimistic planning.
Typical Update Schedule
- October/November: Autumn Budget announcements reviewed and updated
- March/April: Spring Statement and new tax year preparation
- 6 April: New tax year rates go live in the system
- Ad-hoc: Emergency budgets or mid-year changes applied immediately
Default Calculation Assumptions
Some projections require assumptions about future growth, inflation, or returns. Here are the defaults we use (which you can customise in your scenarios):
| Assumption | Default Value | Basis |
|---|---|---|
| Investment Growth Rate | 7% per annum | Historical long-term equity market average |
| ISA Growth Rate | 5% per annum | Conservative balanced portfolio assumption |
| Safe Withdrawal Rate | 4% per annum | Trinity Study / 4% rule for retirement planning |
| Inflation Rate | 2% per annum | Bank of England target rate |
| Property Growth | Local snapshot, fading to 3% over 7 years | Location lookup is a recent HPSSA or UKHPI snapshot. The model moves it in a straight line to a 3% a year background over 7 years of ownership, from above or below. The background is a modelling assumption, not a forecast. |
How You Can Verify Our Calculations
Transparency means you should be able to verify our work. Here's how:
Compare with HMRC Tools
Use HMRC's official calculators for income tax, National Insurance, and pension allowances. Your Kumberi projections should match official tools for equivalent inputs.
Check Against Published Rates
Visit gov.uk to verify any tax rate, allowance, or threshold. All our rates are sourced from official government publications.
Review Scenario Breakdowns
Every Kumberi scenario includes detailed year-by-year breakdowns showing exactly how tax, growth, and other calculations are applied. Review these to understand the methodology.
Consult Your Accountant or IFA
For complex situations, share your Kumberi projections with a qualified accountant or independent financial adviser. They can verify the methodology and help with personal tax planning.
Important Information
- • This methodology page is for educational purposes and does not constitute financial or tax advice
- • Tax rules and rates change annually - always verify current rates with HMRC
- • Personal circumstances vary - consult a qualified tax adviser or IFA for personalised guidance
- • Projections use assumptions that may differ from actual outcomes
- • Past performance and historical rates do not guarantee future results
Further Resources
- HMRC - Income Tax Rates & Allowances
Official HMRC guidance on income tax
- HMRC - Pension Tax Rules
Official HMRC pension tax guidance
- HM Treasury - Budget 2025 OOTLAR
Budget 2025 overview of tax legislation and rates