April is always a turning point in the tax calendar, but 2026 is in a different league.
Rate changes, doubled penalties, Making Tax Digital (MTD) going live, business rates restructured, and the first wave of new employment law – all landing at once.
What makes it unusual is the overlap. Employers are dealing with new tax rates and new employment obligations simultaneously.
Here is a comprehensive summary of what’s changing – and what to do about it.
Personal Tax Changes from 6 April 2026
Dividend tax rates increase
The ordinary rate of dividend tax rises from 8.75% to 10.75%, and the upper rate from 33.75% to 35.75%. The additional rate stays at 39.35%.
For directors of owner-managed businesses – who typically pay themselves through a combination of salary and dividends – this is another step in the gradual narrowing of the dividend tax advantage. It doesn’t make dividends a bad strategy, but it does change the maths.
If you haven’t yet taken your 2025/26 dividends, it’s worth running the numbers on whether doing so before 6 April saves you money. That said, this depends entirely on your wider tax position, so speak to your accountant before making any changes.
Business Asset Disposal Relief (BADR)
The CGT rate for BADR – formerly Entrepreneurs’ Relief – rises from 14% to 18% for disposals on or after 6 April 2026. The same applies to Investors’ Relief.
If you’re considering selling a business or qualifying assets, the timing of that disposal has become a more important part of the planning conversation.
Inheritance Tax: Agricultural Property Relief (APR) and Business Property Relief (BPR) reforms
From 6 April 2026, the 100% rate of combined APR/BPR will be capped at £2.5 million of qualifying assets per person – or up to £5 million for spouses and civil partners. Above that threshold, 50% relief applies, meaning an effective Inheritance Tax (IHT) rate of 20% on the excess. Shares listed on the Alternative Investment Market (AIM) are restricted to 50% relief regardless of value.
This has been one of the most debated measures from the Autumn Budget, and the threshold was raised from the original £1 million proposal following pressure from farming and business groups. Even at £2.5 million, these changes could reshape succession planning for family businesses and agricultural estates.
If this affects you, the earlier you review your position, the more flexibility you’ll have. For those looking at trust-based planning, our guide on using trusts to reduce Inheritance Tax in 2026 covers the current options.
Other personal tax changes
A handful of smaller but still meaningful changes also take effect from 6 April.
- Venture Capital Trust (VCT) relief drops from 30% to 20%. If you’re considering a VCT investment at the higher rate, the window is closing.
- Homeworking deduction removed. Employees can no longer claim the HMRC income tax deduction for non-reimbursed homeworking costs. Employer reimbursements remain tax and National Insurance Contributions (NIC)-free under existing rules, but the self-claim route that many people have used since the pandemic is gone.
- Voluntary Class 2 NIC for overseas periods ends. Individuals living abroad can no longer pay voluntary Class 2 contributions to build their State Pension record. Only Class 3 remains – around £18.40/week (~£957/year), a substantial jump from Class 2.
- Income tax thresholds remain frozen. The personal allowance and higher rate threshold are locked until 2031, which means rising incomes continue to be pulled into higher bands without any rate change being announced.
Business Changes
Making Tax Digital for Income Tax
This is the headline operational change for sole traders and landlords. From 6 April 2026, anyone with gross income over £50,000 from self-employment or property must keep digital records using HMRC-approved software and submit quarterly updates. Those earning over £30,000 follow from April 2027.
Two points that catch landlords out. First, the £50,000 threshold is based on gross rental income – not profit after expenses. Second, where a property is jointly owned, each owner’s share counts separately against the threshold.
HMRC has confirmed that no penalty points will be issued for late quarterly updates during the first 12 months. But penalties for late tax returns and late payment still apply as normal, so the grace period is narrower than it sounds. If you’re in scope, you should already be looking at compatible software and thinking about how your record-keeping needs to adapt.
Read more: Making Tax Digital Is Coming: Does Your 2024/25 Return Determine Your Deadline?
If you’re still weighing up your software options, we’ve also put together a guide to choosing accounting software for small businesses.
Corporation tax late filing penalties double
For returns with a filing date on or after 1 April 2026, the fixed penalties for late CT600 filing will double – the first increase in decades:
- One day late: £200 (was £100)
- Three months late: £400 (was £200)
- Three successive late filings, first stage: £1,000 (was £500)
- Three successive late filings, higher tier: £2,000 (was £1,000)
These penalties apply whether or not corporation tax is actually owed. If your business has historically filed close to the deadline, this is a good reason to bring that timeline forward.
The CATO filing portal closes
The HMRC/Companies House joint online filing service – commonly known as CATO – shuts on 31 March 2026. From 1 April, commercial software will be required to file company accounts and CT600 returns. You also won’t be able to access or amend prior returns through the portal after it closes. This affects a lot of smaller companies that have relied on the free service, so it’s worth getting set up with alternative software well before the deadline.
Capital allowances
The main rate writing-down allowance for plant and machinery drops from 18% to 14% – effective 1 April 2026 for corporation tax and 6 April for income tax. A new 40% first-year allowance (FYA) – available from January 2026 – partially offsets this, particularly for unincorporated businesses and those leasing equipment that can’t access full expensing.
On a more positive note, the 100% FYA for zero-emission cars and electric vehicle (EV) charge points has been extended to 31 March 2027 for corporation tax and 5 April 2027 for income tax. Full expensing and the £1 million Annual Investment Allowance (AIA) remain unchanged.
Research and Development (R&D) advance assurance pilot
HMRC is launching a limited pilot in spring 2026 that will give SMEs upfront certainty on whether their R&D claims qualify – before they file their tax return. Full details are still emerging, but for businesses already claiming or considering R&D tax credits, this could reduce the uncertainty and back-and-forth that often comes with the process. We’ll be keeping a close eye on this one as it develops.
Read more: R&D Tax Credits: Your Business Might Qualify and Not Even Know It
Business rates restructured (England)
From 1 April, the existing two-multiplier system for business rates is replaced by five multipliers, alongside a full revaluation based on 1 April 2024 property values. This is a structural change – not another annual extension. The temporary 40% Retail, Hospitality, and Leisure (RHL) relief ends and is replaced by dedicated lower multipliers for qualifying RHL properties:
- Small business RHL: 38.2p (rateable value under £51,000)
- Standard RHL: 43.0p (£51,000–£499,999)
- Small business: 43.2p (under £51,000)
- Standard: 48.0p (£51,000–£499,999)
- Higher: 50.8p (£500,000+)
Eligible pubs and live music venues receive a further 15% relief for 2026/27. The higher multiplier – aimed primarily at large distribution warehouses – is framed as a rebalancing of the tax burden away from high streets and towards online retail infrastructure.
Because the new rateable values are based on post-pandemic 2024 data rather than 2021 figures, many businesses will see their valuations change. You can estimate your business rates on GOV.UK. The deadline to challenge your current assessment is 31 March, so check yours now if you haven’t already.
Other business changes
Several further changes take effect in April that are easy to miss but worth knowing about.
- Umbrella Pay As You Earn (PAYE) risk transfers. From 6 April, where an umbrella company employs a worker, the agency or end client can be held liable by HMRC for PAYE underpayments. If you engage temps or contractors through umbrellas, the compliance risk now sits with you.
- Payrolling of benefits in kind. Mandatory payrolling doesn’t start until 6 April 2027, but the deadline to voluntarily register for 2026/27 is 5 April 2026. If you provide company cars, private medical insurance, or similar taxable benefits, early adoption gives you a full year to test your systems before it becomes compulsory.
- National Living Wage and National Minimum Wage (NMW) rates rise from 1 April. 21 and over moves to £12.71 (from £12.21), 18–20 to £10.85 (from £10.00), and 16–17/apprentices to £8.00 (from £7.55).
- Statutory payment rates change from 6 April. New weekly rates for Statutory Sick Pay (SSP) and family-related statutory pay take effect alongside the eligibility changes below.
The Employment Rights Act 2025: First Wave
The Employment Rights Act 2025 received Royal Assent in December and its first batch of reforms takes effect from 6 April. For employers, this is arguably the most operationally demanding part of the April reset – because it touches contracts, policies, payroll, and day-to-day management all at once.
SSP from day one
SSP becomes payable from the first day of sickness absence instead of the fourth. The Lower Earnings Limit is also being removed, meaning all employees qualify regardless of pay level. For employers with part-time or lower-paid staff, this could meaningfully increase SSP exposure. Review your absence policies and payroll setup before April.
Day-one paternity and parental leave
The 26-week qualifying period for paternity leave and the one-year requirement for unpaid parental leave are both scrapped. Employees are entitled from their first day of employment. If you manage onboarding or probation processes, your documentation will need updating.
Redundancy consultation penalties double
The maximum protective award for failing to properly consult on collective redundancies goes from 90 to 180 days’ pay per affected employee. If your business ever faces a restructuring situation, the financial cost of getting the consultation process wrong has just doubled.
Other Employment Rights Act changes
Whistleblowing covers sexual harassment. Reporting sexual harassment now counts as a qualifying disclosure, with full protections against detriment and unfair dismissal.
Fair Work Agency launches 7 April. A new enforcement body bringing oversight of minimum wage, holiday pay, and SSP compliance under one roof.
Trade union recognition simplified. The process for unions to gain formal recognition is being streamlined from April, with further access rights following in October.
How Double Point Can Help
There’s a lot arriving at once this April, and the right response depends entirely on your circumstances.
A company director reviewing their dividend strategy needs a different conversation to a landlord entering MTD for the first time, and neither looks the same as an employer updating their HR policies for the Employment Rights Act.
At Double Point, we work with our clients throughout the year to stay ahead of changes like these – not react to them after the fact. Whether you need to restructure your remuneration before rates change, get your filings in order ahead of doubled penalties, prepare for MTD, or understand what all of this means for your business, our team of chartered accountants is here.
Book a free consultation with us today and let’s make sure you’re ready for 2026/27.