What Businesses Need to Know About Tax Changes in UK 

In the United Kingdom, “new financial year” can mean two things. The government’s financial year typically runs from 1 April, while the personal tax year runs from 6 April to 5 April. For 2026/27, the tax year started on 6 April 2026.  This matters because a lot of the practical tax changes in UK (PAYE, National Insurance, dividend tax rates, capital gains tax relief rates, and the rollout of Making Tax Digital for Income Tax) start from 6 April. 

Key dates at the start of the year

Date	What it means in practice
1 April 2026	Start of the Corporation Tax “year” (financial year) for rates that apply to companies’ profits (depending on accounting period start dates).
6 April 2026	Start of the 2026/27 tax year (Income Tax and National Insurance settings apply from this date, and several targeted changes take effect).
5 April 2026	Cut-off to register for voluntary payrolling of benefits in kind for the 2026/27 tax year (if you want to payroll benefits instead of using P11Ds).

Personal tax changes for 2026/27

Most headline Income Tax rates are unchanged, but allowances and thresholds still drive what you actually pay. 

Income Tax bands and thresholds

For most people in England, Wales and Northern Ireland, the standard Personal Allowance remains £12,570, and the basic/higher/additional rate structure is unchanged. 

Read: How to Increase Your Tax-Free Personal Allowance to £20,070 Through HMRC Rent-a-Room Scheme

If your adjusted net income is over £100,000, your personal allowance is tapered away at £1 for every £2 over £100,000, reaching zero at £125,140. 

Area	Band (2026/27)	Taxable income	Rate
England, Wales, Northern Ireland	Personal Allowance	Up to £12,570	0%
	Basic rate	£12,571 to £50,270	20%
	Higher rate	£50,271 to £125,140	40%
	Additional rate	Over £125,140	45%

These bands are set out in government guidance for the 2026/27 tax year. 

Tax changes for Scottish taxpayers

If you live in Scotland, you pay Scottish income tax rates on wages, pensions and most other non-savings, non-dividend taxable income. Dividends and savings interest remain taxed at UK-wide rates. 

Area	Band (2026/27)	Taxable income	Rate
Scotland	Personal Allowance	Up to £12,570	0%
	Starter rate	£12,571 to £16,537	19%
	Basic rate	£16,538 to £29,526	20%
	Intermediate rate	£29,527 to £43,662	21%
	Higher rate	£43,663 to £75,000	42%
	Advanced rate	£75,001 to £125,140	45%
	Top rate	Over £125,140	48%

The tax changes for Scotland taxpayers in the 2026/27 financial year include updated income tax bands and rates, reflecting changes that affect both higher and lower earners across Scotland.

Dividend tax rises from 6 April 2026

A clear “start of tax year” change for investors and owner-managed businesses is dividend taxation. From 6 April 2026:

• the dividend ordinary rate rises to 10.75%
• the dividend upper rate rises to 35.75%
• the dividend additional rate stays at 39.35% 

The dividend allowance remains £500 for 2026/27 (so you only pay dividend tax on dividends above this allowance, after considering how the allowance interacts with your wider Income Tax position). 

For close companies, it is also worth noting that the “loans to participators” charge is linked to the dividend upper rate and therefore moves in line with that increase. 

Get Free Consultation

Call Anytime 0203 883 4777

Get Free Consultation

Capital Gains Tax and relief rates

The Capital Gains Tax Annual Exempt Amount for individuals remains £3,000 for 2026/27 (with a lower allowance of £1,500 for most trustees). 

For many disposals in 2026/27, government guidance shows CGT rates at 18% and 24% for individuals (depending on whether you are a basic rate or higher/additional rate Income Tax payer), with trustees and personal representatives generally at 24% (subject to the detailed rules). 

Business Asset Disposal Relief goes to 18%

If you are selling a business (or qualifying shares), the rate under Business Asset Disposal Relief increases again.

Business Asset Disposal Relief means you pay:

• 18% on qualifying gains for disposals on or after 6 April 2026
• 14% for disposals between 6 April 2025 and 5 April 2026 (and 10% for earlier disposals) 

This change is also reflected in wider official CGT policy material. 

Investors’ Relief similarly moves to 18% for disposals on or after 6 April 2026. 

Inheritance Tax changes affecting farms and family businesses from 6 April 2026

Another major change that takes effect from 6 April 2026 is a reform to 100% Agricultural Property Relief and 100% Business Property Relief.

Official guidance confirms that, for deaths on or after 6 April 2026, the combined value of qualifying agricultural or business property that can receive 100% relief is capped at £2.5 million. 

Where qualifying value exceeds £2.5 million, relief at the lower rate (50%) applies to the excess. 

The allowance can also be transferable between spouses and civil partners if a claim is made, and rules also apply for trusts. 

Business and employer changes for 2026/27

For employers, the start of the tax year is primarily a payroll event. Rates, thresholds, and employer reliefs need to be correct from the first pay run after 6 April. 

National Insurance rates and thresholds

For 2026/27, published National Insurance contribution rates show:

• employees in the main category (A) pay 8% on earnings above the Primary Threshold up to the Upper Earnings Limit, and 2% above that 
• employers pay 15% on earnings above the Secondary Threshold (with modified treatment for specific categories such as under-21s and apprentices) 
• Class 1A and Class 1B National Insurance on expenses and benefits is 15% for 2026/27 

The key thresholds that align strongly with payroll for 2026/27 include:

• Primary Threshold: £242 per week (£12,570 per year)
• Secondary Threshold: £96 per week (£5,000 per year)
• Upper Earnings Limit: £967 per week (£50,270 per year) 

Get Free Consultation

Call Anytime 0203 883 4777

Get Free Consultation

Employment Allowance remains a key employer offset

The employment allowance can reduce eligible employers’ annual employer (secondary) Class 1 National Insurance liability by up to £10,500. 

HMRC guidance also confirms that the previous restriction linked to having more than £100,000 of secondary Class 1 NIC liability (in the prior year) ceased from 6 April 2025 onwards. 

Corporation Tax for financial years starting 1 April

Corporation Tax rates depend on profits, and the published table for Corporation Tax years starting 1 April shows:

• 19% small profits rate for companies with profits under £50,000
• 25% main rate for companies with profits over £250,000
• marginal relief applies between those limits (with published limits and fraction). 

VAT thresholds and registration

The VAT registration threshold is more than £90,000 of taxable turnover (rolling 12-month test). The voluntary deregistration threshold is £88,000. 

If you exceed the threshold, government guidance explains that you must register within 30 days of the end of the month when you went over the threshold. It also sets out the “effective date of registration” as the first day of the second month after you go over. 

Making Tax Digital for Income Tax begins for many from April 2026

For sole traders and landlords, the biggest operational change at the start of 2026/27 is the move into Making Tax Digital for Income Tax.

Who must comply from 6 April 2026

Government guidance confirms Making Tax Digital for Income Tax becomes mandatory from 6 April 2026 for individuals with qualifying income over £50,000 from self-employment and property. 

It is being phased in, with published thresholds showing:

• qualifying income over £50,000 → mandatory from 6 April 2026
• qualifying income over £30,000 → mandatory from 6 April 2027
• qualifying income over £20,000 → mandatory from 6 April 2028 

What it changes day-to-day

HMRC guidance states that you (or your agent) will need compatible software to keep digital records and send quarterly updates, and then submit your tax return and pay tax due by 31 January after the end of the tax year. 

There is also a published first-year “soft landing” on quarterly update penalties: where you are required to use MTD from 6 April 2026, HMRC will not apply penalty points for late quarterly updates in the first year (2026/27), though penalties still apply for late tax returns and late payment. 

Start-of-year checklist

A clean start in April saves time (and usually stress) later in the year.

Individuals and families:

• Check your tax bands and Personal Allowance position, especially if your income is around £100,000 (Personal Allowance taper) or close to £125,140. 
• If you receive dividends outside ISAs and pensions, update your 2026/27 dividend tax estimates for the rate rise. 
• If you are planning a business sale or exit, factor in the Business Asset Disposal Relief rate now being 18% for disposals on or after 6 April 2026. 
• If you have significant farm or business assets, review Inheritance Tax exposure under the new £2.5 million cap on 100% relief for deaths on or after 6 April 2026. 

Employers:

• Confirm payroll software has the correct 2026/27 PAYE and National Insurance settings. 
• Check Employment Allowance eligibility and ensure it is being claimed correctly (up to £10,500). 
• If you want to payroll benefits in kind for 2026/27, registration needed to be completed by 5 April 2026. 

Sole traders and landlords:

• Use HMRC’s eligibility guidance to confirm if you must join Making Tax Digital from 6 April 2026 and choose compatible software early. 

How We Help You Deal With the Recent UK Tax Updates

At Apex Accountants, we help you translate the rules into practical decisions.

We support clients with:

• personal tax planning (income tax bands, dividends, CGT planning, and reliefs)
• director remuneration reviews in light of the 2026/27 dividend tax rates
• payroll compliance, including correct NIC settings and Employment Allowance claims
• VAT registration planning and ongoing VAT returns
• Making Tax Digital for Income Tax readiness: eligibility checks, software setup, and quarterly update workflows
• exit planning (including Business Asset Disposal Relief considerations) and succession planning where Inheritance Tax relief rules have changed from 6 April 2026

Get Free Consultation

Call Anytime 0203 883 4777

Get Free Consultation

Conclusion

The new 2026/27 tax year brings fewer “headline” rate changes, but several impactful shifts are now live: higher dividend tax rates, an 18% rate under Business Asset Disposal Relief, new Inheritance Tax limits on 100% relief for qualifying farm and business assets, and the first mandatory phase of Making Tax Digital for Income Tax. 

FAQs About 2026 Tax Changes in UK

When does the UK tax year run?

The 2026/27 tax year runs from 6 April 2026 to 5 April 2027. 

What are the recent tax changes in the UK?

Recent tax changes include the Corporation Tax main rate remaining at 25% (unchanged since 2023), with dividend tax rates increasing to 10.75%/35.75% and Business Asset Disposal Relief rising to 18% from April 2026.

Are taxes going up in 2026 in the UK?

Corporation Tax remains at 25% for profits over £250,000 (unchanged since 2023). However, dividend tax rates will rise significantly from 6 April 2026, impacting many taxpayers.

Have Income Tax rates changed for 2026/27?

The main Income Tax rates remain 20%, 40% and 45% for England, Wales and Northern Ireland, with published bands as per government guidance.
If you live in Scotland, the Scottish Income Tax bands and rates apply to most non-savings, non-dividend income and differ from the rest of the UK. 

What are the dividend tax rates for 2026/27?

From 6 April 2026, the dividend ordinary rate is 10.75% and the dividend upper rate is 35.75% (additional rate remains 39.35%), with a £500 dividend allowance. 

What is Business Asset Disposal Relief in 2026/27?

Business Asset Disposal Relief applies a reduced CGT rate to qualifying disposals, and the rate is 18% for disposals on or after 6 April 2026 (compared with 14% in 2025/26). 

What is the VAT threshold in April 2026?

The VAT registration threshold is more than £90,000 of taxable turnover, with an optional deregistration threshold of £88,000. 

Do I need to use Making Tax Digital from April 2026?

Making Tax Digital for Income Tax becomes mandatory from 6 April 2026 if your qualifying income from self-employment and property is over £50,000, with phased expansion in later years. 

Can I just gift 100k to my son?

You can gift £100,000 to your son, but it may be subject to inheritance tax if you pass away within seven years, following the Potentially Exempt Transfer (PET) rule and taper relief.

Who pays 40% tax in the UK?

The 40% higher rate applies to taxable income between £50,271 and £125,140 after the £12,570 Personal Allowance. The Personal Allowance tapers from £100,000, reducing by £1 for every £2 earned over that threshold.