The start of the new tax year always brings change, and April 2026 tax updates are no exception. From increased payroll costs to the rollout of Making Tax Digital (MTD) and changes to dividend tax, there are several important developments that business owners, employers, and company directors need to be aware of.
In this guide, we break down the key UK tax changes for April 2026 and what they mean for your business.
Employer’s National Insurance: Higher Costs Continue
From 6 April 2026, Employer’s Class 1 National Insurance remains at 15%, with the secondary threshold still set at £5,000. This means employers begin paying National Insurance at a relatively low level of employee earnings.
Class 1A and Class 1B National Insurance rates also remain at 15% for the 2026/27 tax year.
The Employment Allowance has increased to £10,500, which may help offset some of the cost for eligible businesses. However, for many employers, payroll remains one of the biggest financial pressures this year.
National Living Wage Increase
From 1 April 2026, the National Living Wage and Minimum Wage rates have increased:
- £12.71 per hour for workers aged 21 and over
- £10.85 for ages 18 to 20
- £8.00 for ages 16 to 17 and apprentices
This increase, combined with higher employer National Insurance contributions, creates a double impact on payroll costs for many businesses.
Statutory Pay Rates for 2026/27
Statutory payment rates have also increased for the new tax year.
From April 2026:
- Statutory Maternity Pay, Paternity Pay, Adoption Pay, Shared Parental Pay, Parental Bereavement Pay, and Neonatal Care Pay are set at £194.32 per week, or 90% of average weekly earnings if lower
- Statutory Sick Pay (SSP) is now £123.25 per week, or 80% of average weekly earnings if lower
These increases will affect employer payroll planning and budgeting.
Making Tax Digital for Income Tax Has Started
One of the most significant changes for April 2026 is the introduction of Making Tax Digital for Income Tax (MTD ITSA).
From 6 April 2026, this applies to sole traders and landlords with income over £50,000 (based on the 2024/25 tax year).
Affected individuals must:
- Keep digital records
- Submit quarterly updates to HMRC
- File an end-of-year declaration using compatible software
HMRC has confirmed that penalty points for late submissions will not apply in the first year, although other penalties, including late payment charges, still apply.
This is a major shift away from the traditional annual Self Assessment system and will require preparation.
Dividend Tax Rates Have Increased
From 6 April 2026, dividend tax rates have risen:
- Basic rate: 8.75% → 10.75%
- Higher rate: 33.75% → 35.75%
- Additional rate remains at 39.35%
This change reduces the tax efficiency of dividends and makes it more important for company directors to review their salary and dividend strategy.
Business Asset Disposal Relief Changes
Business Asset Disposal Relief (BADR) has become less generous.
For qualifying disposals made on or after 6 April 2026, the tax rate is now 18%, compared to:
- 14% for disposals between April 2025 and April 2026
- The previous 10% rate
If you are considering selling a business, disposing of shares, or winding up a company, timing is now more important than ever.
Corporation Tax and Associated Companies
Corporation tax rates remain unchanged for 2026/27:
- 19% for profits under £50,000
- 25% for profits over £250,000
- Marginal relief applies between these thresholds
However, the associated company rules continue to catch many businesses out.
The profit thresholds are divided by the number of associated companies. For example, if a company has three associated companies, the thresholds are split across four entities, reducing the limits significantly.
This is particularly relevant for:
- Group structures
- Businesses under common control
- Companies with investment subsidiaries
Understanding these rules is essential for effective corporation tax planning.
Companies House Fee Increases
While not a tax change, Companies House fees increased from 1 February 2026, impacting many businesses.
Updated fees include:
- £100 for digital company incorporation
- £50 for digital confirmation statements
- £14 for online charge registration
These increases should be factored into your business setup and compliance costs.
The tax changes coming in April 2026 are likely to affect many business owners, landlords and company directors, so it’s worth starting to think ahead now. A little planning in advance can make a big difference, helping you avoid surprises and feel more in control of what’s coming.
Whether it’s higher payroll costs, getting ready for Making Tax Digital, or reviewing the most tax-efficient way to take money from your business, taking advice early can really help. If you’d like to talk through how these changes might affect you, please get in touch with us. We’d be happy to help you plan ahead and make things as straightforward as possible.
