Chartered Accountants & Registered Auditors
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The new UK tax year starts on 6 April 2026, and with it come a number of changes that affect business owners, company directors, landlords, and individuals.
Some changes are headline-grabbing. Others are quieter but just as important over time.
This guide breaks down what is changing for the 2026-27 tax year in plain English, focusing on what actually matters in practice.
The 2026-27 tax year runs from:
Any income, gains, and allowances within this period fall into the new tax year.
One of the biggest structural changes is the expansion of Making Tax Digital (MTD) for Income Tax.
From April 2026, many self-employed individuals and landlords above the income threshold will be required to:
What this means in practice:
This moves tax reporting closer to real time. For businesses already using accounting software, the transition should be manageable. For others, it is a prompt to update systems and processes.
Handled properly, it can improve visibility and reduce year-end surprises.
Personal tax thresholds remain frozen.
This includes:
What this means in practice:
As income rises, more people are pulled into higher tax bands without any change in tax rates. This is often referred to as fiscal drag.
For business owners and directors, this makes income planning more important, particularly when balancing salary, dividends, and pension contributions.
Dividend tax continues to be an important consideration for company directors.
While rates and allowances may not change significantly year to year, the combination of:
Means more dividend income is taxed at higher rates.
What this means in practice:
Dividend strategy should be reviewed regularly rather than assumed to remain optimal.
The National Living Wage increases again from April 2026.
What this means in practice:
For employers, this raises payroll costs and can affect:
Even businesses not directly paying minimum wage can feel indirect pressure through supplier costs.
Payroll obligations remain an area of ongoing change.
What this means in practice:
Staying organised with payroll processes is increasingly important.
Capital allowances remain available for qualifying business expenditure, including plant and equipment.
What this means in practice:
Businesses planning investment should consider timing carefully. Bringing forward expenditure can accelerate tax relief, but decisions should always be commercially driven first.
Payments on account remain unchanged but continue to cause confusion.
What this means in practice:
If income rises, payments on account can increase significantly. If income falls, they may be overstated and require review.
Understanding how they work is key to managing cashflow.
While individual tax changes matter, the bigger shift is structural.
The 2026-27 tax year continues a trend towards:
For business owners, this means systems, visibility, and planning matter more than ever.
The new tax year does not require dramatic change. It does require awareness.
Most of the impact comes not from one major policy shift, but from the combination of:
The businesses that feel most in control are the ones that review early, plan consistently, and keep their systems aligned with how they operate.
If you would like to review how the new tax year affects your business and what to prioritise, our team is here to help.
