Tax rules in the UK are changing from 6 April 2026, and even if you’ve never thought much about tax before, these updates could affect you. Here’s a quick guide to what is coming:
Digital Tax Reporting
If you earn over £50,000 from self-employment or renting property out, you’ll need to:
- Keep your records digitally (using software, not paper).
- Send updates to HMRC every three months, instead of just once a year.
This is called Making Tax Digital. It’s designed to make tax easier and more accurate, but it means you’ll need to get comfortable with online systems.
Partnerships are currently exempt from this regime.
Income Tax Freeze
The amount you can earn before paying tax (£12,570) stays the same. The tax bands also stay the same.
Why does this matter? Because wages usually go up over time, more people will end up paying higher taxes. This is called “fiscal drag.”
Dividend Tax Increase
If you own shares and receive dividends:
- The tax rate will increase by 2%.
- The small tax-free allowance (£500) stays the same.
If you run your own company and take a hybrid remuneration package of Salary and Dividends, you may want to review the tax position of this.
Inheritance Tax Reliefs
If you plan to pass on a business or farm:
- Special tax relief is limited to £2.5 million.
- Anything above that will be taxed at 20%.
- Nil Rate Band remains stagnant at £325,000
- Private Residence Allowance remains at £175,000
The Nil Rate Band has remained at £325,000 since 2009, meaning estates are falling into the Inheritance tax bracket simply because their assets have appreciated and the band has not been reflective of this.
Why Should You Care?
Even if you’re not a business owner, these changes affect:
- People who rent out property.
- Anyone with investments.
- Families planning inheritance.
What Should You Do Now?
- Check your income sources: Are you self-employed or a landlord? Start exploring digital accounting software.
- Review your investments: Dividend tax is going up—plan ahead.
- Plan for inheritance: If you own a business or farm, speak to one of our tax advisors about the new cap.
Don’t wait until April—start preparing now.
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