The upcoming tax year is approaching, bringing significant changes that individuals should take note of. Unlike the regular calendar year, the tax year spans from April 6 to the following April 5, resetting personal tax allowances, ISA limits, and pension allowances.
A notable change for employees includes the introduction of new PAYE tax codes. Starting from April 6, several adjustments will come into effect.
From April 2026, sole traders and landlords earning over £50,000 annually will need to maintain digital records and submit tax updates quarterly, as part of HMRC’s Making Tax Digital initiative. This will require the use of software capable of storing income, expenses, VAT information (if applicable), and tax adjustments.
Moreover, alterations to agricultural and business property reliefs for Inheritance Tax will be implemented in April 2026. The new cap before Inheritance Tax applies will be £2.5 million, with assets above this limit receiving only 50% tax relief, an increase from the previous cap of £1 million. The standard Inheritance Tax rate remains at 40%.
Changes in the Dividend Tax rate have been announced, increasing from 8.75% to 10.75% for basic rate taxpayers and from 33.75% to 35.75% for higher rate taxpayers after the Budget announcement. A dividend refers to a company’s distribution of profits to its shareholders.
Furthermore, as of April 2026, individuals working from home will no longer be eligible to claim tax relief for additional household expenses like gas and electricity. The flat rate for work from home allowance in the UK is £6 per week, with the condition that the relief can only be claimed if there is no office to go to, not for those opting to work remotely.
Lastly, the Capital Gains Tax rate applicable to Business Asset Disposal Relief and Investors’ Relief will rise from 14% to 18% from April 2026, while the £1 million lifetime limit for these reliefs remains unchanged. This adjustment means entrepreneurs and investors will face higher tax liabilities on qualifying business sales.