What’s changing from April 2026 
(And what it means for your business)

From April 2026, there are quite a few tax changes coming in. Some are small tweaks, others could have a real impact on how you pay yourself, run payroll, and manage your finances.

Here’s a simple breakdown of what actually matters day to day.

1. Dividends & director decisions 💸

If you’re taking dividends (very common for directors), tax on those is going up slightly.

• Basic rate → 10.75%
• Higher rate → 35.75%
• The additional rate will remain 39.35%.

It’s not huge, but combined with frozen tax thresholds, it does mean you could end up paying more tax without actually earning more.

Frozen tax thresholds means that personal allowance remains £12,570, with higher rate 40% tax kicking in from £50,271, and then 45% rate on earnings above £125,140. 

What this means in reality:
📉 More people quietly drift into higher tax bands
📉 You pay more tax without realising

2. Directors’ loans – getting more expensive 🧾

If you’re using your director’s loan account to take money out of the business, the tax charge is also increasing.

• New rate for  loans made on or after 6 April 2026 under section 455 rules: 35.75%

This applies where loans aren’t repaid on time, so it’s becoming a more expensive way to manage cash flow.

3. Making Tax Digital (MTD) is getting real 📊

This is a big one.

From April 2026, Making Tax Digital for Income Tax starts kicking in for:

• Sole traders
• Landlords
• Self-employed individuals earning over £50,000 based on tax year 2024-25

That means:
✔ Quarterly reporting to HMRC
✔ Digital records required
✔ No more “once-a-year scramble”

👉 Bookkeeping matters more than ever 📒

With MTD and ongoing HMRC changes, clean, up-to-date records are key.

This is where we support clients daily:

• Keeping books accurate and up to date
• Making sure everything is ready for VAT and tax submissions
• Avoiding last-minute surprises

If your bookkeeping is behind, now is the time to fix it - not when deadlines hit.

4. Payroll & compliance changes  

4.1  Umbrella companies ☂️

There are also tighter rules coming in around PAYE responsibility, especially where agencies or third parties are involved.

In simple terms: HMRC is getting stricter on who is responsible for payroll taxes - and they will follow the chain if something goes wrong.

Under the new rules, from 6 April, the umbrella companies will retain the primary responsibility for deduction of PAYE and national insurance contributions (NIC) from the pay of their employees supplied to clients.

4.2 Sick pay is changing (this is a big one for payroll) 💷

From April 2026:

• No minimum earnings threshold for SSP
• No more waiting days
• Employees get SSP from day one

They’ll receive 80% of their usual pay OR the standard SSP rate (whichever is lower). The SSP weekly rate also goes up to £123.25 per week (previously £118.75).

In practice, this means:

• More employees qualify for sick pay
• Payroll calculations become more frequent and slightly more complex

4.3 Family leave pay is increasing🧸

From 5 April, statutory family leave pay is going up slightly.

New weekly rate is £194.32 (previously £187.18). This applies to Maternity pay, Paternity pay, Adoption pay, Shared parental leave, Parental bereavement pay, Neonatal care pay. 

At the same time, the minimum earnings threshold to qualify is also increasing from £125 → £129 per week.
 

4.4 Paternity & parental leave 👶

Employees no longer need to build up service to qualify.

From April 2026:

• Paternity leave = available from day one
• Parental leave = also day one

4.5 Record keeping is becoming serious (and enforceable) 📒

This is a big shift that many businesses will overlook.

From April 2026, you must:

• Keep detailed annual leave records
• Track holiday entitlement and payments properly
• Keep records for 6 years

4.5 New Fair Work Agency 🏢

A new body called the Fair Work Agency, established on 7 April 2026, creates a single body for employers and workers to access information about their rights and ensure legal compliance

5. CIS – stricter rules 🏗

For construction businesses, CIS rules are tightening:

• Monthly returns will be required even if nothing was paid
• HMRC can remove gross payment status much faster
• Penalties are becoming harsher

6. VAT & general compliance 🧮

While VAT rates themselves aren’t changing, HMRC is continuing to tighten compliance across the board.

That means:

• Better record keeping
• More digital reporting
• Less tolerance for errors