New Tax Year Changes From 6 April 2026: What Business Owners Need to Know

What changes on 6 April 2026?

The main changes taking effect from 6 April 2026 include:

• Making Tax Digital for Income Tax becomes mandatory for sole traders and landlords with qualifying income over £50,000.
• Dividend tax rates increase for basic and higher rate taxpayers.
• Construction Industry Scheme rules tighten, including a nil return or advance notification requirement where no subcontractor payments are made.
• Payroll thresholds and statutory rates update for the new tax year.
• Student loan thresholds update, including the introduction of Plan 5 deductions in payroll.

This is not just an admin reset. It affects reporting, cash flow, remuneration planning, payroll accuracy and compliance risk.

Making Tax Digital for Income Tax starts now

From 6 April 2026, Making Tax Digital for Income Tax becomes mandatory for sole traders and landlords whose qualifying income from self-employment and property was more than £50,000 in the 2024/25 tax year.

For affected taxpayers, this means moving onto software that can support digital record keeping and submissions to HMRC. It also means a shift away from the old habit of leaving everything until year end.

For many businesses and landlords, this is the biggest practical change in the new tax year because it changes the process, not just the deadline.

Who needs to act now?

• Sole traders already within Self Assessment
• Landlords already within Self Assessment
• Those with qualifying income over £50,000 for 2024/25
• Those who have not yet moved to a proper digital record-keeping process

What should you do now?

• Confirm whether the rules apply to you now
• Check that your bookkeeping software is genuinely compatible
• Make sure records are being maintained during the year, not reconstructed later
• Clarify who is responsible for bookkeeping, quarterly submissions and year-end filing

Dividend tax has gone up from 6 April 2026

For the 2026/27 tax year, dividend tax rates are now:

• 10.75% for basic rate taxpayers
• 35.75% for higher rate taxpayers
• 39.35% for additional rate taxpayers

The dividend allowance remains £500.

For directors and owner-managed businesses, this matters because profit extraction strategies that worked last year may no longer be the most efficient approach this year. A small-looking percentage increase can still have a noticeable cash impact over 12 months.

If you normally take a mix of salary and dividends, this is a good time to review whether your current setup still makes sense.

Income Tax thresholds are still tight

While the headline story today is not a major shift in personal Income Tax bands, the freeze in thresholds continues to matter. That means more people can drift into higher tax bands as income rises.

For directors, business owners and higher earners, that makes early-year planning more important. Salary, dividends, pension contributions and timing of income all deserve a proper review rather than a repeat of last year’s numbers.

Payroll changes for 2026/27

If you run payroll, 6 April is the point where settings must be right. HMRC has updated PAYE thresholds, National Insurance figures, statutory payment rates and student loan thresholds for 2026/27.

Key payroll points to review

• Employee tax codes and payroll year-start setup
• National Insurance thresholds
• Statutory Sick Pay and family-related statutory payment rates
• Student loan thresholds and plan types
• Onboarding processes for new employees

Too many businesses assume payroll software will handle everything automatically. That is not a control. It is an assumption. The start of the new tax year is the right time to check that payroll is actually configured correctly.

Statutory Sick Pay and family-related pay

From 6 April 2026, the weekly rate of Statutory Sick Pay is £123.25 or 80% of average weekly earnings if lower. The standard weekly rate for statutory maternity, paternity, adoption, shared parental, parental bereavement and neonatal care pay is £194.32 or 90% of average weekly earnings if lower.

Student loan thresholds have changed too

Student loan deductions also change from 6 April 2026, and Plan 5 now enters payroll.

The annual repayment thresholds are:

• Plan 1: £26,900
• Plan 2: £29,385
• Plan 4: £33,795
• Plan 5: £25,000
• Postgraduate Loan: £21,000

This is an easy area to get wrong if employee onboarding is messy or payroll notices are not handled properly. If you employ younger staff or recruit regularly, this is worth checking now rather than after deductions have gone wrong.

CIS changes now require more action in nil months

From 6 April 2026, CIS administration tightens for contractors. If you do not pay subcontractors in a month, you now need to either:

• file a nil return, or
• tell HMRC in advance that you are temporarily inactive and not making subcontractor payments

That matters because silence is no longer enough. If your previous approach was simply to do nothing in months with no payments, that is now a compliance risk.

This is the sort of rule change that can create avoidable penalties where internal communication between site, accounts and payroll is weak.

What business owners should do now

The right action depends on your circumstances, but for many SMEs the immediate priorities are straightforward.

1. Review profit extraction

If you are a director-shareholder, revisit salary, dividends and pension contributions together rather than carrying last year’s structure forward unchanged.

2. Check whether MTD for Income Tax now applies

If you are self-employed or receive property income, confirm whether you now fall into mandatory reporting.

3. Run a payroll health check

Make sure tax codes, statutory rates, student loan settings and National Insurance thresholds are correct from the start of the year.

4. Tighten CIS processes

If you are in construction, nil months need active handling. Leaving them alone is no longer a safe option.

5. Use April as a planning month

The businesses that stay in control are usually the ones that make decisions in April, not the ones that wait until year end or January.

Final thought

The new tax year is live, and the changes taking effect from 6 April 2026 are more than background admin. They affect reporting, payroll, compliance, and the way many business owners take income from their companies.

The biggest mistake is treating April like a technical reset and assuming nothing meaningful needs to change. In reality, this is one of the best times of year to review your tax position while you still have options.

Need help reviewing your position for the new tax year?

Whether you need help with dividend planning, payroll, MTD readiness, CIS compliance or a wider business tax review, our team can help you get things in order early.

Speak to RVP

Frequently Asked Questions

What is the biggest tax change from 6 April 2026?

For many sole traders and landlords, it is the start of Making Tax Digital for Income Tax if qualifying income was over £50,000 in 2024/25. For owner-managed companies, the headline change is the increase in dividend tax rates.

Has dividend tax gone up in the 2026/27 tax year?

Yes. From 6 April 2026, dividend tax rates are 10.75%, 35.75% and 39.35%, depending on your tax band. The £500 dividend allowance remains in place.

Do landlords need to use Making Tax Digital from today?

Some do. Sole traders and landlords with qualifying income over £50,000 for 2024/25 must use Making Tax Digital for Income Tax from 6 April 2026.

What are the new student loan thresholds for 2026/27?

The annual thresholds are £26,900 for Plan 1, £29,385 for Plan 2, £33,795 for Plan 4, £25,000 for Plan 5 and £21,000 for postgraduate loans.

Has Statutory Sick Pay changed from 6 April 2026?

Yes. The weekly SSP rate for 2026/27 is £123.25 or 80% of average weekly earnings if lower.

What changed under CIS from 6 April 2026?

Construction contractors now need to file a nil return or notify HMRC in advance if they are not making subcontractor payments in a month.