A heads up on personal tax changes due April 2026
Today we run through all of the personal tax changes due to come into effect this April. Whether you’re an employee or an employer, you might need to know what’s set to change.
Personal Tax Changes Coming in April 2026
With just a few weeks to go until the beginning of a new tax year, a new round of tax changes take effect from April 2026. While many people won’t see a big difference in their day-to-day tax position, there are some areas worth having on the radar.
Here is a run-through of some of the changes you may want to be aware of.
Dividend Tax Rises
The tax rates for dividends are rising from April 2026. The basic rate and higher rates are each increasing by two percentage points to 10.75% and 35.75%, respectively. The dividend additional rate remains at 39.35%.
Many company owners rely on a combination of salary and dividends for their pay. If that’s you, it’s important to review how you draw income and whether your current mix of salary and dividends still makes sense.
Thresholds Remain Frozen
The tax-free personal allowance and income tax thresholds all remain frozen and are set to stay that way until 2030/31. That ongoing freeze will continue to pull more people into higher rates of tax.
For Scottish taxpayers, there is an increase to the basic and intermediate rate thresholds. This means that lower earners will see a small increase in their take-home pay. However, because of fiscal drag, higher earners will be increasingly drawn into paying additional tax.
National Insurance and Voluntary Contributions
People with gaps in their national insurance contribution (NIC) record, those who are self-employed with low profits, or those who work overseas often consider making voluntary contributions.
From 6 April 2026, the rate for Class 2 NICs (applicable to the self-employed) will be increased from £3.50 to £3.65. The rate for voluntary Class 3 NICs will increase from £17.75 to £18.40.
Aside from the increase in rates, a major change is that voluntary Class 2 NIC will no longer be an option for periods spent abroad. Making voluntary Class 3 contributions will be possible, but the qualifying criteria have been tightened.
Capital Gains Tax (CGT)
Business owners thinking about selling or restructuring should be aware that capital gains that are subject to business asset disposal relief or investor’s relief will be taxed at 18% for 2026/27, an increase from 14% in 2025/26.
Reliefs for disposals to employee ownership trusts have also been scaled back and the rules for share reorganisations have been tightened. Both changes are already in force.
These changes won’t affect everyone, but if you are considering business succession or restructuring, getting the timing and your approach right continues to be key.
Inheritance Tax – Agricultural and Business Property Relief Changes
As has been widely publicised, changes to Inheritance Tax (IHT) to Agricultural Property Relief (APR) and Business Property Relief (BPR) will come into force on 6 April 2026.
These reliefs were previously unlimited, but from April, 100% relief will be capped at £2.5 million of combined agricultural and business assets. Thereafter, the relief reduces to 50%. Unused amounts can be passed to a spouse or civil partner.
The £2.5 million limit is higher than initially proposed, but those who may be affected by the new cap may want to consider whether there are ways to rearrange their estate that would be effective in saving tax.
In Conclusion
If you are affected by any of these changes for 2026/27 and would like help in making sure you are in the best tax position possible, please get in touch. We would be happy to help you!
See: https://www.icaew.com/insights/tax-news/2026/feb-2026/prepare-for-2026-27-individuals
Could a Fiscal “Traffic Light System” Help Your Business Cut Through Uncertainty?
A leading think tank has criticised the fiscal rules that the Chancellor uses to determine the government’s tax and spending plans. The Institute for Fiscal Studies (IFS) has suggested that reducing complex finances to a pass‑or‑fail number misses the bigger picture.
The Treasury, on the other hand, has said that the rules are helping to keep borrowing costs down and support long‑term investment.
Of course, which view is correct when it comes to managing the country’s finances could be an endless debate. However, the IFS proposal brings up an interesting idea that many businesses are using with success.
The IFS Proposals
The IFS are advocating moving to a fiscal “traffic light” system. Rather than judging the economy against the one requirement for “headroom”, a broader set of indicators should be assessed. And given a green, amber or red status.
Why This Idea Might Feel Familiar to Businesses
This traffic‑light idea is something many businesses already use informally. For instance, it’s very common to track financial health and business performance using a dashboard of red, amber and green indicators.
Business owners can get an ‘at-a-glance’ look at the different areas of the business and quickly flag potential problems.
Applying a Traffic‑Light System to Your Own Business
A simple set of indicators is often all that is needed. Three or four core measures can help to assess the business and check its day‑to‑day resilience. For example:
- Cash flow – green if you have several months’ operating expenses covered; amber if cash is tightening; red if you’re relying on short‑term borrowing.
- Debt levels – green if repayments are comfortable; amber if interest is creeping up; red if refinancing is looming or facilities are nearly maxed out.
- Profitability – green if margins are holding; amber if costs are rising faster than prices; red if losses are recurring.
- Sales pipeline – green if opportunities are converting; amber if lead volumes drop; red if future revenue is unclear.
Businesses using a traffic‑light approach tend to make decisions earlier – whether that’s tightening costs, adjusting pricing, or negotiating with lenders. It also helps everyone in the business get a picture of what’s happening without necessarily needing to dive into pages of accounts.
If you would like help building a simple financial traffic‑light dashboard tailored to your business, we would be happy to work with you in developing something that is based on the metrics that matter most to your business.
See: https://www.bbc.co.uk/news/articles/c1kg48m937wo
Employment Rights Act – What is Changing First?
A new website has been launched by the Department for Business and Trade (DBT) offering practical guidance and support on the changes that the Employment Rights Act will introduce and what they can do to get ready.
The website provides details of upcoming changes, including several that come into force from April 2026. These include:
- Statutory Sick Pay – No earnings threshold and no three-day waiting period mean more employees will now qualify.
- Day-one family leave – Paternity Leave and Unpaid Parental Leave a right from the first day in a job.
- Bereaved Partner’s Paternity Leave – A new right for time off following the death of a child’s mother or primary adopter.
- Collective redundancy protections – The protective award for non-compliance is being increased.
- Stronger protections for workers who report sexual harassment.
- A new body called the Fair Work Agency will work to uphold workers’ rights and support businesses with compliance.
The website includes details on how to prepare for changes and a timeline of when further changes will be introduced. It can be found here and would be well worth saving to your browser favourites.