Articles

April 2026 HMRC Tax Changes: What You Need to Know

17 April 2026

April marks the start of a new UK tax year—and in 2026, there are some important changes worth getting ahead of. While some updates may sound technical, they all come down to one thing: helping you stay compliant and avoid any unexpected surprises.

Here’s a clear, jargon-free overview of what’s changing and what it means for you.

1. Making Tax Digital (MTD) Goes Live

One of the biggest changes this year is the introduction of Making Tax Digital for Income Tax (MTD ITSA).

From 6 April 2026, if you’re a sole trader or landlord earning over £50,000, you’ll need to:

Keep digital records using compatible software
Submit quarterly updates to HMRC
File a final year-end declaration.

This means moving away from the traditional “once-a-year” tax return to more regular, digital reporting throughout the year.

Key points:

Applies from April 2026 for income over £50,000 (reducing to £30,000 in 2027)
HMRC won’t provide the software—you’ll need to use a compatible system
You’ll submit updates four times a year, plus a final declaration.

What this means for you:

This is a significant change, especially if you currently rely on spreadsheets or manual records. The good news is you don’t have to figure it out alone—we can guide you through the setup and make the process feel straightforward.

2. A New, Fairer Penalty System

HMRC is introducing a points-based system for late submissions:

Each missed deadline adds a penalty point
Points build up over time before financial penalties apply.

3. Changes to Dividend Tax

From April 2026, dividend tax rates are increasing by 2%:

Basic rate: 8.75% → 10.75%
Higher rate: 33.75% → 35.75%.

With the dividend allowance remaining at just £500, this will be felt by many company owners.

What this means for you:

If you take income through dividends, it’s a good time to review how you’re extracting profits to ensure you remain as tax efficient as possible.

We can review your strategy—get in touch with our team for tailored advice.

4. Frozen Tax Thresholds

Income tax thresholds remain unchanged:

Personal allowance: £12,570
Higher rate threshold: £50,270.

As incomes increase, more people are being pulled into higher tax brackets—a process often referred to as “fiscal drag.”

What this means for you:

Even without a tax rate increase, you may find yourself paying more tax over time. Planning ahead can help reduce the impact.

5. Increased Focus on Corporation Tax Compliance

HMRC is continuing to tighten compliance for companies:

Higher penalties for late corporation tax returns
Increased use of data and AI to identify discrepancies.

What this means for you:

Deadlines are becoming more important than ever. Staying on top of filings—or having support in place—can help you avoid unnecessary costs and stress.

6. The Bigger Picture: A Digital Future

All of these changes form part of a wider shift towards a more digital, real-time tax system.

Over the next few years, we’ll see:

More frequent reporting
Greater reliance on software
Increased visibility for HMRC.

MTD thresholds will also reduce:

£30,000 from April 2027
£20,000 by 2028.

Final Thoughts

The April 2026 changes aren’t just minor updates—they reflect a broader shift in how the UK tax system works.

In simple terms:

Digital compliance is becoming the norm
Tax on certain types of income is increasing
Admin requirements are growing

The earlier you adapt, the easier it will feel. With the right support and systems in place, these changes can be managed smoothly—and even used as an opportunity to get clearer visibility over your finances.

Need Help Navigating the Changes?

If you’re unsure how these updates affect you or your business, now is the perfect time to take a proactive approach.

We’re here to make things simple, keep you compliant, and help you make the most of your hard-earned money.

Contact the Wilson Howe team today to find out how we can support you.

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