The upcoming tax year is set to bring significant changes that individuals should take note of. Unlike the traditional calendar year, the tax year in the UK runs from April 6 to April 5 of the following year. This period marks the reset of personal tax allowances, ISA limits, and pension allowances.
Starting on April 6, there will be new PAYE tax codes for employees. Additionally, from April 2026, sole traders and landlords with an annual income exceeding £50,000 will be mandated to maintain digital records and submit tax updates quarterly under HMRC’s Making Tax Digital initiative.
Furthermore, alterations to agricultural and business property reliefs for Inheritance Tax purposes are on the horizon, with a new cap of £2.5 million before Inheritance Tax applies. The Dividend Tax rate is also set to increase, moving to 10.75% for basic rate taxpayers and 35.75% for higher rate taxpayers.
Moreover, from April 2026, individuals working from home will no longer be eligible to claim tax relief for additional household expenses like gas and electricity. The rate of Capital Gains Tax related to Business Asset Disposal Relief and Investors’ Relief will rise from 14% to 18%, affecting entrepreneurs and investors with a £1 million lifetime limit for these reliefs.
