The upcoming tax year is approaching, bringing significant changes that individuals should take note of. Unlike the regular calendar year, the tax year spans from April 6 to April 5 of the following year. During this period, personal tax allowances, ISA limits, and pension allowances are reset.
One key change is the introduction of new PAYE tax codes for employees starting on April 6. Additionally, starting from April 2026, sole traders and landlords earning over £50,000 annually will need to maintain digital records and submit tax updates quarterly as part of HMRC’s Making Tax Digital initiative.
In April 2026, alterations to agricultural and business property reliefs for Inheritance Tax purposes will be implemented. Notably, there will be a new £2.5 million cap before Inheritance Tax applies, with assets exceeding this limit receiving only 50% tax relief compared to the standard 40% rate.
Moreover, the Dividend Tax rate is set to increase from 8.75% to 10.75% for basic rate taxpayers and from 33.75% to 35.75% for higher rate taxpayers following recent Budget announcements. Individuals working from home will no longer be eligible to claim tax relief for additional household costs, such as gas and electricity, starting April 2026.
Furthermore, the Capital Gains Tax rate for Business Asset Disposal Relief and Investors’ Relief will rise from 14% to 18% in April 2026. Although the lifetime limit for these reliefs remains at £1 million, entrepreneurs and investors will face higher tax payments on qualifying business sales.
