April 2026 Tax Update
Whilst the Chancellor did not announce any new changes or policies to the UK tax system in the Spring Statement, there are various tax changes being implemented from April 2026 for taxpayers to be aware of. In the below, we have highlighted what these are, who they affect, and some potential planning points where possible.
INDIVIDUALS
From 6 April 2026, the basic and higher rate dividend rates are increasing by 2%. This will shift the basic rate to 10.75% and higher rate to 35.75%. Interestingly, the additional rate (taxpayers with income over £125,140) remains unchanged at 39.35%. It is worth noting that all taxpayers will still benefit from the £500 dividend allowance (0%), which also remains unchanged. Given these rate hikes and dependent on personal income levels and company reserves, it may be beneficial to fast track paying some dividends by 5 April 2026.
Staying on the dividend theme, non-resident shareholders of UK companies will no longer receive a notional tax credit of 8.75% when receiving a dividend from that company. This often meant no further UK tax was due on this income. The tax credit was not refundable but is being abolished from April 2026, meaning UK tax is more likely to be due on those dividends going forward. This, combined with the dividend rate increases coming in April could mean that accelerating dividends prior to 5 April 2026 is beneficial.
Another notable rate change for individuals is to Business Asset Disposal Relief (BADR). This is a reduced rate of capital gains tax (CGT) for qualifying disposals of business interests (investments/assets/shares). The rate is increasing from 14% to 18%, again effective from 6 April 2026, thus bringing the rate closer in line with standard CGT rates. Each individual has a £1m lifetime limit of the allowance to utilise on qualifying disposals. For those with BADR-qualifying sales agreed and sufficient lifetime limit remaining, it will be worth pushing for completion prior to 5 April 2026 to benefit from the 14% rate.
Taxpayers looking to obtain income tax relief through venture capital trusts will see a reduced rate of relief from investments made in April 2026, decreasing from the current 30% to 20%. If you are wishing to benefit from the higher relief therefore, it is worth investing and obtaining the VCT certificate by 5 April 2026. EIS and SEIS investments will still receive income tax relief at 30% and 50% respectively, reflecting the increased risk of these investments. All of these come with varying annual limits and complex tax treatment so please let us know if you would like more information.
The two-child benefit cap is being lifted from April 2026. Do be careful if you or your partner earns £60,000 or more though, as the high-income child benefit charge will then start to kick in, meaning some of it will need to be repaid to HMRC (all of it once the higher earner has income exceeding £80,000).
Making Tax Digital (MTD) is compulsory from April 2026 for those with qualifying income (rental income and self-employed turnover exceeding £50,000 in the 2024/25 tax year). The regime will require quarterly filings for the individual taxpayers exceeding that threshold, alongside the annual tax return, with the first quarterly return for the April to June inclusive period being due on 7 August 2026. The qualifying income threshold is decreasing over the next few years which will bring more taxpayers into the regime from April 2027 and April 2028. Please see here for more information. We are also running our third FUSE: Live webinar to run our clients through MTD, please click here if you would like to register.
Whilst the £20,000 ISA limit remains intact, from April 2027, contributions to cash ISAs will be capped at £12,000 for under 65s, with the remaining £8,000 reserved for stocks and shares ISAs. If you are under 65 and want to maximise your cash ISA contributions therefore, you only have two tax years left to do so. Contributions for the 2025/26 tax year need to be made by 5 April 2026, with the final contributions before the changes come in to be done by 5 April 2027. Please note that we cannot give financial advice and therefore cannot comment whether this is a worthwhile investment of your money or not.
Business property relief (BPR) and agricultural property relief (APR), two key inheritance tax reliefs, are being restricted from April 2026. This may well increase the inheritance tax bill related to your Estate for those you leave behind. Whilst this is unwelcome news, the Treasury did backtrack on their initial plans for the measure. The initial proposal was that the first £1m of qualifying assets would be exempt from inheritance tax (100% relief) with any amount over that only receiving 50% relief. That threshold has thankfully been updated to £2.5million per person with the remainder still receiving 50% relief. The reliefs can be applied to lifetime gifts as well as the death estate calculation and resets every 7 years, in line with the £325,000 nil rate band. Any unused amount of the £2.5million allowance on the first death is transferrable to the surviving spouse. The £2.5million allowance is a combined limit however, so an individual cannot have £2.5million of business-related assets as well as £2.5million of agricultural-related assets. Those already owning qualifying assets will therefore want to review their wills are drafted in a tax advantageous way. For those who wish to reduce their inheritance tax bill, this is a reminder that investments into business and agricultural assets can be an effective method of achieving this. There are various qualifying conditions that need to be met however, so please do let us know if you would like more information.
COMPANIES/EMPLOYERS
Businesses with large amounts of capital expenditure may already be feeling the benefits from the newly introduced 40% first year allowance (FYA) on qualifying expenditure. Those with capital allowance pools however will see the writing down allowance (WDA) drop from 18% to 14% from April, meaning slightly less beneficial tax relief against business profits. The timing of this will depend on the business yearend.
Employers will also see an increase in wage costs from April 2026 as the national living and minimum wages rise, as detailed here. This, combined with the reduction in the secondary threshold (£9,100 per annum to £5,000 per annum in April) means increased employer national insurance contributions (at rate of 15%) will be due. The £10,500 employment allowance may be available to help alleviate some of these increased costs.
Those businesses that are looking to scale may be able to benefit from the revised EIS-qualifying company thresholds. Increases to the gross asset values and investment limits will result in more companies being eligible for 3rd party investment to fund the next step. Please see here for a full breakdown of the changes coming into effect from 6 April 2026.
Many of the above changes were announced in the Autumn budgets of 2024 and 2025, alongside further announcements that have already been brought in, or are to be introduced in the future. Please see here if you would like to read our summary of both of those budgets.
If you would like a better explanation of any of the above changes, please do not hesitate to get in touch.
FUSE is an independent Chartered Certified firm of accountants and tax advisors based in Highgate Village, North London. We provide a dynamic range of services to clients working in property, media, entertainment and professional services. Our clients vary in size from self employed sole traders, small enterprises and medium size businesses. We believe that comprehensive financial planning and sound business financial advice are the keys to growth and profitability.
