UK Tax Law Changes Coming in April 2026: What You Need to Know
- lynnemartin28
- Oct 28
- 2 min read
As the new tax year approaches, April 2026 brings a wave of important changes to UK tax legislation. Whether you're a sole trader, landlord, investor, or business owner, it's crucial to understand how these updates could affect your financial planning. Here's a breakdown of the key changes:
Making Tax Digital (MTD) for Income Tax
Who’s affected?
Sole traders and landlords earning over £50,000 annually.
What’s changing?
Mandatory digital record-keeping.
Quarterly submissions of income and expenses via MTD-compatible software.
Replaces the traditional Self Assessment tax return.
Looking ahead:
April 2027: Threshold drops to £30,000.
April 2028: Threshold drops to £20,000.
Certain groups (e.g. ministers of religion, those with power of attorney) are exempt or deferred.
Why it matters: This shift aims to streamline tax reporting and reduce errors—but it also means adapting to new software and processes.
Inheritance Tax (IHT) Reliefs Tightened
Key changes from 6 April 2026:
Business Property Relief (BPR) and Agricultural Property Relief (APR) capped at £1 million per individual.
Amounts above the cap will receive only 50% relief.
AIM-listed shares will also see relief reduced from 100% to 50%.
Impact: Business owners and farmers may face higher IHT liabilities when passing assets to heirs. Estate planning will become more critical than ever.
Capital Gains Tax (CGT) Adjustments
Business Asset Disposal Relief (BADR):
Rate increases from 10% to 14% in April 2025.
Rises again to 18% from April 2026.
Carried Interest:
From April 2026, taxed under income tax rules.
A 72.5% multiplier will be applied to calculate taxable income.
Why it matters: These changes could significantly affect entrepreneurs and investors, especially those involved in private equity or venture capital.
What Business Owners Should Know
If you run a business, these changes could have a direct impact on your operations and succession planning:
Digital compliance: Ensure your accounting systems are MTD-ready. Cloud-based platforms like Xero, QuickBooks, and Sage are popular choices.
Succession planning: With IHT reliefs capped, transferring business assets to family members may become more costly. Consider trusts or staggered gifting strategies.
Exit strategies: The rising BADR rates mean selling your business will attract higher CGT. Plan ahead to optimise timing and structure.
Tip: Speak to a tax adviser about restructuring options or using employee ownership trusts (EOTs) to mitigate tax burdens.
Expert Insights
“The 2026 changes are not just tweaks—they’re structural shifts. Businesses need to review their digital infrastructure and estate plans now, not later.”— Sarah Thompson, Chartered Tax Adviser
“For landlords and sole traders, MTD is a wake-up call. Quarterly reporting will require discipline and reliable software.”— James Patel, Small Business Accountant
Final Thoughts
April 2026 marks a pivotal moment in UK tax policy. Whether you're preparing for digital tax reporting or reassessing your estate and investment strategies, now is the time to get ahead. Speak to a tax adviser or accountant to ensure you're ready for the transition.
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