The new tax year 2026 is on its way. Changes are coming for employment law, business rates and tax, among other things. Check this list to see if you’ve missed any important details.
When does the new tax year start for 2026?
The new tax year starts as usual on April 6, which falls on Easter Monday this year.
National Living Wage increases – April 1, 2026
National Living Wage is going up again on April 1 – a few days ahead of the new tax year, but still significant. For over 21s, this is an increase to £12.71 from £12.21. For 18-20-year-olds it’s going from £10 to £10.85 and for those aged 16-17 and apprentices it’ll be £8 an hour, up from £7.55.
If you’re paying the Real Living Wage, you’ll be paying £13.45 instead of £12.60.
What can I do now? Make sure that payroll has been updated to comply with the changes in time for the next pay day.
Making Tax Digital (MTD) for Income Tax introduced for business owners with more than £50,000 turnover
Business owners and landlords with a turnover of over £50,000 will need to start filing quarterly using MTD-compatible software. Fines and penalties will be imposed for non-compliance. Find out more in Making Tax Digital thresholds and timelines for 2026-2028.
What can I do now? If you’re eligible, check what your obligations will be and find a suitable software platform for your business.
Business rates
A permanently lower business rate is being introduced for leisure, hospitality and retail businesses. However, it’s still higher than the business rates relief (40% discount up to a value of £110,000) that is currently in place.
From April 6, leisure, hospitality and retail business rates for properties with a rateable value (RV) of £51,000 or less will have a multiplier of 38.2p. Those in properties with an RV of £51,000-£499,999 will have a multiplier of 43p.
The National Small Business multiplier is 43.2p for properties with an RV of £51,000 or less. These rates apply to businesses in England and Wales.
Check out this video for more essential info.
There’s some good news for pubs; they’ll get a 15% discount on their business rates.
What can I do now? Take a look at how your business rates will change. If you think you’ll be paying too much, speak to your local council.
UK dividend tax income rates increasing by 2%
The basic rate will rise from 8.75% to 10.75%, while the upper rate is rising from 33.75% to 35.75%. The 39.35% rate will stay the same.
What can I do now? Rebalance your salary vs your dividends and use your pension contributions.
Statutory Sick Pay (SSP) from day one
A few changes from the Employment Rights Act 2025 are coming into force on April 6. This one is perhaps the most notable.
At the moment, Statutory Sick Pay for employees doesn’t kick in until day four of illness and injury absence. From Easter Monday onwards, Statutory Sick Pay will need to be paid from day one of injury or illness. SSP will be 80% of the worker’s average weekly earning or £123.25 a week, whichever is lower.
What can I do now? Learn the new rules and ensure HR is aware of how to implement them, ensure your employees are aware of the changes and that your payroll provider can adapt.
Paternity and Paternal leave rights from day one
Similarly, unpaid parental leave will be a right for your employees from day one, while the 26-week service period for paternity leave will be removed. They will still have to give the appropriate length of notice before they intend to go on parental leave.
What can I do now? Familiarise yourself with the new rules. HR should be updating contracts and company policies in line with these new rules.
Collective redundancy award to double
If you fail to meet collective redundancy consultation obligations, you can expect to pay double, going from 90 days’ pay for each affected employee to 180 days’ pay for each affected employee.
What can I do now? Make sure you know your collective redundancy consultation obligations. You must hold a collective consultation if you’re proposing 20 or more redundancies, they’re all in one establishment (not necessarily in your whole organisation) and the redundancies are expected within the next 90 days.
Whistleblower protection extended
Whistleblower protection will be extended to those who make sexual harassment disclosures.
What can I do now? If you haven’t already, get managers and staff trained so that they’re aware of this new protection.
Umbrella chain PAYE liability
The umbrella company and the client will be jointly liable for pay as you earn (PAYE) and national insurance contributions. HMRC can seek payment from either party.
What can I do now? Know your responsibilities on PAYE and national insurance contributions.
Late filing of corporation tax
Penalties will double for late filing of corporation tax. That’ll be £200 for the initial fine and £400 for filings over three months late. Continued failings to file will incur fines of up to £2,000.
What can I do now? Know your corporation tax obligations and when the filing deadlines are. This will normally depend on your accounting period, which is the period of time that your accounts cover, which is normally 12 months. Sign into your HMRC business tax account if you’re unsure.
Fair Work Agency – April 7, 2026
The government is launching the Fair Work Agency the day after the new tax year starts, on April 7. The agency aims to enforce workers’ rights. It’ll go beyond the minimum wage and modern slavery to enforce elements such as holiday pay.
The agency will have powers and it intends to use them. It’ll be able to access your HR, payroll and other employment records without notice. It can also do inspections and speak to employees – an investigation doesn’t even need to be triggered by a complaint.
What can I do now? Make sure your payroll and holiday pay calculations are accurate. Get training for managers in place if necessary so that they’re following appropriate protocol and recording information correctly.
Preparing your small business
As Katharine Moxham, spokesperson for GRiD, points out: “These are not insignificant operational challenges for businesses to absorb at a time when they are already contending with rising costs and sustained economic pressures. Indeed, the research has found that some businesses are not prepared to simply absorb the cost and will be looking to make cuts in other areas.”
Hopefully this article has given you a starting point. If you need any extra help, it’d be best to talk to a trusted professional, such as an accountant, an employment lawyer or your local authority.
Read more
Employment Rights Act 2025 and the changes you need to prepare for – The government has published the timetabled changes that are coming in line with the Employment Rights Act 2025. Here’s a rundown
Making Tax Digital (MTD) – HRMC requirements and the best compatible software providers – After the rollout of Making Tax Digital (MTD) for VAT, MTD for Income Tax is being phased in from April 2026
Best Offers for Making Tax Digital accounting software – Discover the best current offers and discounts on MTD-compatible accounting software that you can use to file your returns and manage bookkeeping
