10 key tax changes from April 2026

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The 2026/2027 tax year represents a significant shift in the UK’s fiscal landscape. While several of these measures were announced in previous Budgets, April 2026 marks the point of implementation for reforms affecting business succession, digital compliance, and increasing costs for businesses.

Below are the ten most significant areas requiring professional attention before the new tax year begins.

1. Restricted Agricultural Property Relief and Business Property Relief for IHT

From 6 April 2026, the 100% Inheritance Tax (IHT) relief for Agricultural Property Relief (APR) and Business Property Relief (BPR) will be capped at a combined £2.5 million allowance per individual.

Qualifying agricultural and business assets exceeding this threshold will receive 50% relief, resulting in an effective IHT rate of 20%.

The £2.5m allowance is transferable between spouses and civil partners, allowing 100% relief on qualifying assets up to £5 million.

This is a significant change that places greater importance on succession planning to protect business assets and family wealth. Business owners should review their Wills, consider lifetime gifts and asset structures to ensure both allowances are fully utilised.

2. Increased Business Asset Disposal Relief (BADR)

The tax cost of exiting a business continues to rise. Following the 2025 increase to 14%, the Capital Gains Tax (CGT) rate for qualifying disposals under BADR rises to 18% on 6 April 2026.

The £1 million lifetime limit remains in place but the impact of the further rate increase means, for example, that on a qualifying gain of £1 million, the tax liability will have increased from £100,000 (at 10% pre-2025) to £180,000 in April 2026.

3. Making Tax Digital (MTD) for Income Tax

April 2026 marks the mandatory start date for Making Tax Digital (MTD) for Income Tax.

This applies to self-employed individuals and landlords with a qualifying gross income (not profit) over £50,000 (reducing to £30,000 from April 2027).

MTD requires affected taxpayers to keep digital records and submit quarterly summaries of income and expenses to HMRC via compatible software, replacing the single annual return.

4. Dividend tax rate hikes

To further align the taxation of investment income with earned income, dividend tax rates are increasing by 2% from April 2026. The basic rate will rise from 8.75% to 10.75%, and the higher rates will increase from 33.75% to 35.75%. With the tax-free dividend allowance remaining at just £500, profit extraction strategies for director-shareholders may require review. This change was announced in the 2025 Budget, along with increases to tax on savings and property income.

5. Inheritance Tax on AIM-listed shares

Shares listed on the Alternative Investment Market (AIM) will no longer qualify for 100% BPR relief. Instead, they will be subject to a flat 50% relief rate across their entire value. This results in a permanent 20% IHT liability on death for these holdings, significantly altering their role in estate planning.

6. Employee costs

Above-inflation increases to National Minimum Wage rates will apply from April, further increasing employment costs for businesses.

7. Business incorporation

From April 2026, businesses that choose to convert to a corporate structure will no longer automatically qualify for incorporation relief (to exempt the capital gains tax charges associated with incorporation) if the conditions are met. The relief will have to be claimed by the tax payer on their self-assessment return.

8. Working from home allowance

The working from home allowance will be removed from April 2026. This has been used to allow employees who were required to work from home to claim a weekly deduction of £6 for costs associated with working from home without the need for a receipt and has been popular for those working in the professional services sector.

9. Business rates for retail and hospitality

New rateable values for non-domestic properties in England and Wales are effective from 1 April 2026 and could substantially change rates bills for many businesses. Local councils use rateable values to calculate business rates.

Lower multipliers will apply to retail, hospitality, and leisure properties with a rateable value under £500,000 – 38.2p for properties with a rateable value below £51,000 and 43p for properties with a rateable value between £51,000 and £499,999.

This is offset by an increased multiplier for properties with rateable values over £500,000, such as distribution centres and major office blocks. There is no lower multiplier for larger RHL properties in this category.

In Scotland, new rateable values will also be in place, with the poundage of the basic, intermediate, and higher property rates reduced by 1.7p 1.9p and 2p, respectively. There is support for retail, hospitality and leisure businesses, however, this is capped at £110,000 per business.

10. EMI share option scheme expansion

In a positive development for high-growth SMEs, EMI share options have been opened up to a wider audience, with companies with up to 500 employees (up from 250) and gross assets of up to £120 million (up from £30 million) now being able to offer tax advantaged share options. This allows larger companies to continue using tax-advantaged share options to recruit and retain key staff. In addition, employees will also be able to hold unexercised options for up to 15 years (up from 10 years).

Measure the impact on your business

These measures will reshape how businesses pass on value, extract profits, stay compliant and manage their workforce. Reviewing how the changes could impact your business can prevent costly surprises in the future.