{"id":32064,"date":"2026-01-08T14:07:11","date_gmt":"2026-01-08T14:07:11","guid":{"rendered":"https:\/\/www.simplybusiness.co.uk\/?post_type=knowledge&p=32064"},"modified":"2026-01-08T14:07:15","modified_gmt":"2026-01-08T14:07:15","slug":"new-tax-laws-for-businesses","status":"publish","type":"knowledge","link":"https:\/\/www.simplybusiness.co.uk\/knowledge\/business-tax\/new-tax-laws-for-businesses\/","title":{"rendered":"New tax laws for businesses in 2026 \u2013 and Self Assessment shake-up"},"content":{"rendered":"\n

By far the biggest tax change coming in 2026 is the shift in how the self-employed report and pay income tax. From April 2026, Making Tax Digital comes in for income tax Self Assessment and is described by the government as the most significant change to the process since it was first introduced in 1997.  <\/p>\n\n\n\n

We cover key dates for the Making Tax Digital (MTD) roll-out, and other key tax changes small businesses and landlords need to know this year. Keep reading to find out when the laws come in and what the changes mean for you. <\/p>\n\n\n\n

1. Making Tax Digital for income tax: April 2026 deadline<\/h2>\n\n\n\n
    <\/ol>\n\n\n\n

    The biggest change to the UK tax system in decades arrives on 6 April 2026. Known as Making Tax Digital (MTD) for income tax<\/a>, it replaces the annual Self Assessment return with a digital-first system of quarterly updates.<\/p>\n\n\n\n

    Who does this affect in 2026?<\/strong><\/h4>\n\n\n\n

    If you\u2019re a sole trader or a landlord with a combined “qualifying income” (gross turnover) of more than \u00a350,000, you must follow new MTD rules from April 2026.<\/p>\n\n\n\n

    Threshold<\/strong><\/td>Deadline<\/strong><\/td>Requirement<\/strong><\/td><\/tr>
    Over \u00a350,000<\/td>6 April 2026<\/td>Digital records and quarterly updates<\/td><\/tr>
    Over \u00a330,000<\/td>6 April 2027<\/td>Digital records and quarterly updates<\/td><\/tr>
    Over \u00a320,000<\/td>By 2029<\/td>To be confirmed<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

    What you need to do<\/h4>\n\n\n\n
      \n
    1. Keep digital records: <\/strong>You can no longer use paper ledgers. You must record every transaction digitally.<\/li>\n\n\n\n
    2. Use compatible software: <\/strong>Spreadsheets are only allowed if used with “bridging software” that connects directly to HMRC.<\/li>\n\n\n\n
    3. Submit quarterly updates: <\/strong>You\u2019ll send a summary of income and expenses to HMRC every three months.<\/li>\n\n\n\n
    4. Final declaration:<\/strong> You still provide a final end-of-period statement by 31 January and pay your tax bill. <\/li>\n<\/ol>\n\n\n\n
      \n

      What is \u201cqualifying income\u201d for Making Tax Digital?\u00a0<\/h3>\n\n\n\n

      Qualifying income for MTD is the amount of gross income (also known as turnover) you earn from self-employment and property.  <\/p>\n<\/div>\n\n\n\n

      2. Dividend tax rate hike <\/h3>\n\n\n\n

      As announced in the Autumn Budget 2025<\/a>, the standard dividend tax rate is increasing from 8.75 per cent to 10.75 per cent for the 2026-27 tax year.\u00a0<\/p>\n\n\n\n

      The upper rate is increasing from 33.75 per cent to 35.75 per cent from April 2026. The additional rate will remain the same at 39.35 per cent. <\/p>\n\n\n\n

      This change affects company directors of limited companies that pay themselves in dividends. <\/p>\n\n\n\n

      \n<\/div>\n\n\n\n

      3. Capital gains tax relief reduction <\/h3>\n\n\n\n

      The second phase of changes for business asset disposal relief, which reduces the capital gains tax<\/a> (CGT) rate on qualifying business disposals, are coming this year.<\/p>\n\n\n\n

      Capital gains tax for business asset disposals is increasing to 18 per cent on 6 April 2026. <\/p>\n\n\n\n

      This means business owners, sole traders, and business partners will pay more tax when selling qualifying business assets \u2013 for example shares, buildings, equipment, and vehicles.<\/p>\n\n\n\n

      4. Business rates changes for 2026<\/h3>\n\n\n\n

      Details of business rates<\/a> changes were announced in the Autumn Budget 2025, confirming a new lower tax rate specifically for retail, hospitality, and leisure properties. These properties with a rateable value of \u00a3500,000 will pay 5p less than than the standard multiplier from the 2026-27 tax year onwards.\u00a0<\/p>\n\n\n\n

      All properties in England and Wales will also have new rates based on the latest property revaluations (which take place every three years).\u00a0<\/p>\n\n\n\n

      \n

      New tax laws \u2013 FAQs<\/h2>\n\n\n\n

      When is the new tax year? <\/h3>\n\n\n\n

      The 2026-27 tax year starts on 6 April 2026 and ends on 5 April 2027. <\/p>\n\n\n\n

      Will Making Tax Digital apply to me in 2026?<\/h3>\n\n\n\n

      MTD for income tax will only apply to you this year if your annual turnover is over \u00a350,000. From April 2027, self-employed people with a qualifying income over \u00a330,000 will need to sign up to MTD. <\/p>\n\n\n\n

      What other tax changes are coming? <\/h3>\n\n\n\n

      Keep an eye out for these tax changes that have been announced (but aren\u2019t happening in 2026): <\/p>\n\n\n\n