The new tax year has officially begun, and April is the most important time to get ahead financially. Those who plan early tend to pay less tax, stay compliant and avoid the January rush.

• New tax year checklist
• April changes
• Ongoing changes
• Company cars
• Claimable expenses
• Common mistakes
• Salary vs dividends
• Making Tax Digital
• Financial calendar

Your April Checklist

A few simple steps now can make a significant difference over the rest of the year. Now is the time to reset and prepare:

• Review your bookkeeping system or software
• Set your income and profit targets for the year
• Plan your salary and dividend strategy
• Check pension contribution plans
• Ensure you’re ready for Making Tax Digital, if applicable

Getting organised now avoids stress later and gives you more control over your tax position.

What’s Changed This Month?

From 6 April 2026 several key updates apply. The new tax year (2026/27) has started, PAYE tax codes have been updated, National Insurance thresholds have reset and annual allowances have refreshed.

If you employ staff or run payroll, now is the time to ensure everything is updated and running correctly: update software, check employee tax codes, and confirm pension auto-enrolment compliance.

This scenario is particularly relevant for individuals who are planning to close or sell a business, transitioning into property income only, or assuming reduced income will remove MTD obligations. Early awareness allows for proper planning, system setup, and avoiding unnecessary compliance issues.

If you believe this may affect you, we recommend reviewing your position well in advance.

Important Ongoing Changes to Be Aware Of

Alongside the new tax year updates, there are several ongoing changes that could affect how much tax you pay this year. These are often overlooked, but they can have a real impact on your profits and cash flow if not planned for early.

Frozen tax thresholds

Although not a “new” change, it’s still highly relevant in 2026/27. The Personal Allowance remains at £12,570 and the higher rate threshold remains at £50,270.

As income rises, even slightly, more people are being pulled into higher tax bands — often called “fiscal drag”.

Corporation Tax bands

Corporation Tax continues at 19% on profits up to £50,000 and 25% on profits over £250,000, with marginal relief applying in between. Many small businesses are now edging into higher rates without realising.

Profit planning and timing of expenses can help manage which band you fall into.

VAT threshold

The VAT registration threshold remains at £90,000 turnover. Businesses must monitor turnover regularly to avoid late registration and penalties.

Pension contributions

Pensions remain one of the most tax-efficient strategies available. The annual allowance can be up to £60,000 depending on circumstances. Making use of pensions can significantly reduce both personal and corporation tax.

Capital allowances & investment

The Annual Investment Allowance (AIA) remains at £1 million. Investing in equipment or business assets can reduce your taxable profits.

Company Cars — What You Need to Know

If an employee or their household is provided with a company car for private use, special rules determine the cash equivalent for tax purposes.

If given a choice between a car and a cash alternative, the employee is taxed on the higher of the car’s cash equivalent or the salary foregone. This includes costs such as fuel and insurance, though pooled cars may be exempt.

A company car is any road vehicle, unless it is a goods vehicle, motorcycle, or unsuitable for private use. Vans and double cab pickups have specific rules based on payload and construction purpose.

The cash equivalent is calculated as a percentage of the car’s list price, including VAT and extras. Employee contributions can reduce this up to £5,000.

The percentage depends on CO2 emissions, rounded down to the nearest 5g/km. Diesel cars may have a 4% supplement unless they meet RDE2 (Euro 6d) standards. The maximum charge is capped at 37%.

Pooled cars are exempt if used by multiple employees and private use is incidental. Cash equivalents can be reduced proportionately if the car is temporarily unavailable for 30 or more consecutive days.

What Expenses Can You Claim?

You may be missing out on legitimate business expenses.

Common allowable expenses

• Office costs (phone, internet, software subscriptions)
• Travel and mileage (HMRC approved rates apply)
• Professional fees (accountants, legal, consultants)
• Marketing and advertising

Often overlooked

• Use of home as office (flat rate or proportion of household costs)
• Business-related subscriptions and memberships
• Training courses (must be relevant to your current trade)
• Equipment and capital allowances, such as laptops and tools

Getting this right ensures you’re not paying more tax than necessary.

Common Mistakes We’re Seeing

Carrying last year’s habits into a new tax year

Many businesses start the year already on the back foot by:

• Falling behind on bookkeeping early
• Mixing personal and business expenses
• Using outdated systems or processes

These small issues quickly build into bigger problems.

Salary vs Dividends — Getting the Balance Right

With the Dividend Allowance remaining at just £500, planning how you take income is more important than ever.

For most director-shareholders, a combination of a tax-efficient salary (typically around National Insurance thresholds) and dividends taken strategically throughout the year continues to be the most effective approach.

However, every situation is different. Taking too much, too soon — or not planning at all — can lead to unnecessary tax.

Also worth noting: Corporation Tax can be as high as 25%, so extraction strategy matters, and dividend tax rates remain higher than in previous years.

Making Tax Digital — Income Tax

The introduction of Making Tax Digital (MTD) for Income Tax had been delayed several times, however it is now confirmed and MTD IT has begun, starting with sole traders and landlords whose income exceeds £50,000.

These changes are significant and now involve keeping digital records, submitting quarterly updates to HMRC and completing a finalisation statement at the end of the financial year.

Quarterly reporting

Quarterly reporting of income and expenditure is required every three months within the tax year, which may differ from your business year-end date. Each quarterly update is based on a cumulative total of income and expenses for the tax year to date. This helps reduce the need for corrections to previous submissions where errors have been identified.

Finalisation statement

A finalisation statement is also required alongside the quarterly reports. This is submitted at the end of the tax year and replaces the current annual Self Assessment tax return. It includes any adjustments to the quarterly updates as well as declarations of other income, and any claims for allowances and reliefs. This process continues to have a submission deadline of 31 January following the end of the tax year.

When will it affect you?

If you are a landlord or sole trader with a gross qualifying income of £50,000 or more, Making Tax Digital for Income Tax now applies to you from 6 April 2026. This means you are required to keep digital records and submit quarterly updates to HMRC, alongside a year-end finalisation statement.

These changes form part of HMRC’s phased rollout of MTD, with lower income thresholds expected to follow in future tax years.

• 6 April 2027Qualifying income exceeds £30,000
• 6 April 2028Qualifying income exceeds £20,000 (subject to change)

When is qualifying income determined?

If you had a gross qualifying income in your 2024/25 tax return, HMRC will use this figure to determine whether you are required to join Making Tax Digital this year. This income level is used to assess if you meet the £50,000 threshold and therefore fall within the new reporting requirements.

• 2027/2028Qualifying income exceeds £30,000 on the 2025/26 tax return
• 2028/2029Qualifying income exceeds £20,000 on the 2026/27 tax return

Software

You are now required to use commercial software that is compatible with Making Tax Digital for Income Tax. This software must be able to:

• Create, store and amend digital records of your income and expenditure
• Send quarterly updates to HMRC
• Submit a finalisation statement at year end

We can support you with this and offer software solutions that we already use with clients. If you are choosing your own software, please ensure you check with the provider that it fully meets your requirements. It is important to remember that the finalisation statement also includes other income figures, not just business income and expenses. Some software packages are able to handle all functions, while others may only cover certain parts of the process, so it is essential to choose carefully. HMRC publishes a list of compatible software.

Information required by HMRC

Each quarterly update needs to be submitted to HMRC by the 7th of the month following the end of the relevant quarter. It must include the period start and end date as well as all income and expenditure that falls within the period dates.

• Q17 August 2026
• Q27 November 2026
• Q37 February 2027
• Q47 May 2027
• Final declaration31 January 2028

Reporting categories

Landlords

You may have only had to deal with a low amount of transactions each month, or have a management company that dealt with this for you. Now under the new MTD you will be expected to keep your own digital records (even if your property is owned jointly) and submit quarterly updates online to HMRC.

If your property is jointly owned, you must include your share of gross property income as qualifying income.

Penalties

Under new MTD, there is a new regime for late filing and late payments. This means that late filing of quarterly updates or the MTD tax return won’t trigger an automatic financial penalty. Instead, you will receive a penalty point, with a £200 penalty being imposed when a certain threshold is reached. Points will also expire after two years if the threshold is not reached, or can be reset after a period of good behaviour if the threshold is reached.

Late payment penalties will also change under MTD, with penalties kicking in at 15 days, then becoming more severe from 30 days onwards.

We are here to help you. We will help you make the transition to MTD. Please contact us if you have any questions.

Financial Calendar

April 2026

• 5 April 2026Last day of the 2025/26 tax year
• 6 April 2026Start of the 2026/27 tax year
• 19 April 2026Deadline for PAYE, NIC and CIS payments (postal)
• 22 April 2026Deadline for PAYE, NIC and CIS payments (electronic)
• 30 April 2026Deadline for submitting 2025/26 Annual Tax on Enveloped Dwellings (ATED) return, if applicable

May to July 2026

• 31 May 2026Deadline to provide employees with P60s for 2025/26
• 6 July 2026Deadline to submit P11D and P11D(b) forms and Employment Related Securities (ERS) returns for 2025/26
• 6 July 2026Deadline to agree PAYE Settlement Agreements (PSA) for 2025/26

August 2026 to February 2027

• 1 August 2026Corporation Tax due for companies with a year end of 31 October 2025
• 5 October 2026Deadline to notify HMRC of new chargeability to Income Tax or Capital Gains Tax for 2025/26
• 31 October 2026Deadline for paper submission of 2025/26 Self Assessment tax return
• 30 December 2026Deadline for online submission of 2025/26 Self Assessment return if tax is to be collected via PAYE (where tax due is under £3,000 and criteria met)
• 31 January 2027Deadline for online submission of 2025/26 Self Assessment tax return. Balance of tax due for 2025/26 payable. First payment on account due for 2026/27.
• 1 February 2027Corporation Tax due for companies with a year end of 30 April 2026

Every month

• 1stCorporation Tax due for companies with a year end nine months and one day earlier
• 19thPAYE, NIC and CIS deductions due (postal payments)
• 22ndPAYE, NIC and CIS deductions due (electronic payments)
• QuarterlyVAT returns and payments due one month and 7 days after the VAT quarter end
• QuarterlyCorporation Tax instalments due for companies within the quarterly instalment regime

If the due date for payment falls on a weekend or Bank Holiday, payment must be made by the previous working day. Electronic payments sent using the Faster Payments Service (FPS) are able to clear into HMRC’s account on a non-banking day — a Saturday, Sunday and most Bank Holidays.

File accounts with Companies House for private companies with a year ending nine months earlier, and for public companies with a year ending six months earlier.

Additional important notes for 2026/27

• CGT Annual Exempt Amount remains £3,000 for individuals
• Dividend Allowance remains £500
• Personal Allowance remains frozen at £12,570 unless changed in future Budgets
• Making Tax Digital for Income Tax continues to apply to qualifying sole traders and landlords
• Late payment interest and penalties continue to apply for missed deadlines

Download this newsletter as a PDF