April always comes with a fresh tax year… but 6 April 2026 is shaping up to be a big one for business owners, directors, employers and investors. In this blog, I will highlight some of the main changes starting in April, reminding some that have already happened and what this might mean for you and your business.
1) Dividend tax is going up (directors and shareholders, this one’s for you)
From April 2026, dividend tax rates increase for the Basic rate and the Higher rate:
- Basic rate: 8.75% → 10.75%
- Higher rate: 33.75% → 35.75%
- Additional rate: stays 39.35%
What this means in real life: if you take dividends from your limited company (instead of salary), you may pay more tax on the same drawings in this tax year.
Example: How the dividend tax increase could affect you
While the percentage increase may seem small, the additional tax can add up depending on how much you take in dividends. Here are some simple examples:
| Dividend Taken | Tax Rate Before April 2026 | Tax Due Before | Tax Rate From April 2026 | Tax Due From April 2026 | Increase in Tax |
| £10,000 | 8.75% | £875 | 10.75% | £1,075 | £200 |
| £20,000 | 8.75% | £1,750 | 10.75% | £2,150 | £400 |
| £50,000 | 33.75% | £16,875 | 35.75% | £17,875 | £1,000 |
Figures are simplified examples and assume dividends fall fully within the relevant tax band.
Practical next steps:
- Review your director remuneration strategy (salary vs dividends) before the new tax year lands.
- If you’re planning larger dividend payments, consider timing and cash flow carefully.
- Make sure you’re using the £500 dividend allowance efficiently (where relevant).
2) Payroll & employer updates from April 2026
SSP becomes a Day 1 right (and the Lower Earnings Limit is removed)
From 6 April 2026, Statutory Sick Pay changes include:
- No Lower Earnings Limit to qualify
- No waiting days (so it’s payable from the first full day of sickness absence)
- SSP will be 80% of normal weekly earnings or the flat weekly rate (whichever is lower)
Practical next steps:
- You’ll need cleaner absence records, clear qualifying days in contracts, and payroll processes that can cope with SSP from day one.
Student Loan Plan 5 launches (payroll teams: update your checklists)
Plan 5 student loan deductions start 6 April 2026. HMRC will issue start notices showing which plan to operate, and Plan 5 becomes the default where an employee doesn’t know their plan type (until the notice arrives).
Payrolling Benefits in Kind (BiK): deadlines you do want in the diary
- To voluntarily payroll BiKs for 2026/27, registration must be completed by 5 April 2026
- Mandatory payrolling for most BiKs is planned from April 2027
Paternity leave + unpaid parental leave become Day 1 rights
From 6 April 2026, paternity leave and unpaid parental leave become Day 1 rights (no minimum service requirement)
Working from home tax relief is being removed (employee claims)
From April 2026, employees will no longer be able to claim the Income Tax relief for additional homeworking expenses from HMRC (where the employer hasn’t reimbursed)
State Pension age change
State Pension age is scheduled to rise from 66 to 67 gradually between 2026 and 2028, depending on date of birth.
Looking ahead: salary sacrifice pensions (April 2029)
A heads-up for future planning: from April 2029, the NIC exemption for employee pension contributions via salary sacrifice will be capped at £2,000 a year.
3) Capital Gains: Disposal relief changes (BADR Relief)
If you’re selling a business (or shares that qualify), this is a key one.
From 6 April 2026, the CGT rate for:
- Business Asset Disposal Relief (BADR) becomes 18% (up from 14% in 2025/26)
What this means: business exits and share disposals that qualify for these reliefs could cost more in tax from April 2026.
Practical next steps:
- If an exit is on the horizon, get advice early—CGT planning can be very timing-sensitive.
- Double-check eligibility (BADR rules are picky, and the paperwork matters).
4) Switching from LTD to sole trader/partnership (disincorporation)
HMRC have published guidance on transferring a business out of a company (often called disincorporation), including tax considerations across CT, PAYE, VAT, Income Tax and CGT.
Before you restructure, get advice—this can trigger tax points you won’t see until later if it’s not planned properly.
As always, the start of a new tax year brings a number of updates that can impact how you run and structure your business. Taking the time to understand these changes early can help you avoid surprises and plan more efficiently.
If you’d like help reviewing how the April 2026 changes affect you, feel free to get in touch with our team.