Yesterday marked the start of a new tax year, and this one is not business as usual. The 2026/27 tax year ushers in a cluster of changes that will hit owner-managed businesses, property landlords, family estates, and quoted companies alike. Some of these have been trailed for months; others have crept up quietly. Either way, the time for preparation is over — these rules are now live.
Here are seven changes that demand your attention, what they mean in practice, and what you should be doing about them today.
1. Making Tax Digital for Income Tax Is Finally Here
After years of delays, Making Tax Digital for Income Tax (MTD for ITSA) went live on 6 April 2026. If you are self-employed or a landlord with gross business or property income exceeding £50,000, you are now required to keep digital records using MTD-compatible software and submit quarterly updates to HMRC.
This is a fundamental shift in how HMRC collects information. Instead of one annual self-assessment return, affected taxpayers must now provide year-to-date income and expenditure figures every quarter, followed by a final digital tax return by 31 January. The threshold drops to £30,000 from April 2027 and £20,000 from April 2028, so even if you fall below the current limit, you are on the clock.
HMRC has confirmed it will not apply penalty points for late quarterly submissions during the first year (2026/27), which offers some breathing room. But that grace period does not extend to the final return, and it certainly does not excuse you from getting compliant software in place now. If you have not already chosen an MTD-compatible package and tested it against live data, treat that as urgent. The HMRC-approved software list is a good starting point.
2. Inheritance Tax: The APR and BPR Cap Bites
From 6 April 2026, the previously unlimited 100% relief from inheritance tax on qualifying agricultural and business property is capped at £2.5 million per individual. Assets above that threshold attract only 50% relief, meaning an effective IHT rate of 20% on the excess rather than 0%.
The government raised the cap from the originally proposed £1 million to £2.5 million following intense lobbying from the farming and business communities, and unused allowance can be transferred between spouses, giving a married couple up to £5 million of fully relieved assets when combined with the nil-rate band and residence nil-rate band.
Even so, this is a seismic change for family businesses and farming estates that have relied on full APR and BPR relief for succession planning. If you own or advise a business or agricultural estate worth more than £2.5 million, you need to revisit your estate plan now. Lifetime gifting, trust structures, and the interaction with the existing nil-rate bands all need fresh analysis. HMRC estimates around 1,100 estates will pay more IHT as a result — and the real number may be higher once property values are properly accounted for.
3. Business Asset Disposal Relief: Rate Rises to 18%
The Capital Gains Tax rate on qualifying disposals under Business Asset Disposal Relief (BADR, formerly Entrepreneurs Relief) has risen to 18% from 6 April 2026, up from 14% a year ago and 10% before that. The lifetime limit remains at £1 million of qualifying gains.
For business owners planning an exit, this matters. A £1 million gain now costs £180,000 in CGT under BADR, compared with £100,000 just two years ago. If you are in the process of selling a business or winding down a company, the timing of disposals and the structuring of consideration — deferred, earn-out, or upfront — deserve careful review. There may still be scope to crystallise gains tax-efficiently, but the window is narrower than it was.
4. Dividend Tax Rates Increase by 2 Percentage Points
Dividend tax rates have risen by 2% across the board from 6 April 2026. The basic rate goes from 8.75% to 10.75%, the higher rate from 33.75% to 35.75%, and the additional rate climbs to 39.35%. Combined with the £500 dividend allowance (reduced from £1,000 in 2024/25 and from £2,000 before that), the tax cost of extracting profits as dividends continues to climb.
For owner-managers operating through limited companies, this changes the salary-versus-dividend calculation yet again. You should be reviewing your remuneration strategy with your adviser to ensure you are still extracting profits in the most tax-efficient way — pension contributions, salary sacrifice arrangements, and the timing of dividend declarations all come into play.
5. New FRS 102: Lease and Revenue Recognition Overhaul
The revised FRS 102 standard applies to accounting periods beginning on or after 1 January 2026, which means many companies are already preparing their first set of accounts under the new rules. Two changes stand out.
First, lease accounting. Most operating leases must now be recognised on the balance sheet as right-of-use assets with corresponding lease liabilities. If your business holds significant property or equipment leases, your balance sheet will look materially different — and so will your debt covenants, gearing ratios, and EBITDA calculations. Lenders and investors need to understand these are presentational changes, not operational ones, but the conversations need to happen now.
Second, revenue recognition moves to a five-step model aligned with IFRS 15 principles. For businesses with complex contracts — bundled services, milestone-based billing, long-term projects — the timing and amount of revenue recognised may shift. Finance teams should have completed their impact assessments by now; if not, prioritise this immediately.
6. EIS and VCT Investment Limits Double
In more welcome news, the annual investment limits for the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs) have doubled from 6 April 2026. Companies can now raise up to £10 million annually (£20 million for knowledge-intensive companies), with lifetime limits rising to £24 million and £40 million respectively.
For growing businesses seeking equity investment, this is a genuine incentive. The tax reliefs available to EIS investors — 30% income tax relief, CGT deferral, and loss relief — make EIS-qualifying fundraises attractive to high-net-worth investors. If you are planning a funding round, ensuring your company qualifies for EIS or SEIS should be part of the conversation from day one.
7. Vaping Products Duty and Remote Gaming Duty
Two sector-specific duties took effect on 1 April 2026. A new Vaping Products Duty applies to manufacturers and importers of vaping liquids, with rates varying by nicotine content. Meanwhile, remote gaming duty has jumped from 21% to 40% (with UK horse-racing bets remaining at 15%), and bingo duty has been abolished entirely.
These are niche changes, but if you operate in the vaping, gaming, or leisure sectors, the compliance and commercial implications are significant. The remote gaming duty increase, in particular, will squeeze margins for online operators and may accelerate consolidation in the sector.
What Should You Do Now?
The common thread running through all of these changes is that reactive compliance is no longer enough. MTD demands new systems and processes. The IHT and CGT changes require proactive estate and exit planning. FRS 102 changes need balance sheet remodelling and stakeholder communication. And the dividend tax increases mean remuneration strategies need revisiting.
If any of these changes affect your business or your clients, the time to act is not next quarter — it is now. Review your software, revisit your tax planning, and pressure-test your assumptions against the new rules.
Talk to Tanous about navigating the 2026/27 tax year — contact us at tanous.co.uk.