Tax Changes 2026: Key Updates You Must Know

Team Nomi

May 20, 2026
6 minutes read

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The 2026 tax changes bring important updates that affect individuals, landlords, and businesses. With new rules from HM Revenue & Customs and ongoing policy changes from the UK Budget, understanding these updates is essential for effective financial planning.

Tax rates remain largely unchanged, but fixed thresholds, reduced reliefs, and increased reporting requirements can still affect how much tax you pay. At the same time,  the shift towards digital compliance under Making Tax Digital means more people must maintain accurate records and submit information online. 

Whether you are an accountant managing clients or a business owner handling finances, staying informed about these changes will help you avoid surprises and remain compliant throughout the year.

Overview of Tax Changes 2026

From April 2026, the new tax changes in the UK Budget and other updated rules published by HM Revenue and Customs (HMRC) will start to take effect. The aim of these measures is to increase tax revenue and improve compliance with tax regulations, utilising digital technologies and modernising the process.

Under Making Tax Digital for Income Tax, many more self-employed individuals and landlords will be required to keep digital records of their taxable income and to provide online updates of any changes to that income and submit updates online.

The main areas affected include:

• • Personal tax (income and dividends)
  • Business and corporation tax
  • Inheritance tax (IHT)
  • Environmental and indirect taxes

For most people, the biggest impact will not be higher tax rates, but fixed thresholds and fewer tax reliefs. This means you could end up paying more tax even if your income only increases slightly.

Income Tax & Threshold Updates

According to HM Revenue & Customs, income tax rates for 2026 – 27 remain the same:

• • 20% (basic rate)
  • 40% (higher rate)
  • 45% (additional rate)

However, the key thresholds are still fixed:

• • £12,570 personal allowance
  • £37,700 basic rate limit

This means the tax bands are not increasing in line with inflation.

Even though tax rates have not gone up, many people will still pay more tax. This is because:

• • Salaries may increase over time
  • Tax thresholds stay the same
  • More of your income moves into higher tax bands

In addition, under Making Tax Digital for Income Tax, more self-employed individuals and landlords will need to keep digital records and submit updates regularly, increasing the need for accurate income tracking.

This situation is known as fiscal drag, in which rising income leads to higher taxes without any change in tax rates.

Example

If your salary increases from £40,000 to £45,000:

• • A larger portion of your income will fall into the higher-rate tax band
  • You will pay more tax overall, even though the rates have not changed

Dividend Tax Changes

In 2026, one of the biggest changes is an increase in the tax rate on dividends received. This in conjunction with HMRC’s new rules, will increase the amount of tax payable on dividend income.

New Dividend Tax Rates – from April 2026

Impact of dividend tax changes:

• • Company directors taking dividends will pay more tax
  • Investors relying on dividend income will see reduced take-home returns
  • Tax planning becomes more important, especially when choosing between salary and dividends

In addition, with Making Tax Digital for Income Tax, individuals receiving dividend income may need to keep more accurate digital records and report income more regularly.

Business & Corporation Tax Changes

From April 2026, a number of changes will be made to how businesses calculate and pay taxes. As stated by HM Revenue & Customs, there will also be a focus on reducing certain tax reliefs, encouraging investment in specific areas, and increasing the use of digital methods for tax reporting.

Capital Allowances Update

• • Writing-down allowances reduce from 18% to 14%
  • A new 40% first-year allowance is introduced for qualifying assets

This means businesses get less tax relief over time but can claim more upfront on certain investments.

Homeworking Expense Relief Removed

Employees can no longer claim tax relief for unreimbursed homeworking expenses.

• Higher taxable income for remote workers
• Employers may need to review expense policies

Venture Capital & Investment Changes

Venture Capital Trust (VCT) relief is reduced from 30% to 20%

• • Reduced incentive for investors
  • Potential slowdown in startup investment

Inheritance Tax (IHT) Changes

From April 2026, HM Revenue & Customs has introduced changes to inheritance tax reliefs, specifically affecting Agricultural Property Relief (APR) and Business Property Relief (BPR).

Key Changes

• • APR and BPR will be capped at £2.5 million per estate
  • Any value above this threshold will qualify for only 50% relief, instead of full relief

These updates limit the amount of inheritance tax relief available on qualifying agricultural land and business assets.

Other Important Tax Changes

Alongside major tax updates, HM Revenue & Customs is introducing several smaller but important changes. These mainly affect specific industries, international investors, and indirect taxes.

Environmental & Indirect Taxes

• • Landfill tax increases with inflation
  • The plastic packaging tax rises in line with the CPI.

These changes mainly affect businesses involved in manufacturing, packaging, and waste management.

VAT & Other Adjustments

• • VAT relief introduced for donated goods
  • Simplification of some administrative tax rules

Non-Resident Tax Changes

• • The dividend tax credit for non-UK residents is abolished

Keeping up with the new tax changes for 2026 can be challenging for accountants and business owners. The changing regulations, fixed limits, and additional reporting requirements can create compliance risks if not managed properly.

Nomi provides accountants and bookkeepers with powerful practice management software that simplifies your day-to-day work and allows you to stay compliant with current UK tax regulations. Nomi offers tools to manage clients, track due dates, and automate work so you can remain organised and maintain control.

Instead of worrying about tax changes, you can focus on growing your business while Nomi handles the complexity behind the scenes.

Conclusion

From 2026, there will be significant tax changes in the UK that affect both individuals and businesses, and how they manage their money. Even the minor tax changes, such as amendments to fixed thresholds or reduced relief, will increase the amount of taxes that you pay overall.

Having access to the right tools allows individuals to manage these situations with relative ease. Software, such as Nomi, enables users to keep track of records, monitor income, and comply with HMRC rules. 

Once you have reviewed the tax changes and put together your plan, as well as used all of the available technology, you will be able to process your taxes with confidence.

Disclaimer: All tax rates and changes mentioned in this blog are based on official UK government sources and publicly available information.