Changes coming in from 6th April 2026

Making Tax Digital Self Assessment (MTD SA) – self-employed and rental income Self Assessment Tax Returns.

If your self-employment turnover (not profit but turnover/sales) and/or gross rental income is above £50,000 a year then for the 2026 27 tax year you will be expected to submit quarterly Self-Assessment Tax Returns, to be submitted in the month after the quarter end. The return for April, May, June 2026 should be submitted in July 2026.   In the last budget it was announced that the plan was to waive any late filing penalties for 2026 27.

For 2027 28 the threshold will reduce to £30,000 and for 2028 29 the threshold will reduce again to £20,000.

Once the system is imbedded in Quarterly Income Tax payments will be looked at rather than the current payments in January and July. Hidden in the November budget details it says that the quarterly payments is planned to start from April 2029.

These rules DO NOT apply to partnerships, so, for example, if a self-employed person formed a partnership with their spouse from say 1st April 2026 then they would NOT be required to submit quarterly returns. On partnerships with family members HMRC normally accept that the split of profits can change each year to reflect the most favorable tax position – this means one of the partners with sizeable other income could be allocated a small or zero split of the profits.

Dividend Tax

For 2025 26 Dividend tax rates (for basic rate tax payers) was 8.75% (higher rate taxpayers 33.75% then 39.35%).  

For 2026 27 Dividend tax rates (for basic rate tax payers) will be 10.75% (higher rate taxpayers 35.75% but top rate remains at 39.35%).  The first £500 remains tax at 0%.

This means if you pay yourself a dividend on 5th April 2026 you pay 8.75% or 33.75% tax on it but if you pay yourself a Dividend on 6th April 2026 you pay 10.75% or 35.75%.  This one day on a £10,000 dividend can cost you £200 more tax.

Remember a company cannot pay dividends it cannot afford.

Ordering of income in tax calculations

Some clients have suggested to me that in future tax years they want their personal allowance to offset income taxed at a higher rate (for example rental profits). Sorry HMRC has given the following as the order income is taken for tax purposes:

  • Employment, partnership, self-employment income 
  • Property income 
  • Savings income
  • Dividend income

Employees home working 

In the recent budget one item announced was to remove tax relief on home working expenses for employees. The published policy paper refers to employees only (which includes Directors). This is effective for the 2026 27 tax year and affects both the simplified method (£312 per year) as well as any percentage use calculations.

Capital Allowances

This won’t affect many of you and I have included this just for completeness.  “Writing Down Allowances” for capital spend has gone from 18% to 14% effective from April 2026.

A Cancelled Change

It was planned that for future accounting periods small companies would have to start to submit “Profit and Loss” Accounts as well as their “Balance Sheet” to Companies House. This requirement has been indefinitely delayed.