Act now to make the most of your tax allowances, adapt to Making Tax Digital and update payroll for new wage rates before 6 April 2026
Who should care: savers, landlords, sole traders, directors and employers across the UK. What’s happening: the 2026–27 tax year starts on 6 and brings a mix of routine deadlines, tax-rate tweaks and administrative changes you can’t ignore. Why act now: annual allowances will reset, new digital reporting rules bite in, and changes to dividend tax, business rates and wage floors could affect take-home pay and costs.
Key dates and headlines – Tax year cut-off: 5 (use any “use-it-or-lose-it” allowances before this date). – New tax year begins: 6. – Making Tax Digital (income tax) compliance starts for many from 6; the first common reporting deadline for most affected taxpayers is 7 and the final annual declaration is due by 31 January.
– Payroll and wage changes take effect from.
Allowances and year‑end actions you can still take – ISA allowance: the –26 ISA allowance (up to £20,000) won’t carry forward. If you haven’t used it, top up or transfer before 5 April.
– Pensions: check annual and lifetime allowance positions and whether carry-forward rules can help. – Capital gains and dividends: plan any disposals or dividend payments with the current CGT and dividend allowances in mind so you don’t miss tax-saving opportunities. Making Tax Digital for income tax — what to prepare for – Who’s affected: roughly 864,000 sole traders and landlords with taxable income over £50,000 will be brought into MTD for income tax from. – What to do now: confirm whether you meet the threshold, pick HMRC‑compatible software, digitise bookkeeping, and run trial submissions well before the first quarterly filing. – Risks of delay: penalties, extra compliance costs and cash-flow headaches if quarterly reporting isn’t baked into your routines.
Tax and cost changes to factor into planning – Dividend tax: rates rise by two percentage points for 2026–27 (expect lower net distributions for many company owners). Re-run salary-versus-dividend scenarios before deciding on pay-outs. – Business rates: some retail, hospitality and leisure premises (rateable value under £500,000) will see revised multipliers — check revaluation notices to see if your bill changes. – Wage floors: the National Living Wage rises to £12.71/hour; the National Minimum Wage becomes £10.85 for 18–20 year olds and £8.00 for under‑18s and apprentices. Update payroll and staffing budgets accordingly.
Practical checklist — what to do this month – Use your ISA allowance or transfer funds into ISAs by 5 April. – Review pension contributions and carry-forward options. – If you expect capital gains or want to extract dividends, model timing to maximise available allowances. – Check whether you fall into the MTD income-tax threshold; choose and set up compliant software; test end‑to‑end reporting. – Update payroll rates, confirm younger staff are on correct pay bands, and keep payroll records for at least six years. – Re-run pay-versus-dividend calculations in light of higher dividend rates and frozen personal allowances. – Talk to your accountant or tax adviser about bespoke strategies — now is better than rushing in May.
Consequences of ignoring this window – Missed allowances are gone for good and can mean higher tax bills. – Late MTD preparation risks penalties and hectic fixes. – Incorrect payroll can create penalties, back pay liabilities and morale issues. – For businesses, changes to dividends, business rates and wages can squeeze margins unless you plan ahead.
Keep watching HMRC guidance HMRC and the Treasury will publish technical guidance and precise deadlines as rollout progresses. Keep an eye on their updates and speak to your adviser to convert these headlines into a clear plan for your circumstances.
