For an estimated 860,000 sole traders and landlords, Making Tax Digital for Income Tax has now formally arrived. 

No longer looming or “coming soon.” Simply… here.

In other words, it's time to get your digital ducks in a row.

If your gross income exceeded £50,000 in 2024/25, you’re in scope for the 2026/27 tax year.

What does that mean in practice?

• Digital record-keeping becomes mandatory
• Quarterly updates to HMRC
• An end-of-year submission to finalise the position

And one important date to keep quietly in mind:
Your first quarterly update is due by 7 August 2026.

A gentle introduction, if you like. With a deadline.

There is, however, a slight overlap to be aware of. While you’ll be settling into quarterly reporting for 2026/27, your 2025/26 self-assessment tax return is still very much required, with the usual filing deadline of 31 January 2027.

So yes, for a brief period, you’ll be operating both systems.

Think of it as a transitional phase. HMRC certainly does.

The final MTD regulations were laid before Parliament on 24 March 2026, confirming what we already suspected: this isn’t a trial run. It’s the new routine.

HMRC may have written to you. They will not, however, sign you up automatically. This remains one of those rare administrative situations where inaction produces a very reliable outcome: nothing happens.

We’ve been helping clients move across to MTD in a way that feels structured rather than sudden. If your transition isn’t already underway, now is a particularly good time to make it so.

Preferably before August introduces itself.

 

Income Tax – A Still Surface With a Slight Ripple

At first glance, income tax for 2026/27 looks reassuringly unchanged. Thresholds and bands remain frozen at 2025/26 levels.

But dividends have had a quiet adjustment:

• Basic rate band: 10.75% (up from 8.75%)
• Higher rate band: 35.75% (up from 33.75%)
• Additional rate: remains at 39.35%

Nothing dramatic, but enough to make dividend planning slightly less casual and a touch more deliberate.

 

Corporation Tax – Small Changes, Sharper Edges

Corporation tax hasn’t introduced sweeping reforms, but it has made a few targeted adjustments worth noting.

The s455 tax charge (on loans to shareholders in close companies) now aligns with the higher dividend rate:

• Increasing to 35.75% for relevant loans from 6 April 2026

Which makes leaving those loans outstanding feel… incrementally less appealing.

Late filing penalties have also been adjusted for returns due on or after 1 April 2026:

• Missed deadline: £200
• 3 months late: £400
• Third consecutive failure: up to £2,000

A gentle escalation, designed to reward consistency, or at least discourage testing the limits repeatedly.

 

Capital Gains Tax – Relief, Just Slightly Less Generous

For gains qualifying under Business Asset Disposal Relief (BADR) and Investors’ Relief:

• The CGT rate increases to 18% from 6 April 2026

Following last year’s rise to 14%, this continues the gradual upward trend.

Not prohibitive. Just a tad less generous than it once was.

 

VAT – A Few Interesting Twists

Donations to Charity

From 1 April 2026, most donations of business goods to charities will be excluded from deemed-supply VAT rules.

A rare moment where doing something generous doesn’t require quite as much tax consideration afterwards.

EV Charging – A Developing Plot

In Charge My Street Ltd v HMRC (2026), the tribunal found that public EV charging could qualify for the 5% reduced VAT rate, rather than the standard 20%.

A helpful ruling — though not yet binding, and likely to be appealed.

So, for now: interesting, promising but not something to build pricing strategies around just yet.

 

Dividends – HMRC Is Taking a Closer Look

If there’s a theme emerging, it’s visibility.

A new consultation on reporting company payments to participators suggests HMRC wants a clearer picture of how money moves between close companies and their shareholders.

Proposals include reporting:

• Payments and transfers
• Loans and write-offs
• Asset sales and purchases
• Dividends and distributions

At the same time, 2025/26 self-assessment returns will begin collecting additional data, including:

• Directorship status
• Company details
• Dividend income
• Shareholding percentages

In short: more detail, more transparency, and fewer places for ambiguity to quietly sit unnoticed.

“It seemed fine at the time” is unlikely to remain a robust position.

 

CIS Rules – Less Room for Optimism

From April 2026, the Construction Industry Scheme tightens further.

If a business knew — or is deemed to have known — that a payment was linked to fraud, HMRC can:

• Remove gross payment status immediately
• Recover the tax loss
• Apply penalties to both the business and its officers

And if that status is lost, the waiting period to reapply increases to five years.

Optimism is no longer a strategy. Due diligence has been promoted to a core function.

 

A Small Boost for EV Charging (A Rare Uplift)

Not everything is tightening.

EV charge point grants have increased:

• From £350 to up to £500
• Schools can receive up to £2,000 per socket

Combined with existing incentives for electric vehicles, this remains one of the more generously supported areas of the tax system.

A sentence we still don’t write often enough to be entirely comfortable with it.

 

Employers – The Quiet Admin That Matters

As the tax year closes on 5 April, payroll responsibilities make their dependable return.

A quick checklist:

• Submit your final payroll report on or before your last payday
• Update payroll records from 6 April
• Provide P60s by 31 May
• Report expenses and benefits by 6 July

Routine, predictable and only truly routine when completed on time.

 

Home Working – Still Your Responsibility

The Health and Safety Executive has offered a gentle reminder: remote working doesn’t reduce responsibility, it simply relocates it.

Key areas:

• Mental health and workload
• Safe equipment use
• The home working environment

The approach remains sensibly proportionate:

• Keep communication regular
• Encourage openness
• Avoid unspoken overtime expectations
• Ask practical questions

No need for clipboard inspections. Just consistent, reasonable oversight.

 

Late Payments – Help Is (Eventually) On The Way

Late payments continue to cost UK businesses an estimated £11 billion annually.

Proposed changes include:

• Stronger powers for the Small Business Commissioner
• A standard 60-day payment term
• Mandatory interest (8% above base rate)
• Increased scrutiny of large businesses

Legislation is expected.

Timing, as ever, remains politely undefined.

 

In The Meantime: Three Practical Ways to Get Paid Faster

1. Make Paying You Effortless
Clear details, visible due dates, prompt invoicing. Remove friction and payments tend to follow.

2. Set the Tone Early
Payment terms should appear well before the invoice does. Preferably more than once.

3. Follow a Consistent Routine

• Day 1: Friendly reminder
• Day 7: Firmer follow-up
• Day 14: Mention interest

Polite persistence tends to outperform hopeful silence.

 

Diary of Main Tax Events (April – May 2026)

A few key dates to keep within reach:

• 1 April – Corporation Tax (year to 30/06/2025) due
• 5 April – End of 2025/26 tax year
• 6 April – Start of 2026/27 tax year & MTD begins
• 19 April – PAYE, NIC & CIS (to 5 April)
• 30 April – ATED returns and payment
• 1 May – Corporation Tax (year to 31/07/2025)
• 19 May – PAYE, NIC & CIS (to 5 May)

Nothing unexpected. Just quietly immovable.

 

The Practical Takeaway

Across all of this, the theme remains reassuringly consistent:

No sudden shocks. Just a steady increase in expectations.

More reporting. More visibility. More emphasis on getting things right as you go, rather than all at once in January.

Whether it’s Making Tax Digital, dividend reporting, CIS compliance or simply getting invoices paid, the advantage sits firmly with those who plan slightly earlier than strictly necessary.

As ever, we’re here to help you stay ahead of it all — clearly, calmly, and with minimal drama.

Though we reserve the right to raise an eyebrow when tax rules attempt to be… inventive.

Categories: Positive Accountant