What's Changing in April 2026

Employment & Payroll

New Day-One Employment Rights Now in Force

The Employment Rights Act introduced major changes that every employer must act on now. From 6 April 2026, three key rights apply from an employee's first day:

• Statutory Sick Pay (SSP) is now payable from day one of sickness absence. The previous three-day wait no longer applies.
• New fathers and partners can take paternity leave from their first day of employment. The six-month qualifying period has been removed.
• Employees now qualify for unpaid parental leave immediately. The previous one-year service requirement no longer applies.

If you run your own payroll, speak to your provider now. These rules apply to absences starting on or after 6 April 2026.

National Minimum Wage Rates Increased from 1 April 2026

The National Minimum Wage and National Living Wage are the minimum hourly rates you must pay all workers, regardless of business size. New rates took effect on 1 April 2026. You must apply them from the first pay period starting on or after that date.

Working From Home Allowance Removed

The working from home allowance no longer applies from April 2026. It previously allowed employees to claim a weekly £6 deduction for home-working costs without a receipt. Inform any employees who have been claiming this that it is no longer available.

Small Employers' Relief Rate Rises to 9%

The Small Employers' Relief compensation rate has increased from 8.5% to 9%. Check whether this affects your SSP reclaim calculations.

Tax Changes

Making Tax Digital Is Now Mandatory for Income Over £50,000

MTD for Income Tax is mandatory from April 2026 for self-employed individuals and landlords with gross income over £50,000. You must keep digital records and submit quarterly income and expense summaries to HMRC via approved software. This replaces the single annual Self Assessment return. The threshold drops to £30,000 from April 2027. Sign-up is not automatic — contact your Everett King adviser urgently if you are in scope.

Capital Gains Tax — BADR Rate Rises to 18%

The CGT rate for qualifying disposals under Business Asset Disposal Relief (BADR) rose to 18% on 6 April 2026, up from 14%. The £1 million lifetime limit stays in place. On a qualifying gain of £1 million, the tax bill has risen from £100,000 to £180,000. If you are planning a business sale or exit, take advice now.

Inheritance Tax Relief Cap — What Business and Farm Owners Must Know

From 6 April 2026, 100% Inheritance Tax relief for Agricultural Property Relief and Business Property Relief has a combined cap of £2.5 million per individual. Assets above this threshold now attract 50% relief, creating an effective IHT rate of 20%. If you hold agricultural or business property, review your estate planning with us as soon as possible.

Dividend Tax Rates Up by 2%

Dividend tax rates have increased by 2% from April 2026. This brings investment income taxation closer in line with earned income. Review your dividend strategy with your adviser if you draw income this way.

Incorporation Relief — Now Must Be Actively Claimed

Businesses converting to a corporate structure no longer receive incorporation relief automatically. You must now claim it on your Self Assessment return. Missing this claim could result in an unexpected Capital Gains Tax charge.

Construction Industry Scheme Monthly Returns Reinstated

Following the Autumn Budget 2025, contractors must file a CIS return every month from April 2026. This includes nil returns in months where no subcontractors are used. Make sure your processes are updated to meet this obligation.

How Everett King Can Support You

Navigating this many changes at once is not something you should have to do alone. Our team watches everything coming out of GOV.UK so you don't have to. We turn complex government updates into clear, practical steps built around your business.

We can support you with: Making Tax Digital registration, payroll compliance, tax planning, estate planning, and CIS obligations. Get in touch with your Everett King adviser today.