If you run a small business, 6 April is an important date in the calendar. The start of the new tax year brings a number of changes that could impact your finances.
The 2026-27 tax year starts on Monday 6 April 2026. There’s no shortage of changes for small business owners to be aware of this time around.
From Making Tax Digital to new tax rates and payroll information to update, here are four things to focus on ahead of the new financial year.
1. Prepare for Making Tax Digital for income tax
It’s been a long time coming but Making Tax Digital (MTD) for income tax will finally be introduced from 6 April 2026. It’s estimated that the first phase of MTD will affect 864,000 sole traders and landlords (those earning more than £50,000 a year).
The new system will require taxpayers to keep digital records using HMRC-approved software. They’ll also need to submit quarterly tax updates and a ‘final declaration’ by 31 January each year.
What to do before 6 April:
- check criteria and exemptions to find out if you need to sign up
- sign up and choose a MTD-compatible software
- prepare for first quarterly submission on 7 August 2026
2. Use your tax allowances
There are business tax reliefs and personal allowances you can claim each year to reduce your tax bill
Some allowances and reliefs reset at the end of the tax year (5 April), so it’s important to take advantage before the new financial year starts.
For example, each year you have a ‘use it or lose it’ Individual Savings Account (ISA) allowance of £20,000. You can use an ISA to save money or invest without having to pay tax.
Other allowances to use before the end of the tax year include the dividend allowance, the capital gains tax (CGT) allowance, and the marriage allowance.
What do do before 6 April:
- assess your savings to see if you can use more of your ISA allowance
- plan for the sale of any assets to make sure you maximise your CGT allowance
- speak to an accountant to make sure you’re getting the most out of your tax reliefs and allowances
3. Get to grips with new tax rates
Every April, there are usually some tax rate changes to be aware of and 2026-27 is no different.
Although income tax rates will remain the same for the foreseeable future, here are some upcoming changes:
dividend tax rates are increasing by two per cent (the standard rate to 10.75 per cent and the higher rate to 35.75 per cent)
if you own a premises and operate in the retail, hospitality, or leisure sector, lower business rates multipliers are being introduced for properties with rateable values under £500,000
What to do before 6 April:
- if you pay business rates, check your revaluation as this could affect how much you pay
- if you take dividends out of your business as earnings, review your finances. New rates combined with frozen allowance may make it more efficient to take some earnings as a salary
- speak to an accountant to make sure you’re fully prepared for upcoming changes to tax rates
4. Update payroll if you’re an employer
If you employ people, you’ll need to make sure your payroll is updated for the new financial year.
From April 2026, national living wage and national minimum wage rates are increasing:
- the national living wage is increasing from £12.21 to £12.71 an hour
- the national minimum wage for 18 to 20 year olds is increasing from £10 to £10.85 an hour
- the national minimum wage for under 18s and apprentices of all ages is increasing from £7.55 to £8
What to do before 1 April:
- if you employ younger people (aged 18 to 21), make sure you’re paying them the right wage
- make sure your payroll records are up to date and stored for at least six years
- budget for increased overheads due to higher wages
More guide for small business owners
- Payslip template for small businesses (2026 update)
- Reduce your tax bill by claiming these self-employed expenses
- New tax laws for businesses in 2026 – and Self Assessment shake-up
- Companies House changes for 2026
Ready to set up your cover?
As one of the UK’s biggest business insurance providers, we specialise in public liability insurance and protect more trades than anybody else. Why not take a look now and build a quick, tailored quote?