UK Tax Changes April 2026: Self-Employed and Landlord Guide
Key UK tax changes from April 2026 for self-employed people and landlords: Making Tax Digital goes live, dividend rates rise, BADR hits 18%. Act now.
Key Actions
- Check if your qualifying income exceeds £50,000 and sign up for Making Tax Digital
- Note the new dividend tax rates if you receive dividends (10.75% basic, 35.75% higher)
- Review your CGT position if you plan to sell business assets (BADR now 18%)
- Set up MTD-compatible software and digital record keeping before your first quarterly update
- Diarise 7 August 2026 as the deadline for your first MTD quarterly update
The key UK tax changes from April 2026 affect how self-employed people, CIS subcontractors, and landlords report and pay tax. The 2026/27 tax year, starting 6 April 2026, introduces Making Tax Digital for Income Tax, higher dividend tax rates, an increased CGT Business Asset Disposal Relief rate, and more.
This guide covers each self-employed tax change for 2026 in detail, with practical examples and links to further reading where you need more information.
Making Tax Digital for Income Tax Goes Live
The single biggest change from 6 April 2026 is Making Tax Digital (MTD) for Income Tax. This replaces the annual Self Assessment return with quarterly digital reporting for those above the income threshold.
Who is affected (Phase 1):
- Self-employed sole traders and landlords with qualifying income over £50,000
- Qualifying income = total gross income from self-employment and property combined (before expenses)
- Around 780,000 people fall into scope from this date
What you need to do:
- Use MTD-compatible software to keep digital records
- Submit quarterly updates to HMRC summarising your income and expenses
- File a final declaration by 31 January (replacing the traditional Self Assessment return)
First quarterly deadlines (2026/27):
| Period | Deadline |
|---|---|
| 6 April – 5 July 2026 | 7 August 2026 |
| 6 July – 5 October 2026 | 7 November 2026 |
| 6 October – 5 January 2027 | 7 February 2027 |
| 6 January – 5 April 2027 | 7 May 2027 |
Grace period: HMRC will not charge penalty points for late quarterly updates during the first year (2026/27). However, penalties for late final declarations and late payments still apply.
Coming next: The threshold drops to £30,000 from April 2027, and to £20,000 from April 2028 (subject to legislation).
For full details, see our guides on MTD for self-employed and MTD for landlords.
Dividend Tax Rates Increase
From 6 April 2026, dividend tax rates increase by 2 percentage points at the basic and higher rate bands:
| Tax band | 2025/26 rate | 2026/27 rate | Change |
|---|---|---|---|
| Basic rate | 8.75% | 10.75% | +2% |
| Higher rate | 33.75% | 35.75% | +2% |
| Additional rate | 39.35% | 39.35% | No change |
The £500 dividend allowance remains unchanged for 2026/27.
Who this affects: Anyone receiving dividends — including company directors paying themselves through dividends, and investors with shares outside ISAs. This does not affect self-employment income or employment income, which remain at 20%/40%/45%.
Example: James is a higher-rate taxpayer who receives £20,000 in dividends from his limited company.
| 2025/26 | 2026/27 | |
|---|---|---|
| Dividends | £20,000 | £20,000 |
| Less: dividend allowance | −£500 | −£500 |
| Taxable dividends | £19,500 | £19,500 |
| Tax at higher rate | £19,500 × 33.75% = £6,581 | £19,500 × 35.75% = £6,971 |
| Extra tax | £390 |
For anyone comparing sole trader vs company structures, this change makes the limited company route slightly less attractive. See our self-employed vs limited company guide for the updated comparison.
Property and Savings Income Tax Changes (from April 2027)
The government has announced separate tax rates for property and savings income from April 2027 — not April 2026. These are worth noting now for planning purposes:
| Income type | Current rate (2026/27) | New rate (from 2027/28) |
|---|---|---|
| Property basic rate | 20% | 22% |
| Property higher rate | 40% | 42% |
| Property additional rate | 45% | 47% |
| Savings basic rate | 20% | 22% |
| Savings higher rate | 40% | 42% |
| Savings additional rate | 45% | 47% |
For landlords: This means rental profit will be taxed at higher rates from April 2027. Finance cost relief (mortgage interest) will be provided at the property basic rate of 22% rather than the current 20%. Maximising allowable expenses in the current and next tax year becomes even more important. See our guide on mortgage interest relief for how Section 24 works.
For 2026/27: Employment, self-employment, property, and savings income all continue at the existing 20%/40%/45% rates. The changes above take effect one year later.
Capital Gains Tax: Business Asset Disposal Relief Rises to 18%
From 6 April 2026, the CGT rate on qualifying business disposals under Business Asset Disposal Relief (BADR) increases from 14% to 18%.
- The £1 million lifetime limit on BADR remains unchanged
- This affects anyone selling a business, part of a business, or shares in a personal company
- The standard CGT rates (18% basic / 24% higher for non-residential assets) are unchanged
Example: Sarah sells her sole trader business for a gain of £500,000, qualifying for BADR.
| 2025/26 (14%) | 2026/27 (18%) | |
|---|---|---|
| CGT on £500,000 | £70,000 | £90,000 |
| Extra tax | £20,000 |
If you're planning to sell a business or dispose of qualifying assets, the timing matters.
Working From Home: Employee Allowance Removed
From April 2026, the £6 per week tax-free working-from-home allowance for employees is removed. Employees can no longer claim this flat-rate deduction without providing receipts.
This does NOT affect the self-employed. If you're a sole trader working from home, you can still claim:
- The simplified expenses flat rate (£10–£26 per month depending on hours)
- Or a proportion of your actual household costs
See our working from home expenses guide for how to calculate your claim.
UK Tax Rates and Thresholds Unchanged for 2026/27
Several key thresholds remain frozen or unchanged:
| Item | 2026/27 rate/amount |
|---|---|
| Personal allowance | £12,570 (frozen) |
| Basic rate band ceiling | £50,270 (frozen) |
| Higher rate threshold | £50,271–£125,140 |
| Additional rate | 45% (above £125,140) |
| Income Tax on self-employment | 20% / 40% / 45% (unchanged) |
| Class 4 NI (main rate) | 6% on £12,570–£50,270 |
| Class 4 NI (higher rate) | 2% above £50,270 |
| Trading allowance | £1,000 |
| Property allowance | £1,000 |
| Dividend allowance | £500 |
| CGT annual exempt amount | £3,000 |
| VAT registration threshold | £90,000 |
The personal allowance and basic rate band have been frozen since 2021/22 and are expected to remain frozen until at least 2028/29. This means more people are gradually pushed into higher tax bands as their income rises — sometimes called "fiscal drag."
Self-Employed April 2026 Tax Checklist
If you're self-employed:
- Check if your qualifying income exceeds £50,000 — if so, sign up for MTD
- Set up MTD-compatible software and start digital record keeping from 6 April
- Note your first quarterly update deadline: 7 August 2026
- Review whether your business structure is still right — dividend tax rises may affect the sole trader vs limited company calculation
- Budget for your tax bill using the 25–30% rule
If you're a landlord:
- Check if your combined self-employment and property income exceeds £50,000 for MTD
- Start digital record keeping for rental income and expenses
- Note that property tax rates increase from April 2027 — maximise legitimate deductions now
- Review your mortgage interest relief position
Frequently Asked Questions
Who does Making Tax Digital affect from April 2026?
Phase 1 of Making Tax Digital for Income Tax applies only to self-employed people and landlords with qualifying income over £50,000. If your income is below this threshold, you continue filing an annual Self Assessment return as normal. The threshold drops to £30,000 from April 2027.
Do self-employed Income Tax rates change in April 2026?
No. Income Tax rates on self-employment and employment income remain at 20%, 40%, and 45% for 2026/27. The rate increases apply to dividends (from April 2026) and property/savings income (from April 2027).
Will I be penalised if I'm late with my first MTD quarterly update?
HMRC has confirmed a grace period for the first year (2026/27): no penalty points will be issued for late quarterly updates. However, penalties for late final declarations and late tax payments still apply from day one.
How does the dividend tax increase affect company directors?
If you run a limited company and pay yourself through dividends, you'll pay 2% more tax on dividends in the basic and higher rate bands. On £20,000 of dividends taxed at the higher rate, that's an extra £390 per year. The additional rate (39.35%) is unchanged.
This guide is for informational purposes only and does not constitute tax, legal, or financial advice. Tax rules change frequently. Always verify current requirements on GOV.UK or consult a qualified accountant for your specific situation.