We’re a month into the 2026/27 tax year, which has significantly transformed the UK tax landscape, affecting individuals, sole traders, landlords, employers, and company directors. Here’s a summary of the most impactful updates we’ve seen, and how you can stay ahead of them.
Tax digitalisation
Making Tax Digital (MTD)
Now mandatory for sole traders and landlords earning £50K+ (combined income across sole trade and/or rental income)
What changes:
- Digital records required
- Quarterly updates
- Final return still due 31 January
MTD Timeline
- £50K+: From now
- £30K-£50K: From April 2027
- £20K-£30K: From April 2028 (projected)
- 12-month penalty grace period.
Tax reporting
Reporting Penalties and Deadlines
- Late Corporation Tax filing penalties double
- MTD: £200 fine after 4 missed submissions
- New reporting requirements for directors
- Penalties for failing to report Company Director/Shareholder position on annual tax return
Personal tax
Non-UK Domicile Reform
- New Foreign section added for settlors of overseas trusts with retained interest
- Required to declare income and gains from non-resident settlor-interest trusts
New section to report benefits received:
- As a transferor
- As a non-transferor
- Under the Close Family Member and Onwards Gifts rules
Winter Fuel Payment Charge
Eligibility for Winter Fuel Payments is now income-tested
Pensioners earning 35,000 or less remain eligible for:
- Winter Fuel Payment (WFP)
- Pension Age Winter Heating Payment (Scotland)
Pensioners earning over 35,000:
- Can opt out via DWP or Social Security Scotland
- Or repay via an income tax charge equal to the full amount received
How it’s collected:
- Self-Assessment taxpayers reclaimed via 2025-26 tax return
- PAYE taxpayers will be adjusted through the 2026-27 tax code
- HMRC will not collect via PAYE for those already in Self-Assessment
Employment
Statutory Sick Pay (SSP)
- Paid from day one (no waiting period)
- Earnings threshold removed
- Covers 1.3M more workers
- Rate: Lower of 80% earnings
Employer Cost Impact
- Review absence policies
- Update payroll systems
- Budget for increased SSP costs
Wages and National Insurance
- National Living Wage now £12.71/hr for 21+
- Employer NI at 15%
- Threshold frozen at £5,000 until 2031
- Employment Allowance now £10,500
Rates and reliefs
Business Rates Relief
Permanent lower rates for:
- Retail
- Hospitality
- Leisure
- Properties under £500K benefit
- Extra relief for pubs and live venues
Key Tax Changes
- Capital Gains (BADR) now 18%
- Dividend tax rates increase by 2%
- Capital allowances reduced from 18% to 14%
What to do now
- Switch to MTD-compatible software
- Update payroll and compliance processes
- Review tax strategy and remuneration
- Plan ahead for rising costs
- Speak to an expert to streamline your tax planning
