April 2026 Tax Changes: Key Updates for Individuals and Businesses

The UK government has announced a series of significant tax changes set to come into effect from April 2026, affecting individuals and businesses. These measures are designed to simplify tax administration, encourage investment in certain assets, and adjust reliefs and allowances across the board.

As a recap, we breakdown the most notable changes as follows:

Inheritance Tax – Business and Agricultural Property Relief
Business Property Relief (BPR) and Agricultural Property Relief (APR) will now be capped at £2.5 million per individual. Relief above this threshold will only be available at 50% with an IHT rate of 20%. Additionally, shares listed on the Alternative Investment Market (AIM) will qualify for 50% BPR, opening up opportunities for investors in smaller companies.

Capital Gains Tax – Business Asset Disposal Relief
The rate for Business Asset Disposal Relief (formerly Entrepreneurs’ Relief) will increase to 18% from 6 April 2026 in line with the increase to the basic band Capital Gains Tax rate.

Relief	Change	Notes
Business & Agricultural Property Relief (BPR/APR)	Capped at £2.5M per individual; above this only 50% relief	AIM-listed shares now get 50% BPR
Business Asset Disposal Relief	Rate rises to 18%	From 6 April 2026

Income Tax – Making Tax Digital Expansion
From April 2026, Making Tax Digital (MTD) becomes mandatory for landlords and self-employed individuals with a turnover exceeding £50,000. This threshold will drop to £30,000 in April 2027, extending the scope of digital tax reporting across smaller enterprises.

Dividend Tax Changes
Dividend tax rates will rise, with the basic rate increasing from 8.75% to 10.75%, and the higher rate moving from 33.75% to 35.75%. These increases are likely to impact investors relying on dividend income from shares. There is no change to the additional rate which remains at 39.35%.

Rate	Old	New
Basic	8.75%	10.75%
Higher	33.75%	35.75%

Employment and Employee Benefits
Several employment-related changes are being introduced:

The National Minimum Wage will increase, supporting low-income workers.
The working-from-home allowance will be removed.
Employment benefits exemptions are being revised to include eye tests, flu vaccinations, and certain supplies and services used in performing employment duties.

Enterprise Management Incentives (EMI)
The EMI scheme, which allows companies to grant tax-advantaged share options to employees, will expand. Companies with up to 500 employees (up from 250) and gross assets of up to £120 million (up from £30 million) will be eligible, and options can now be held for up to 15 years. This is intended to make it easier for larger businesses to reward key staff with equity incentives.

Capital Allowances and Equipment Leasing
Capital allowances are being adjusted, with the general rate reduced from 18% to 14%. However, a new first-year allowance (FYA) of 40% will apply to leased equipment, encouraging investment in modern business assets.

These changes mark a significant shift in both individual and business taxation in the UK, reflecting the government’s priorities around investment, digitalisation, and employee benefits. Businesses and investors should review their tax planning strategies to take full advantage of the revised reliefs and allowances.

The key takeaways from these changes are: