April 2026 Newsletter

As the 2026/27 tax year begins, April is one of the busiest and most important months in the tax calendar. This year, the timing feels even more pronounced because Easter falls right at the start of the new tax year, with Good Friday on 3 April and Easter Monday on 6 April in England and Wales. That seasonal break will be welcome for many, but it also means payroll, payment runs, staffing and reporting timetables may need a little more planning than usual.

A number of changes now move from announcement into day-to-day reality. Making Tax Digital for Income Tax is now live for the first group of taxpayers from 6 April, employers are working with new payroll settings and tax codes, statutory wage increases take effect from 1 April, and companies and directors may also need to reassess filing processes, investment decisions and profit extraction planning for the year ahead.

For business owners, landlords and individuals, April is not just about tidying up the previous year. It is about implementation. Systems, payroll, reporting, deadlines and record-keeping all need to be right from the start of the new tax year, particularly where Easter bank holidays may affect normal working patterns and turnaround times.

In this edition, we look at the biggest April changes, what they mean in practice, and the steps worth taking now to stay compliant and ahead of the curve.

Making Tax Digital for Income Tax Goes Live

From 6 April, sole traders and landlords with qualifying income above £50,000 are required to comply with Making Tax Digital for Income Tax. This means keeping digital records, using compatible software, sending quarterly updates, and completing a final declaration after the tax year-end. The threshold is due to be reduced to £30,000 from April 2027.

This is one of the most significant changes to personal tax reporting in years. For those affected, the question is no longer whether MTD is coming. It is now live. Quarterly updates are not payment deadlines, but they do require more regular record-keeping and stronger systems throughout the year. Businesses and landlords that have previously left bookkeeping until year-end may find the transition difficult if they have not already moved to a digital process.

If you require assistance or would like to learn more, please read our dedicated article here or get in touch with our team.

New Payroll Year: Tax Codes, Thresholds and Employer Checks

April is also the start of the new payroll year, so employers should ensure payroll software, tax codes, and thresholds are all updated correctly.

April is also the start of the new payroll year, so employers should ensure payroll software, tax codes and thresholds are all updated correctly. HMRC’s P9X guidance for 2026/27 confirms that, unless HMRC has issued a new code, employers should carry forward the authorised tax code from the 2025/26 payroll record, but should not carry over any week 1 or month 1 markings. HMRC’s employer thresholds guidance also sets out the rates and thresholds to use from 6 April 2026 to 5 April 2027.

In practice, this makes April a good time to check payroll setup, employee codes, National Insurance thresholds and any payrolling of benefits arrangements before errors carry into the rest of the year. With Easter arriving at the start of the tax year, employers may also want to double-check payroll cut-off dates and payment timetables.

National Living Wage and Minimum Wage Increases From 1 April

From 1 April, the National Living Wage and National Minimum Wage rates increased again.

GOV.UK confirms the new headline rates as follows:

• £12.71 per hour for workers aged 21 and over
• £10.85 per hour for those aged 18 to 20
• £8.00 per hour for 16 to 17-year-olds and apprentices

For many employers, the impact will be wider than the employees directly affected by minimum rates. Wage rises at the lower end of the structure often create pressure further up the payroll as businesses try to preserve pay differentials and manage recruitment, retention and pricing. This is particularly relevant in labour-intensive sectors, where even modest increases in hourly rates can have a noticeable annual cost effect.

Dividend Tax Rates Rise From 6 April

A major April headline for directors and shareholders is the change to dividend tax rates from 6 April. HMRC’s technical note confirms that the legislation relating to the dividend rates applies to distributions and loans or benefits conferred on participators from close companies made on or after 6 April, and the updated rates include an ordinary dividend rate of 10.75% and an upper dividend rate of 35.75%.

That makes April a particularly important time for owner-managed companies to review how profits are being extracted. The balance between salary, dividends and pension contributions may now need a fresh look, especially as companies face higher wage costs and tighter cash flow.

Higher Tax Changes on the Horizon for Landlords

Landlords may also want to keep an eye on wider tax changes affecting property income. From 6 April, dividend tax rates are increasing, which may affect those who hold property through a limited company and take profits as dividends. Looking further ahead, the government also plans to introduce separate income tax rates for property income from April 2027, meaning some individual landlords could face higher tax bills in future. These changes may prompt a review of how property is owned, how profits are extracted, and whether existing tax planning remains efficient.

Companies Face Higher Corporation Tax Late Filing Penalties

Another important April change is the increase in fixed penalties for the late filing of Company Tax Returns. HMRC states that the increased penalties apply to returns with a filing date on or after 1 April.

For companies that already struggle with filing discipline, this is worth flagging clearly. Late filing has always carried risks, but from April, the cost of getting it wrong is higher. For businesses with year ends approaching, this is a timely reminder to keep statutory accounts and Corporation Tax compliance on track.

P60s, P11Ds and Benefits Reporting: What Employers Should Do Now

April and May are also the practical start of the year-end payroll and benefits reporting cycle. HMRC says employers must give a P60 to every employee on the payroll on 5 April, and the deadline to provide the form is 31 May. HMRC also confirms that expenses and benefits must generally be reported by 6 July, with the same deadline applying for P11D(b) reporting of Class 1A National Insurance.

This also marks an important transition point for employers. For most employers, the coming tax year is expected to be the last routine year of P11D reporting before mandatory payrolling of most benefits in kind begins from April 2027. That makes April a useful time to review whether all payroll data for 2025/26 has been finalised correctly, whether benefits are being payrolled or reported separately, and what information will be needed for P11D and P11D(b) filing later in the summer, while also preparing for the move to mandatory payrolling.

Capital Allowances Changes Worth Reviewing

April also brings changes to capital allowances that may affect investment decisions for some businesses. ICAEW notes that, from 1 April for corporation tax and 6 April for income tax, the main rate writing-down allowance reduces from 18% to 14%, while a new 40% first-year allowance is available for qualifying main-rate expenditure incurred on or after 1 January 2026.

For businesses planning capital spend, this makes timing and categorisation more important, particularly where expenditure is not fully covered by accelerated reliefs. It is a useful reminder to review planned investment carefully rather than assuming the position is unchanged from last year.

New VAT Relief for Donated Goods to Charity

A less widely reported April change is the introduction of a new VAT relief for eligible goods donated by businesses to charities. HMRC says the relief removes the requirement for businesses to account for VAT on eligible goods that are donated for onward distribution or use in a charity or eligible organisation’s services, and the government’s summary of responses says the new relief comes into force on 1 April.

For businesses with surplus stock, this may make charitable donations more attractive and more tax-efficient than they have been in the past. Where relevant, it is worth reviewing stock disposal and donation policies in light of the new rules.

Construction Industry Scheme Updates

Construction businesses should also be aware that April brings changes affecting the Construction Industry Scheme. ICAEW’s 2026/27 business tax overview highlights CIS updates as part of the wider package of new tax-year changes taking effect alongside MTD, capital allowances changes and the new VAT relief for charitable donations.

While not every client will be affected, this is another example of how the new tax year is bringing more detailed compliance changes alongside the larger headline reforms. For contractors and subcontractors, it is sensible to review CIS processes early in the year to ensure records and deductions are being handled correctly.

Easter, Bank Holidays and April Planning

This year, Easter falls right at the start of the new tax year, with Good Friday on 3 April and Easter Monday on 6 April in England and Wales. The next bank holidays are on 4 May and 25 May.

Bank holidays can affect staffing, payroll cut-off dates, payment runs, opening hours and client response times. When wages, supplier payments, or reporting work are typically handled around weekends or month-end, it is sensible to plan ahead to avoid unnecessary delays. For employers and business owners, April is therefore not just a tax month but also a practical planning month.

What Businesses Should Do Now

For many businesses, April is the point where awareness needs to turn into action. Employers should check payroll software, tax codes and thresholds for the new year, confirm that payment dates around Easter and the bank holidays are being handled correctly, and make sure P60 and benefits reporting deadlines are diarised. Sole traders and landlords should confirm whether they fall within the first phase of Making Tax Digital for Income Tax, while companies may also want to review dividend planning, capital expenditure and filing deadlines early in the new year.

In many cases, the biggest risk is not a lack of awareness of the rules, but leaving practical changes too late. Early action usually makes implementation smoother, particularly in a month where the Easter break can shorten working weeks and disrupt normal timetables.

Diary of Main Tax Events

April / May 2026

ATED Returns: Key Submission Deadlines

If you own UK residential property through a company and it falls within the scope of the Annual Tax on Enveloped Dwellings (ATED), it is important to be aware of the deadlines for submitting your ATED return.

Normally, an ATED return must be submitted:

• By 30 April, if the property is within the scope of ATED on 1 April at the start of the chargeable period.
• Within 30 days of acquisition, if the property comes within the scope of ATED after 1 April.

For newly built properties, the deadline is extended. In these cases, the ATED return must be submitted within 90 days of the earliest date on which the property either becomes a dwelling for Council Tax purposes or is first occupied.

ATED returns should only be submitted on or after 1 April for the relevant chargeable period. Submitting too early can cause processing issues, while missing deadlines may result in penalties.

If you are unsure whether your property is within the scope of ATED or which deadline applies, we can help you assess your position and ensure returns are submitted correctly and on time.

Looking Ahead

April is a genuinely substantial month for businesses, landlords and individuals. The start of the new tax year already carries plenty of administrative pressure, and this year that is sharpened by Easter and the early bank holiday weekend falling right at the point where many businesses are updating payroll, reviewing reporting systems and adjusting to new rules.

Making Tax Digital for Income Tax is now live for the first group of taxpayers. Payroll rates and tax codes have rolled into the new year; wage costs have increased; dividend tax has risen; companies face tougher late-filing penalties; and several other technical changes are now in force. Alongside the usual P60 and ATED deadlines, the overall picture is clear: the new tax year has started with a strong emphasis on digital compliance, timely reporting and getting systems right from the outset.

At Mercian Accountants, we are here to help clients understand what these changes mean in practice and put the right processes in place for the year ahead. If you would like support reviewing your reporting systems, payroll processes, tax planning or filing obligations for 2026/27, please contact our team.

N.B. This document is for information only and does not constitute tax advice.

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