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April 2026 Tax Changes and What They Mean For Your Business

In this blog post, we cover;

A Month of Change for Business Owners
What’s Changing from April 2026
What This Means For Your Business
Where It’s Worth Reviewing Your Position
Frequently Asked Questions

In this blog post, we cover;

A Month of Change for Business Owners

April is always a key point in the financial calendar, but 2026 brings a cluster of changes that will directly impact how businesses operate, pay staff, and extract profits.
 
While none of these changes are entirely unexpected, the combination of rising costs and shifting tax rates means it’s worth taking a step back and reviewing your current approach.
 
Let’s break down what’s changing, and more importantly, what it means in practice.

UK Tax Changes

What’s Changing from April 2026

1- National Minimum Wage Increases

From 1 April 2026, new mandatory hourly rates come into effect:
  • 21 and over (National Living Wage): £12.71 
  • 18–20 year olds: £10.85 
  • Under 18s & Apprentices: £8.00 
 
The most notable shift is the increase in the 18–20 bracket, as the government continues moving towards a single adult rate.  For businesses with larger or younger workforces, this isn’t just a marginal change…it can have a meaningful impact on overall payroll costs.

2 - Dividend Tax Increase

If you’re a limited company director drawing dividends (profit taken from your company outside of salary), this one’s for you.
 
From 6 April 2026, dividend tax rates increase by 2%:
  • Basic Rate: 8.75% → 10.75% 
  • Higher Rate: 33.75% → 35.75% 
  • Additional Rate: remains at 39.35% 
 
While dividends often remain a tax-efficient option, the gap is narrowing slightly, meaning it’s worth reviewing how you balance salary and dividends going forward. Even small adjustments here can make a noticeable difference over the course of a year.

3 - Capital Gains Tax (Business Asset Disposal Relief)

If you’re planning to sell shares or exit your business, this is a big one. Business Asset Disposal Relief (BADR), which reduces the tax paid when selling a business, is becoming less generous:

  • BADR rate increases from 14% → 18% (April 2026) 
  • Further increase to 20% planned for April 2027 
 
If your exit timeline is flexible, timing could make a significant difference to the tax you pay. Even if a sale isn’t immediate, it’s worth having early conversations so you’re not making decisions under pressure later.

4 - State Pension Increase (Triple Lock)

The State Pension rises by 4.8% to £241.30 per week.

While this doesn’t directly impact most businesses, it’s often linked to wider adjustments across the system. Changes to things like National Insurance thresholds, Employment Allowance, and employer contribution levels can sometimes follow.
 
In other words, it’s one to keep on the radar as it may influence payroll costs indirectly over time.

What This Means For Your Business

Individually, each of these changes is manageable. But together, they point to a clear theme:

Costs are rising, and tax efficiency requires more attention than before. For growing businesses, this typically shows up in a few key areas:
 
  • Higher payroll costs as minimum wage increases take effect. 
  • Reduced net income from dividends.
  • Greater importance of timing when planning exits or asset sales. 
  • More need for forward planning, rather than reactive decisions.
 
This isn’t about drastic change, it’s about staying ahead of the curve and making small, informed adjustments

Where It’s Worth Reviewing Your Position

Periods like this are a good opportunity to sense-check a few things:

Whether your payroll structure still works for your business.

How you’re currently extracting profits.

Whether any longer-term plans (like an exit) need revisiting.

If your forecasting reflects increased costs. 

Often, it’s not about making big changes. It’s about ensuring everything is still aligned with where your business is now.

If you’re unsure where to start, or just want a second pair of eyes on things, this is exactly the kind of review we can help with.

Frequently Asked Questions

Most will feel some impact, particularly through wage increases and dividend tax. The extent depends on your structure, staffing, and how you take income.

Not necessarily straight away, but it’s worth reviewing. A mix of salary and dividends is still common, but the balance may need to be adjusted.

It depends on your circumstances. Timing can affect the tax payable, but it’s important not to rush a decision without considering the wider picture

Possibly. The planned BADR increase in 2027 is already confirmed, and other thresholds may shift alongside wider economic changes.

Tax Changes - Final Thoughts

Final Thoughts

April 2026 isn’t about one major overhaul…it’s about a series of smaller changes that, together, can have a noticeable impact on your business.
 
The key is staying proactive. When you understand how these updates affect your costs, tax position, and future plans, you’re in a much stronger position to respond confidently.
 
If you’d like to talk through how these changes apply to your business, or sense-check your current setup, we’re always here to help.

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