April marks the start of a new tax season and this year is particularly significant because it also signifies the official start of Making Tax Digital for Income Tax for many. There are big changes to get your head around that relate to both this and other areas of tax but to help you stay ahead of the game, we’ve created a handy checklist for the 2026/27 tax year.
Check your dividend strategy
Lots of self-employed individuals pay themselves via dividends. If you do, take note: rates are on the up.
| Tax Band | 2025/26 Rate | 2026/27 Rate |
| Basic Rate | 8.75% | 10.75% |
| Higher Rate | 33.75% | 35.75% |
| Additional Rate | 39.35% | 39.35% (Unchanged) |
The tax-free Dividend Allowance still remains at £500. It just means that if you’re a basic rate taxpayer, those dividends are becoming a little more expensive.
Brush up on capital gains and business disposal
Got plans to sell an asset or part of your business? There are a couple of things you need to know:
- The Annual Exempt Amount for Capital Gains Tax remains at £3,000.
- But the Business Asset Disposal Relief has increased from 14% to 18% as of April 2026. What’s more, this is part of a phased increase so should be factored into any exit strategies.
Watch out for fiscal drag
While the main Income Tax rates haven’t changed, the thresholds remain frozen until 2030. The personal allowance remains at £12,570. As inflation pushes your prices and income up, you might find yourself drifting into a higher tax bracket or even losing your personal allowance – which starts to taper off once you earn over £100,000.
Get to know Making Tax Digital
If your qualifying income was over £50,000 in the 2024/25 tax year, you’re now officially in the MTD era. This means you need to use MTD-compatible software to keep digital records and send quarterly updates to HMRC. If your income was below £50,000, you’re exempt for now but keep an eye on your 25/26 earnings for next year’s threshold.
What’s more, even if you’ve started getting your head around the MTD changes, there’s still some traditional admin to finish off. By 31st January 2027, you need to complete a standard Self Assessment tax return for the 2025/26 tax year. This means you’ll be reporting the past via the old portal while tracking the present via MTD.
Plan for the year ahead
Making Tax Digital and its digital net is widening. By April 2027, the threshold will drop to £30,000. And by April 2028, the threshold is expected to drop to £20,000. If you’re in this bracket, there’s no time to rest, though. Instead, use 2026 to digitise your receipts and bank feeds. Getting into the habit now will save you a massive headache later.
2026 is a bridge between the old way of doing things and a new digital future. And, by ticking off this checklist now, you’re not just staying compliant but giving yourself a clearer picture of your business health.
Ready to get ahead of the changes? Download Coconut today and connect your bank account. We’ll help you track your tax in real-time, so you can focus on growing your business.
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