Happy New Year!
We hope you had a restful and restorative festive season and indulged in a mince pie (or three). As we look ahead to 2026, we hope you’re ready to make plans, no matter what the year brings. While many aspects of life can be unpredictable, taxes are not. We already have a good understanding of what to expect in 2026.
Many of the tax changes were announced well in advance, during the 2024 and 2025 Budgets. However, the downside of early announcements is that they’re easy to forget and, as has become increasingly common, they sometimes get tweaked, revised, or partially reversed along the way.
So, in this first blog of the year, let’s spend a bit of time together, reminding ourselves of the top tax changes arriving in 2026, and what they might mean for you or your business. New tax rules, new strategy, what 2026 has in store for you?
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Selling your business? BADR just got more expensive
If selling your business is on the horizon, this one is important. From 6 April 2026, the capital gains tax (CGT) rate under Business Asset Disposal Relief (BADR) will increase from 14% to 18%.
Timing, structure, and planning are more important than ever, so if a sale is even a distant possibility, it’s worth revisiting your plans sooner rather than later. You should take advice now.
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Paying yourself with dividends? Time to double-check the maths
From April, there will be an additional 2% tax on dividends drawn from a company. The top dividend tax rate, however, will remain unchanged at 39.35%.
For many years, the low-salary, high-dividend approach has been the go-to remuneration strategy for company directors. Increasingly, though, that’s not always the most tax-efficient option, especially once you factor in dividend tax rises, National Insurance changes, and corporation tax levels.
This doesn’t mean dividends are “bad” just that the answer is no longer one-size-fits-all. It’s a good time to speak with your accountant to review whether your current strategy still stacks up.
If you’re a Myers Clark client, feel free to email your usual manager, who will be happy to help you look at the numbers in more detail.
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Minimum wage rises (as it does every April)
No surprises here, but still worth a reminder. The minimum wage will increase again from April, as it does every year.
If you employ staff, make sure these increases are reflected in your payroll, cash flow forecasts, and budgets. Even modest hourly increases can add up over a year, particularly for businesses with larger teams or part-time staff.
A quick check now can help avoid unpleasant surprises later. We can’t impress the importance of a good cash flow forecast. We don’t need to remind you that good businesses fail due to cash-flow crises. If there is one thing you will do differently this year in your business, it is to maintain a workable cash flow forecast and review and adjust it regularly.
If that sounds like too much hard work, speak to us. If you are not yet working with us, have a look at who we are.
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Planning to invest in new assets? A new 40% allowance arrives
From 1 January 2026, a new 40% first-year allowance (FYA) will be available for qualifying expenditure incurred by companies and unincorporated businesses.
A few key points to note:
- It can be used against leased assets (excluding overseas leasing).
- It cannot be used for cars or second-hand assets.
- It’s most useful when the Annual Investment Allowance (AIA) or other FYAs aren’t available.
This relief won’t suit every situation, but if you’re planning large capital investment in 2026, it’s worth factoring it into your decision-making. As always, the timing of expenditure could make a real difference.
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Thinking of incorporating your business? Extra admin alert
Many business owners consider whether operating through a limited company makes sense and for good reason, because there may be some tax savings. However, incorporation can trigger capital gains tax, so it’s not a decision to rush into. You need to take advice.
In some cases, incorporation relief may be available to defer the gain. What’s changing is the process: from April 2026, any claim for incorporation relief must be included in your self-assessment tax return.
Previously, there was no specific requirement to notify HMRC when transferring a trade into a company. That simplicity is disappearing, so paperwork and advice matter more than ever.
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Passing your business to employees? The rules have shifted
Employee Ownership Trusts (EOTs) have been a popular succession planning tool for many business owners. However, following the last Budget, the relief has been scaled back.
Disposals into an EOT will now receive only half the previous relief, meaning 50% of the gain will be chargeable. The remaining 50% will continue to be held over and taxed on a future disposal.
If you’ve run the numbers in the past, it’s essential to revisit them using the updated rules and, as always, to take up-to-date advice before making decisions.
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IHT changes to APR and BPR: more clarity at last
Inheritance tax reliefs for agricultural and business property have already undergone several changes, causing considerable confusion. This is what is set for next April:
- 100% relief will apply only to the first £2.5 million of combined agricultural and business property.
- Any value above £2.5 million will receive 50% relief.
- This limit is per individual
- From April 2026, the allowance will be transferable to a surviving spouse or civil partner.
In practical terms, this means a couple may be able to pass on up to £5 million of qualifying agricultural and/or business property free of inheritance tax. Estate planning is firmly back on the agenda.
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And finally… Making Tax Digital (MTD)
It looks like this is finally happening after numerous delays. Sole-traders and landlords with a combined income of £50,000 will need to start filing quarterly returns beginning next April.
This will require a different approach to managing your financial affairs. HM Revenue and Customs are not providing free software, so it is down to you to organise this and the quarterly returns.
We can help you. We can get involved as much or as little. So let’s talk. If you are already working with us, contact your normal manager.
If you are not yet working with us, please email enquiries@myersclark.co.uk with a brief explanation of your situation.
You can find full details on MTD here.
Final thoughts
Tax changes rarely arrive quietly, and 2026 is no exception. While none of these changes necessarily require panic, most do require awareness, updated calculations, and timely advice.
If nothing else, consider this blog a friendly nudge to dust off your plans, refresh your assumptions, and start the year feeling informed rather than overwhelmed. And remember: you don’t have to navigate these changes alone. We are here to help.
Here’s to a well-planned (and well-advised) 2026.