UK Spring Budget 2026: key tax changes for businesses and individuals
If you have been searching for a major tax reset this spring, the first thing to know is that 2026 did not bring a full Spring Budget. Instead, the Chancellor delivered the Spring Forecast on 3 March 2026, alongside the latest Office for Budget Responsibility outlook. That matters because many of the key tax issues affecting you this year are not brand-new headline giveaways. They are measures already in the pipeline that are now getting closer, becoming law, or starting from April 2026.
For you, that means this is less about one dramatic announcement and more about practical tax planning. If you run a company, work for yourself, receive dividends, own rental property, or manage staff, the 2026 to 2027 tax year is one where detail really matters. Good record-keeping, regular reviews, and early action can help you avoid expensive surprises. That is where support with bookkeeping, annual statutory accounts, and an outsourced finance department can make a real difference.
Income tax thresholds are still frozen
One of the biggest pressures on individuals is still fiscal drag. The Personal Allowance remains at £12,570, the basic rate limit at £37,700, and the higher-rate threshold at £50,270. The government has already legislated to keep the main thresholds frozen beyond April 2028, with the higher-rate threshold also staying at £50,270 until 5 April 2031.
In simple terms, if your income rises but the thresholds do not, more of your earnings can be pulled into higher tax bands over time.
That has a real impact on employees, directors, and higher earners who may not feel significantly better off even if their pay increases. If you have more than one source of income, such as salary, dividends, rent, or side income, it is worth reviewing the full picture rather than looking at each income stream in isolation.
If your affairs are becoming more complex, help with personal tax returns and Xero bookkeeping can make planning much easier.
Dividend tax is higher from 6 April 2026
If you are a company director taking profits through dividends, one of the clearest tax changes is the rise in dividend tax rates from 6 April 2026. The ordinary rate increases from 8.75% to 10.75%, and the upper rate rises from 33.75% to 35.75%. The additional rate remains 39.35%. This was announced previously, but it is now a live planning issue for the new tax year.
For you, that means the usual salary-versus-dividend conversation deserves another look. The most tax-efficient mix will depend on profit levels, other personal income, pension planning, and how much you actually need to extract from the business.
There is no one-size-fits-all answer, but relying on last year’s approach without checking the numbers could cost you more than necessary. This is particularly relevant if you are growing a limited company or need advice as one of the accountants for start-ups clients FHP supports.
Business sales are becoming more expensive under BADR
If you are thinking about selling all or part of your business, Business Asset Disposal Relief remains important, but the rate has changed. GOV.UK confirms that qualifying disposals are taxed at 14% from 6 April 2025 and that disposals qualifying for BADR on or after 6 April 2026 are taxed at 18%. That means timing has become more significant for business owners considering an exit, share disposal, or wider restructuring.
This will not affect every business owner, because eligibility rules still matter, but it does mean you should not leave succession or exit planning too late. If a transaction is already being discussed, you may want to review the tax implications early and make sure your records are in shape for due diligence. Services such as company tax returns and company secretarial services can help keep the groundwork in order.
Making Tax Digital moves from theory to reality
For many sole traders and landlords, the biggest practical change is Making Tax Digital for Income Tax. HMRC states that from 6 April 2026, sole traders and landlords with qualifying income over £50,000 must use MTD for Income Tax.
The threshold then drops to £30,000 from 6 April 2027, and the government has also set out plans to lower it again to £20,000 from April 2028. HMRC has also confirmed that for taxpayers mandated from April 2026, penalty points for late quarterly updates will not apply in the first tax year, although late payment penalties and other filing penalties can still apply.
For you, this means digital record-keeping is no longer something to think about “later”. If you are self-employed or receive rental income, now is the time to review how you keep records, what software you use, and whether your current process is good enough for quarterly reporting. This is especially relevant if you need support with VAT return services, landlord accountants, or property tax accountants.
Employers should also look ahead to benefits reporting
If you employ staff, another important change is coming into view. HMRC’s draft guidance says that from April 2027, most benefits in kind and expenses will need to be reported through the Full Payment Submission process in real time, rather than the older year-end reporting route for most items.
HMRC has also published a March 2026 measure to remove the option for employers to newly register for voluntary real-time reporting from 6 April 2026 onwards for the 2027 to 2028 tax year and after.
That may sound like a future problem, but payroll systems and internal processes often take time to adapt. If you offer benefits or taxable expenses, this is a good year to review how those benefits are tracked and reported. Reliable payroll services can help you prepare well before the rules become mandatory.
What this means for you now
The main message from spring 2026 is simple. There was no dramatic giveaway Budget, but there are still important tax changes and compliance developments that can affect how much you pay, how you report, and how well prepared you are for the year ahead. Frozen thresholds are still dragging more income into higher tax, dividend tax is rising from April 2026, BADR is becoming less generous for qualifying disposals from the same date, and Making Tax Digital is now right on the doorstep for many sole traders and landlords.
If you want to stay ahead of these changes, this is a good time to review your structure, your records, and your tax position. Whether you need help as a business owner, landlord, or individual taxpayer, FHP Accounting can help you make sense of the numbers and plan with confidence. To talk through your situation, visit the contact page and arrange a conversation with the team.
I lead FHP Accounting, an accountancy practice specialising in Commercial and Residential Property Accounting. Our goal is to make the administration of running property portfolios easier for landlords, managers, and investors — allowing you to focus on what you do best, while we take care of everything behind the scenes.
