Welcome to the April 2026 edition of Tax E-News.

We hope you find this useful. If anything raises questions or you’d like to explore the impact on your position, just get in touch.

Making tax digital for income tax is here!

Making Tax Digital (MTD) for income tax has now gone live, marking a significant change for the 2026/27 tax year.

The new regime applies to self-employed individuals and landlords with business and/or property income (total income, not profits) exceeding £50,000 per annum. MTD requires digital record-keeping alongside quarterly submissions to HMRC, with the first update due by 7 August 2026.

The final MTD Regulations were laid before Parliament on 24 March 2026.

If you’re one of the estimated 860,000 individuals entering the regime, it’s worth noting that your 2025/26 tax return still needs to be filed as normal by 31 January 2027. This means you’ll be managing both quarterly updates for 2026/27 and your annual return for the prior year at the same time.

We’ve been supporting clients through the transition to MTD. If you’re not already working with us on this, now’s the time to start planning.

What else is changing in 2026/27?

With each new tax year comes a raft of updates, rates, thresholds and legislation. Here are the key changes from April 2026.

Income tax

Income tax rates, thresholds and bands largely remain aligned with 2025/26.

The key change is to dividend tax rates from 6 April 2026:

• Basic rate band (£0 – £37,700): increases to 10.75% (from 8.75%)
• Higher rate band (£37,701 – £125,140): increases to 35.75% (from 33.75%)
• Additional rate (over £125,140): remains at 39.35%

Corporation tax

The s455 tax charge (on loans to participators in close companies) tracks the dividend upper rate. As a result, it increases to 35.75% for loans and advances made on or after 6 April 2026, where the balance remains outstanding 9 months and 1 day after the period end.

There are also changes to penalties for late-filed corporation tax returns. For returns due on or after 1 April 2026, the new penalties are:

Capital gains tax

From 6 April 2026, CGT rates for gains qualifying for Business Asset Disposal Relief (BADR) and Investors’ Relief (IR) increase to 18%. This follows the previous rise to 14% in April 2025.

VAT

From 1 April 2026, a new relief removes most donations of business goods to charities from the deemed supply VAT rules.

Dividends: HMRC are paying close attention

Consultation: Reporting company payments to participators

A new consultation, ‘Reporting company payments to participators’ proposes additional reporting requirements for close companies.

HMRC’s view is that close companies present a higher risk of error and tax evasion, particularly where the distinction between company and individual is blurred. They believe current reporting does not provide full visibility of these interactions.

Under the proposals, close companies would need to report detailed information on transactions with participators, including:

• Payments (cash, bank transfer or otherwise)
• Loan repayments and write-offs
• Asset sales to the company
• Asset purchases from the company
• Dividends and other distributions
• Any other transfer of value

Salary and wages would remain outside scope, as these are already reported via PAYE.

We’re keeping a close eye on this and will update you as the proposals develop.

New dividend data in 2025/26 self-assessment returns

Following powers introduced in Finance Act 2024, HMRC will begin collecting more detailed data via self-assessment.

For 2025/26 returns, company directors will need to disclose:

• Whether they were a director
• Whether the company was a close company
• Company name and registration number
• Dividends received from the close company
• Their highest percentage shareholding during the year

Taken together with the consultation above and wider disclosure changes, it’s clear HMRC is increasing scrutiny in this area. Ensuring dividend processes are robust, compliant and properly documented will be key.

If you’d like support reviewing this, we’re here to help.

VAT on public electric vehicle charging

In Charge My Street Ltd v HMRC [2026] TC09802, the First Tier Tribunal ruled that VAT on public EV charging can qualify for the 5% reduced rate, rather than the standard 20%.

The case involved charging stations operated by Charge My Street Ltd. The company argued that supplies fell within the reduced rate for domestic fuel and power.

Under VAT rules, electricity supplies below 1,000 kWh per month are treated as domestic. The Tribunal agreed that individual customer usage fell within this threshold, qualifying for the 5% rate.

This challenges HMRC’s long-standing position and could reduce the disparity between home and public charging costs. However, the decision is not yet binding law and is expected to be appealed.

We’ll continue to monitor developments. As ever, VAT remains complex – if you’re unsure about the correct treatment for your business, it’s worth getting clarity.

 
DIARY OF MAIN TAX EVENTS

APRIL / MAY 2026

Content accurate as of 01.04.26