What Does the New Financial Year Mean for SMEs?

April marks the start of the new financial tax year for 2026/27. Along with current laws and regulations, the government has outlined numerous changes that will affect SMEs across the country.

We’ve put together an overview of everything you need to know, and how you can prepare to ensure that your cashflow is unaffected and your business is compliant.

What Changes Take Affect in April 2026?

There are a number of changes taking place that can influence SMEs, the level of effect will depend on factors such as staffing numbers and business size.

The 3 main changes coming into force on the 1^st April are:

• National Living Wage Increase
• Updated Employment Rights Act
• Supporting Small Business Relief

Following this, on the 6^th April:

• Making Tax Digital for Income Self Assessment Begins (for those with trading and property income exceeding £50,000)
• Business Asset Disposal Relief CGT Rate Increases
• IHT Business Property & Agricultural Property Relief capped at a combined £2.5m (then attracts 50% relief for assets over that value)
• New Liability for Engagers of Umbrella Companies that don’t pay their tax

Finally, on the 30^th April:

• ATED returns and payments for 2026/27 due for properties held on 1^st April 2026

What Does This Mean for SMEs?

What this means varies on your business type and staffing numbers, with some companies being affected more than others.

National Minimum Wage Increase

If you have staff members, the national minimum wage is increasing from £12.21 to £12.71 for workers aged 21 and over. For workers aged between 18 and 20 – it’s increasing from £10 to £10.85. For under 18s and apprentices from £7.55 to £8 – these increases can have a significant impact on cashflow. It’s important to ensure that wage increases are ready in your system for this date and that you have enough funds to pay these increased wages.

Employment Rights Act Updates

Similarly, with changes to the Employment Rights Act meaning that employees are entitled to Statutory Sick Pay from day one. Day-one family leave means employees are entitled to Paternity leave and Unpaid Parental Leave from their first day of employment. Bereaved Partner’s Paternity Leave has also been introduced, which is a new right to time off following the death of a child’s mother or primary adopter. All of these mean that there is a higher risk of employees being off work, as well as more responsibility to compensate employees for this time off, both of which can cost your business time and money.

As well as this, there are new protections added for collective redundancy and whistleblowing and simpler enforcement through the Fair Work Agency to uphold workers rights and support businesses with compliance.

Supporting Small Business Relief Begins

This change allows bill relief for small businesses if they meet the relevant government criteria:

• Your business property’s bill will increase when the next revaluation happens on 1^st April 2026
• You’ve lost some or all of your small business rate relief, rural relief, retail hospitality and leisure relief or 2023 supporting small business relief

If you’re eligible, your bills will go up no more than £800 or the percentage caps listed below (whichever is greater) for the 2026 to 2027 tax year:

• Up to £20,000 (£28,000 in London) – 5%
• £20,001 (£28,001 in London) to £100,000 – 15%
• Over £100,000 – 30%

Although this is a business relief, the changes coming into effect will most likely result in an increased bill, and you should prepare for this accordingly.

Making Tax Digital for Income Tax Self Assessment Begins

From April 2026, landlords and sole traders will need to join Making Tax Digital (MTD). If you have trading and property gross income exceeding £50,000, you will need to submit your self assessment using the MTD system. This includes, keeping digital records, submitting quarterly updates and filing a final annual digital tax return. As part of this new process, you must use HMRC approved software to track digital records. So it is worth looking into the best software for you to ensure you comply with the MTD rules.

Business Asset Disposal Relief CGT Rate Increases

From 6^th April 2026, the Business Asset Disposal Relief (BADR) rate is increasing from 14% to 18%. The £1 million lifetime limit for qualifying gains has been retained, however, the increase in Capital Gains Tax (CGT) rate under BADR significantly affects the net proceeds that businesses owners can retain when selling.

Previously known as Entrepreneurs’ Relief, BADR is a tax allowing a reduced CGT rate when selling all or part of a qualifying business. It can apply to both owners, partners or shareholders, such as:

• Sole traders, owners or partners selling all or part of their business
• Shareholders selling shares in a trading company or group

IHT Business Property & Agricultural Property Relief Capped at a Combined £2.5m

From the 6^th April, the government is increasing the Agricultural and Business Property Reliefs threshold from £1m to £2.5m. This will allow spouses or civil partners to pass on up to £5m in qualifying agricultural or business assets between them before paying inheritance tax (IHT), on top of existing allowances. This is on the back of concerns from the farming community and businesses surrounding the initial reforms.

New Liability for Engagers of Umbrella Companies That Don’t Pay Their Tax

The government is introducing significant changes to PAYE responsibilities from the 6^th April, which will include umbrella companies. If you are an agency or end client, the rules mean that you are responsible for making sure PAYE is operated correctly if and when an umbrella company employs your workers. If the government were to find that an umbrella company has not paid the correct amount of PAYE, they may look to recover it from them.

ATED Returns and Payments for 2026/27 due for Properties Held on 1^st April 2026

The Annual Tax on Enveloped Dwellings return is due by the 30^th April. This applies to you if your property is within the scope of ATED on 1^st April, or within 30 days of acquisition if your property comes within the scope after 1^st April. For newly built properties, this is slightly different, you will need to submit your return within 90 days of the earliest date when the property either:

• Becomes a dwelling for Council Tax purposes
• Is first occupied

You will need to complete an ATED for each property you own. If you do not file your return on time, you could be charged a penalty and interest.

What Other Notable Changes Take Place Later in 2026?

While most of the significant dates take place in April 2026, there are still some important dates for your diary later in the year:

• May 31^st – Deadline to give employees P60s and details of payrolled benefits for 25/26
• July 19^th – Class 1A NIC due for 25/26 paid non electronically
• July 22^nd – Class 1a NIC due for 25/26 paid electronically
• July 31^st – 2^nd self-assessment payment on account for 25/26
• August 7^th – First quarterly update due for Making Tax Digital for income tax
• October 31^st – Deadline to submit 25/26 tax return by post
• December 30^th – Submit your personal tax return for 25/26 if you want HMRC to collect tax underpayment (below £3,000 through your 27/28 PAYE coding)

These deadlines all related to submitting information regarding tax. It’s important to adhere to them otherwise you could be susceptible to penalties and fines. If you need any support with your cash flow to help adhere or maximise these tax deadlines, our friendly team is here to help you explore your options. Just get in touch to see how we can help.