The new tax year is beginning soon and many of the tax changes announced in the Autumn Budget will finally take effect.
While there is a lot of discussion around what is changing, it is also vital to understand what is staying the same, as this can often have an unforeseen impact on finances if not properly accounted for.
As such, we are looking at what is changing, what is staying the same and how both will impact you.
What taxes are changing in 2026?
No discussion of tax changes in 2026 would be complete without a mention of Making Tax Digital for Income Tax Self-Assessment (MTD ITSA).
Set to roll out over the next few years, 2026 will see MTD ITSA apply to self-employed individuals, landlords and sole traders with an income over £50,000.
Inheritance Tax (IHT) is also undergoing some of the biggest changes in recent times as well.
While some changes are still to come, 2026 will see the £2.5 million cap on 100 per cent relief for Agricultural Property Relief (APR) and Business Property Relief (BPR).
This will see many more estates pulled into the scope of IHT, as any qualifying assets with a combined value above £2.5 million will only be subject to 50 per cent relief.
If you are a business owner who has been hoping to dispose of assets, time may have run out to do so in the more tax-efficient way of the past.
Business Asset Disposal Relief (BADR) is increasing to 18 per cent, resulting in a higher Capital Gains Tax (CGT) bill.
What taxes are staying the same in 2026?
If you have a business that operates in England, Wales or Northern Ireland, the Income Tax rates remain unchanged.
For Scottish businesses, things are slightly more nuanced.
The Starter Rate threshold is not changing, but the Basic and Intermediate Rate thresholds are.
This means that Income Tax will start being paid at £12,571 as usual, but the Basic Rate of 20 per cent will take effect on earnings over £16,538 – up from the previous £15,398.
This is then mirrored by the Intermediate Rate starting at £29,527 rather than the current £27,492.
While this does reduce the tax exposure of workers earning a middling wage, those who are earning the least may find themselves facing more exposure than they did previously.
Due to the increasing National Living Wage (NLW), full-time workers will see over half of their salary exposed to Income Tax for the first time.
Concerns around fiscal drag are being echoed with the ongoing debate around student loan repayments, as the full-time NLW wage will also see repayments on student loans for two of the four plans.
As the student loans were sold on the promise of being paid back by graduate salaries, not the legal minimum, it has caused some concern that static thresholds are becoming more problematic.
Higher earners will likely see more of their wages exposed to the Higher Rate band of Income Tax due to the very same fiscal drag, as the Higher Rate threshold is not changing.
The issue is when fiscal drag increases the on-paper value of wages and pushes people across thresholds, but those increases are not reflected in real-world value, spending power or quality of life.
Poorly managed thresholds can have a ripple effect on the economy, as while it may become possible to take more money in Income Tax, it may dissuade people from working full-time jobs, making it more challenging to find staff.
This can also be mirrored in customers being more selective with their purchases, which can harm businesses that sell non-essential goods or services.
How to prepare for the year ahead
Whether you are set to be impacted by tax changes or static thresholds, our team can support you.
We help you understand your personal tax obligations as well as any considerations that might affect the running of a business.
With the new tax year starting soon, it is worth getting professional financial support sooner rather than later to ensure you are compliant and efficient.
