There is something almost steadying about a specific deadline.
In a recent piece, we wrote about the ambient pressures facing Richmond businesses right now, the energy shock, the AI uncertainty, the compounding weight of things that are largely outside anyone’s direct control. Those forces are real, and they are not going away quickly. But they are also, by their nature, things you can only interpret and plan around rather than resolve.
April is different. April brings a specific set of changes, with known dates, known rates and known obligations. That is actually useful information. It means there is something concrete to prepare for, something where the right response is not watching and waiting but getting organised, checking a few numbers, and making sure the right conversations happen before the tax year turns rather than after it.
That is what this article is for.
Several of the changes arriving in April 2026 are significant in isolation. In combination, for businesses that have not yet worked through their implications, they arrive with some force. The dividend tax rates are going up. Thresholds remain frozen, quietly pulling more income into higher bands. The National Living Wage is rising again, with knock-on effects up the pay structure. Employment law is changing in ways that affect how businesses manage sickness, redundancy and new starters. Making Tax Digital becomes mandatory for a substantial group of sole traders and landlords. And Richmond’s business rates are being recalculated on a new basis for the first time since 2021.
None of these individually is unmanageable. Together, they require a few hours of careful attention before 6 April, not panic, but prompt and considered thought.
What you will learn
- Why the April 2026 dividend tax rise matters more for Richmond’s owner-directors than the headline 2 per cent figure suggests, and what to consider before the tax year turns
- How frozen income tax thresholds are quietly increasing the real tax burden on professionals and directors without any headline rate change
- Which Employment Rights Act changes take effect from 6 April 2026, what they mean in practice for smaller employers, and where the financial risk is concentrated
- Who is now caught by Making Tax Digital for Income Tax, what they need to do before April, and who will be caught in subsequent years
- What the business rates revaluation means for Richmond premises, and why the headline changes mask a more complex picture for individual businesses
- How to approach this cluster of changes as a sequence of manageable decisions rather than an overwhelming compliance burden
The dividend and threshold changes: what they actually mean for owner-directors
The headline is familiar by now. From 6 April 2026, dividend tax rates rise by 2 percentage points for basic and higher rate taxpayers. The basic rate moves from 8.75 per cent to 10.75 per cent. The higher rate moves from 33.75 per cent to 35.75 per cent. The additional rate stays at 39.35 per cent.
That sounds modest. In practice, for the typical director-shareholder of a Richmond SME, the effect is more material than the percentages alone suggest.
Most owner-directors of small limited companies pay themselves through a combination of a modest salary, usually set at or just above the secondary National Insurance threshold to minimise employer NI while maintaining a National Insurance contribution record, and dividends drawn from the company’s post-tax profits. This structure remains legitimate and continues to make sense after April 2026. The maths simply change. A director drawing £50,000 in dividends above their salary will pay roughly £1,000 more in tax on those dividends in 2026/27 than they did in 2025/26. At £75,000 in dividends, the additional cost is closer to £1,500. These are not dramatic numbers individually, but they compound with other changes, and they arrive in the same April as the frozen thresholds, which have a different but related effect.
The frozen threshold issue is worth understanding separately, because it operates silently.
Since 2022, the personal allowance, the basic rate limit and the higher rate threshold have all been frozen in cash terms. They will remain frozen until at least April 2031. What this means in practice is that as earnings rise with inflation each year, more income is pulled into higher tax bands without any rate change appearing in the headline news. A director whose total income sat comfortably within the basic rate band three years ago may now find a portion of their dividend income crossing into the higher rate band, simply because their drawings have grown modestly with the cost of living. HMRC collects more revenue. No announcement was made. The director’s tax bill has risen nonetheless. This effect, sometimes called fiscal drag, is the government’s most reliable source of stealth revenue, and it has been working particularly hard over the past four years.
There is a specific and time-sensitive point here for directors who intended to draw dividends in the coming weeks.
Dividends are taxed in the year they are declared, not the year they are received. A dividend declared by a board resolution before 5 April 2026 falls within the 2025/26 tax year and is taxed at current rates. A dividend declared on 6 April 2026 falls within 2026/27, at the higher rates. For directors who were planning to draw dividends in the near term regardless, the timing of a board resolution can make a meaningful difference, and it costs nothing to act on. This is not tax avoidance. It is simply using the rules that exist. If you have not had a conversation with your accountant about this in the last few weeks, it is worth doing promptly, before the window closes.
A director we work with in Richmond, running a consulting firm with modest but consistent profits, mentioned in a recent conversation that she had been planning to draw a larger dividend in May once a client payment cleared. When we looked at the timing together, it became clear that drawing at least part of that dividend before 6 April, against profits already in the company, would save her several hundred pounds at no commercial cost to the business. She had not thought about the declaration date. She had assumed, as most people do, that the payment date was what mattered. It does not. The resolution date does.
The dividend allowance, the amount of dividend income that can be received tax-free, remains at £500 for 2026/27. Combined with the frozen thresholds and rising rates, the overall direction is clear: dividend income is being taxed progressively more like earned income. The structure of salary plus dividends still makes sense for most owner-directors. But the margin of advantage is narrower than it was, and the case for reviewing your specific numbers annually is stronger than ever. A personal tax planning review before April is exactly the kind of conversation that pays for itself.
April 2026: key rates and thresholds at a glance |
Dividend tax from 6 April 2026: Basic rate 10.75% (up from 8.75%) | Higher rate 35.75% (up from 33.75%) | Additional rate 39.35% (unchanged)
Dividend allowance: £500 (unchanged)
Income tax thresholds: Frozen until April 2031. Personal allowance £12,570 | Higher rate threshold £50,270
Business Asset Disposal Relief: CGT rate on qualifying disposals rises from 14% to 18% from 6 April 2026
Corporation Tax: rates unchanged. Late filing penalties double from 1 April 2026.
National Living Wage from 1 April 2026: Age 21+ rises to £12.71/hr | Age 18-20 rises to £10.85 | Under 18 and apprentices rise to £8.00
One further change in this cluster deserves a mention for any director considering a business sale or restructure in the near future. The capital gains tax rate that applies when claiming Business Asset Disposal Relief rises from 14 per cent to 18 per cent from 6 April 2026. If you are in the early stages of planning a disposal, the timing implications are material and the deadline is close. This is one area where a conversation this week, rather than next month, could matter significantly.
The Employment Rights Act changes: what arrives in April and what is still coming
The Employment Rights Act 2025 is, by any measure, the most significant change to UK employment law in a generation.
It will reshape the employment relationship across 2026 and 2027 through a phased series of changes, and the April 2026 wave is the first substantial one. Understanding which parts are live now, which are confirmed for later, and which are still being consulted on matters, because the risk profile for employers is very different across those categories. Getting muddled between them, either assuming everything is already in force or assuming nothing is yet, creates real exposure.
Three changes take effect from 6 April 2026 that most smaller employers will feel directly.
The first is Statutory Sick Pay. From 6 April, SSP becomes payable from the first qualifying day of sickness absence. The current three waiting days, during which employers pay nothing unless their contract is more generous, are removed. At the same time, the Lower Earnings Limit gateway is removed, which means employees who previously earned too little to qualify for SSP become eligible. For businesses with a mix of part-time, lower-paid or variable-hours staff, this can increase both the frequency of SSP payments and the administrative work involved in tracking them. The financial impact per absence is modest. The cumulative effect across a year, in a business with high staff turnover or a lot of short-term sickness, can be more meaningful than it appears on a single calculation. The practical response is to check that your payroll software is set up correctly, that your absence management processes are clear, and that your managers know what to tell employees when they call in sick.
The second change concerns collective redundancy.
The maximum protective award for failing to properly inform and consult in a collective redundancy doubles from 90 days’ pay to 180 days’ pay per affected employee, from 6 April 2026. Collective redundancy rules are triggered when a business proposes to dismiss 20 or more employees at one establishment within 90 days. For most Richmond SMEs, this threshold sounds remote. In our experience, the businesses that get caught are not those who set out to ignore the rules. They are those who move quickly under commercial pressure, who underestimate how fast headcount reductions add up across a team, or who assume the rules only apply to large-scale redundancy programmes. The doubling of the potential award materially raises the cost of getting this wrong, and it is worth a brief conversation with your employment adviser before any significant restructuring, not after.
Third, paternity leave and ordinary unpaid parental leave become day-one rights from 6 April. Employees no longer need any qualifying service to be eligible. For most businesses, this is a modest operational adjustment rather than a financial shock. But it does mean that a new employee who starts on 7 April and needs to take paternity leave the following week is entitled to it. Getting payroll and HR processes updated before April is simpler than correcting them under pressure after a complaint.
What is not yet in force, and is worth noting separately, is the change to unfair dismissal qualifying periods. Under the Employment Rights Act, the current two-year qualifying period will reduce to six months. This does not take effect until January 2027, and it applies to employees whose employment begins on or after July 2026. Businesses hiring this spring and summer are not yet affected. The time to prepare for that change is over the next few months, not today. We will cover it in detail as the implementation date approaches.
Making Tax Digital: who is affected now, and who is next
From 6 April 2026, Making Tax Digital for Income Tax becomes mandatory for sole traders and landlords whose qualifying income exceeded £50,000 in the 2024-25 tax year.
This is not a minor administrative change. MTD for Income Tax replaces the existing annual Self Assessment cycle with a requirement to keep digital records and submit quarterly summaries of income and expenses to HMRC, followed by a final declaration at the end of the year. For anyone used to gathering their records once a year and filing a return in January, the shift to quarterly reporting represents a genuine change in how financial admin is organised throughout the year.
The threshold drops to £30,000 qualifying income from April 2027, and to £20,000 from April 2028. This matters for anyone not caught in the first wave: the question is not whether MTD will apply to you, but when. Starting to think about compatible software and record-keeping habits now tends to make the transition easier whenever the threshold arrives.
For those caught by the April 2026 threshold, the immediate requirements are specific.
You need HMRC-compatible software capable of submitting quarterly updates, and you need to be signed up for MTD before your first quarterly period begins. If you have been using a spreadsheet, or relying on a shoebox of receipts and an annual session with your accountant, those approaches are no longer compliant once you are in the MTD regime. Getting cloud accounting set up properly, with a system that both you and your accountant can use throughout the year, is the sensible foundation. It also tends to produce better financial visibility as a side effect, which has genuine business value beyond the compliance requirement itself.
There is an important nuance for people who are both employed and self-employed, or who have both employment income and rental income. The £50,000 threshold refers to qualifying income from self-employment and property combined, not total income. A person earning £40,000 in employment income and £15,000 from a rental property is not yet caught. A person earning £30,000 in employment and £25,000 from property is not caught either, even though their total income is £55,000, because the qualifying income from self-employment and property is only £25,000. Understanding which income streams count towards the threshold is worth checking carefully.
Our guide to Self Assessment obligations for Richmond individuals covers the broader picture of who needs to report what to HMRC and how the different income streams interact.
One further point. The move to quarterly reporting does not remove the obligation to file an annual Self Assessment return. It adds quarterly submissions to it. The annual final declaration remains, and it is where adjustments, reliefs, pension contributions and other year-end items are finalised. MTD changes the rhythm of reporting, not its ultimate scope.
The cost base changes: wages, rates and what they mean together
Two further changes arrive in April that do not involve new legislation but do affect the cost of running a business in Richmond in ways that compound with everything else described above.
The National Living Wage rises to £12.71 per hour from 1 April 2026 for workers aged 21 and over. The rate for workers aged 18 to 20 rises to £10.85, and the rates for under-18s and apprentices rise to £8.00. These are percentage increases, not just cash increases, and the percentage rises for younger workers are proportionally larger than the headline adult rate, which the government has been doing deliberately to narrow the gap between age bands over time.
For businesses that employ staff at or near the minimum wage, the direct cost impact is clear. What is less often noticed is the compression effect further up the pay scale. An experienced team member earning £15 per hour does not expect to remain on £15 per hour when a new starter earns £12.71 from their first day. Pay structures that were well-differentiated last year can feel flat very quickly when the floor rises steeply. Businesses that have not reviewed their pay bands alongside the NLW increase risk a quiet but real morale problem among staff who feel their experience and tenure are no longer properly reflected in their pay. The sensible response is to model the full pay structure, not just the minimum wage lines, and consider where adjustments are needed before April rather than reacting to conversations in May.
The business rates picture in Richmond is more complex.
From 1 April 2026, rateable values across England are updated using a new valuation date of 1 April 2024, replacing the previous valuation date of 1 April 2021. For properties where market rents have risen significantly between those two dates, rateable values will increase. For properties where the market has been more stable, the effect may be modest. The change is not uniform, and businesses on the same street can have very different outcomes depending on their specific property type and the movement of rents in their particular market.
The transitional relief scheme limits how sharply bills can rise in any single year, which provides some cushion for businesses facing large increases. But transitional relief is temporary, meaning the full new liability will eventually come through even if it is phased. For businesses currently receiving the retail, hospitality and leisure multiplier relief, the temporary percentage discounts are being replaced by permanently lower multipliers for eligible property types. For most qualifying businesses, this represents broadly similar support, but the mechanics are different and it is worth checking that your property has been classified correctly to ensure you are receiving the right multiplier. If you believe your rateable value is wrong, you can appeal through your business rates valuation account on GOV.UK, and the transitional relief period is the best time to do it.
Richmond Council has been publicly lobbying for the business rates relief on pubs and live music venues to be extended to independent cafes, small hotels and restaurants. That lobbying has not yet produced a policy change. Hospitality businesses in the borough that were relying on the previous RHL relief and are not covered by the new pubs-specific provision need to have incorporated their new rates liability into their cashflow planning. The financial control disciplines that apply to any cost change apply here: visibility first, planning second, reaction last.
Approaching all of this without being overwhelmed
Six April arrives in two and a half weeks.
That is not a comfortable amount of time, but it is enough to do what needs to be done, provided the response is focused rather than scattered. The businesses that handle this kind of clustered change most effectively are usually those that separate the genuinely time-sensitive decisions from the ones that can be addressed over the following months, and deal with the former promptly rather than deferring everything.
In the genuinely time-sensitive category, ahead of 6 April, sit two things in particular. The first is the dividend timing question. If you are a director planning to draw dividends in the near future, a conversation with your accountant about the declaration date and the 2025/26 versus 2026/27 tax year boundary is worth having this week. The second is Making Tax Digital sign-up and software readiness, for anyone in the first qualifying cohort. HMRC’s systems for MTD sign-up can be slow, and leaving this to the last few days of March creates unnecessary risk.
In the important-but-not-this-week category sit several of the employment changes.
Updating your absence policy and payroll settings for the SSP changes, briefing managers on the day-one parental leave entitlement, reviewing your pay structure against the NLW increase, and checking that your contracts and redundancy procedures reflect the new protective award limit are all important. None of them requires a midnight scramble. What they require is a few hours of organised attention over the next two to three weeks, ideally with an adviser who knows your specific business rather than a generic checklist from the internet.
The business rates question is slightly different, because the recalculation is happening whether or not you engage with it. The question is whether your new rateable value looks right, whether you are on the correct multiplier for your property type, and whether there is a case for appeal. Checking these things costs nothing and takes a short time. Not checking them and discovering twelve months into the new rate period that you have been paying the wrong amount is a more annoying problem to resolve.
What we have found, working with businesses across Richmond and South West London through previous periods of multiple simultaneous changes, is that the owners who come through them most steadily are those who treat the cluster as a project with discrete steps rather than a wall of anxiety to be either ignored or catastrophised. Write down the specific decisions that need to be made. Assign each one a date by which it needs to be done. Get the right people involved in each one. The individual tasks are, in most cases, not complicated. The difficulty is usually the accumulation effect, the sense that there is too much to address all at once. Breaking it down almost always makes it manageable.
If you would find it useful to work through your specific position with someone who knows the Richmond business context, the tax planning and business advisory conversations we are having with clients at the moment are covering exactly this ground.
Key takeaways
- Dividend tax rates rise by 2 percentage points from 6 April 2026. For director-shareholders who draw dividends, the timing of the declaration matters: dividends declared before 5 April fall in the lower-rate 2025/26 tax year.
- Frozen income tax thresholds are quietly increasing the real tax burden on professionals and directors through fiscal drag, without any headline rate announcement. Reviewing your remuneration structure annually is more important than it used to be.
- Three Employment Rights Act changes take effect on 6 April 2026: SSP from day one, the collective redundancy protective award doubling to 180 days’ pay, and paternity leave becoming a day-one right. The unfair dismissal qualifying period change does not arrive until January 2027.
- Making Tax Digital for Income Tax is mandatory from 6 April 2026 for sole traders and landlords with qualifying income over £50,000. Compatible software and HMRC sign-up are needed before the first quarterly period begins. The threshold falls to £30,000 in April 2027 and £20,000 in April 2028.
- Business rates in Richmond are being recalculated on new 2024 valuations from 1 April 2026. Businesses should check their new rateable value, confirm they are on the correct multiplier, and consider whether an appeal is warranted.
- The National Living Wage rise to £12.71 for workers aged 21 and over affects not just minimum wage roles but the pay structure above them. Reviewing the full pay band before April avoids a morale problem in May.
Frequently asked questions
I missed the window to declare dividends before 6 April. Is there anything else I can do to reduce the impact of the higher dividend tax rates?
Several options remain available. First, the salary and dividend split is worth reviewing for 2026/27 as a whole, because the optimal balance changes when dividend rates move. Second, pension contributions can reduce your total income and therefore the amount of dividend income falling into the higher rate band. Third, if your spouse or civil partner is a shareholder in the business and a basic rate taxpayer, examining whether dividends could be distributed in a way that uses their lower rate band may be worth exploring.
None of these are complicated in principle, but they depend on your specific income position, the company’s profit level and your domestic arrangements. A personal tax planning conversation before you make any decisions is the right starting point.
We have fewer than 20 employees. Do the collective redundancy changes apply to us?
The 20-employee threshold for triggering collective redundancy consultation obligations applies to the number of redundancies you are proposing at one establishment within a 90-day period, not to your total headcount. A business with 18 employees is not exempt if it is proposing to make 20 or more redundancies, though in practice a business of that size would rarely be in that position.
More relevantly, for a business of 25 to 40 employees, the risk is not usually a large-scale redundancy programme but a series of smaller reductions that, if not carefully counted, can unintentionally cross the threshold. The doubling of the protective award makes the consequence of an accidental breach significantly more expensive. If you are considering any redundancies in the coming months, even a small number, it is worth a short conversation to establish whether collective consultation obligations could be triggered.
How do I know if my business rates rateable value is correct after the revaluation?
The Valuation Office Agency publishes all rateable values on its website, and you can check your property’s new value there. If the figure looks materially higher than you would expect based on the rental market for similar premises in your area, you have grounds to challenge it through the Check, Challenge, Appeal process on GOV.UK.
You should continue paying your current bill while any challenge is in progress. The transitional relief scheme applies regardless of whether you appeal, but it does not remove the liability permanently. Getting the underlying valuation right is worth the effort if there is a genuine case to make, because the savings compound over the years the valuation is in force.
We are not in the first MTD wave because our qualifying income is under £50,000. Do we need to do anything now?
Strictly speaking, no, not yet. But it is worth checking two things. First, whether your qualifying income might cross the threshold this year, given that it is the 2024-25 figures that determine April 2026 obligations. Second, whether your record-keeping is already moving towards digital, given that the £30,000 threshold arrives in April 2027.
Businesses that treat each threshold as a separate deadline tend to find themselves scrambling at each one. The Making Tax Digital guidance on the Xeinadin site covers what compliant software needs to do and what to look for when choosing a system.
How does the Business Asset Disposal Relief CGT rate change affect me if I am thinking about selling my business in the next year or two?
The rate on qualifying disposals rises from 14 per cent to 18 per cent from 6 April 2026. For a business sold for £500,000 above the base cost, that is a difference of £20,000 in CGT. For larger disposals, the difference is proportionally more significant.
If a sale is actively being considered and the structure and timing are not yet fixed, the change is material enough to be worth discussing with your adviser now. The window before 6 April is short, and pre-sale structuring that can influence the CGT position cannot generally be done quickly. That said, a disposal made after April at 18 per cent BADR is still significantly more tax efficient than one not qualifying for BADR at all, so the relief remains highly valuable even after the rate increase.
Getting the next few weeks right
If you are a Richmond business owner working through the implications of the April changes for your specific situation, the conversations we are having with clients at the moment cover all of the areas described in this article, from dividend timing and remuneration planning to employment obligations, MTD readiness and rates.
There is no obligation in getting in touch, and no agenda beyond making sure the right decisions get made before 6 April rather than after it.
About the author
Donovan Crutchfield is Area Managing Partner at Xeinadin Richmond and founder of TaxAgility. He is ACA-qualified and has worked with owner-managed businesses, professionals and growing SMEs across Richmond and South West London for many years. His practice focuses on helping business owners make clear, well-informed financial decisions, particularly in periods when the external environment makes that harder than usual.
Xeinadin Richmond is part of Xeinadin Group, one of the UK’s leading networks of independent accountants and business advisers.
