UK tax year 2026/27 introduces significant changes for small businesses
New tax regulations effective April 6, 2026, include the rollout of Making Tax Digital and major reforms to statutory sick pay.
The 2026/27 tax year in the United Kingdom brings critical updates for small businesses, centered on digital compliance and employee benefits. The most significant shift is the mandatory introduction of 'Making Tax Digital' (MTD) for sole traders and landlords with gross incomes exceeding £50,000. Affected taxpayers are now required to maintain digital records and submit quarterly updates to HMRC, replacing the traditional annual Self Assessment return for these groups.
Employment law also sees a major overhaul regarding Statutory Sick Pay (SSP). Under the new rules, the three-day waiting period is eliminated, and the Lower Earnings Limit for eligibility has been removed. These changes aim to include approximately 1.3 million additional workers in the sick pay system. Employers are encouraged to review their payroll and absence management processes to align with the new reporting standards.
These updates are part of a broader set of changes that include adjustments to the National Living Wage and permanent business rate relief for specific sectors, including retail, hospitality, and leisure. Experts advise businesses to verify their compliance status early to avoid potential penalties during the transition period.