Tax awareness week is a good time to learn which obligations are changing
On the surface, it might seem odd that there would be an entire week dedicated to tax awareness when so many people seem to live in constant dread, knowing their obligations loom overhead.
However, it is useful to take the time to understand what is and is not changing in the world of tax so that you can become more confident approaching the new tax year.
We are going to break down what is changing, what is staying the same and how it will likely impact you.
What taxes are changing in 2026?
2026 is a big year for landlords, self-employed individuals and sole traders who will now begin dealing with Making Tax Digital (MTD) for Income Tax.
This will see those with eligible earnings over £50,000 have to contend with digital record keeping, quarterly filings and their usual annual submission.
No penalties will take effect this year though for those who miss deadlines, but it is still worth trying to take the change seriously.
For business owners looking to dispose of assets in a tax-efficient way, the Business Asset Disposal Relief (BADR) is increasing to 18 per cent, resulting in a higher Capital Gains Tax (CGT) bill.
For those considering how their estates will look at the end of their lives, the much-maligned cap to Agricultural Property Relief (APR) and Business Property Relief (BPR) will be coming into force.
This means a higher chance of paying Inheritance Tax (IHT) as the 100 per cent relief will only apply to amounts worth below £2.5 million, after which the relief is only 50 per cent.
What taxes are staying the same in 2026?
Many thresholds and tax amounts are not being adjusted in 2026, but this brings its own considerations.
When a tax is not changed or a threshold moves, this often leaves more people exposed to it due to fiscal drag.
As inflation drives up the amount of money people bring in without increasing the real-world value, it can lead to people feeling more pressure from tax bills they previously would not have paid.
The ongoing debate around student loan repayments, itself seen as a de facto tax on education, encapsulates this, as even a full-time job earning the National Living Wage will incur repayments on half of the plans.
Similarly, those earning the National Living Wage will now see over half of their annual salary exposed to Income Tax for the first time.
Both of these illustrate the widening gulf between economic policy and economic reality.
When there is little difference between a graduate’s salary and the lowest legal salary and even those earning the lowest in society find half of their wages exposed to tax, it could speak of a need to reassess tax thresholds.
Until then, we understand that this tax year may be a challenge for many as different taxes take effect and more thought needs to be given to tax efficiency.
Our team is here to help you understand your obligations so that you do not get caught out by the new tax year.
Speak to our team today to use this tax awareness week to get confident for the future.
