5 key financial changes coming in 2026

Several important financial changes are on the horizon in the year ahead, and planning for them now can help ensure you remain efficient and well prepared.

While tax rates, allowances, and regulations will always change, your long-term goals are likely to stay the same, with a few adjustments as your circumstances evolve.

Financial planning is there to help you bridge that gap, ensuring you adapt to external changes without losing sight of what matters most to you.

So, with that in mind, read on to discover five key financial changes coming in 2026 and what they could mean for your financial plan.

1. A new limit on Business Relief and Agricultural Relief

One of the headline measures in the 2024 Autumn Budget was the change to the value of assets that are eligible for Business Relief (BR) and Agricultural Relief (AR) for Inheritance Tax (IHT) purposes.

From 6 April 2026, assets that currently qualify for 100% BR or AR will have a new combined limit of £2.5 million, revised up from the original £1 million allowance. Any assets above the limit will instead receive 50% relief, meaning they will be charged an effective rate of 20% IHT.

When it was first announced, the allowance was set to be individual and non-transferable. However, in the 2025 Autumn Budget, the government decided that unused allowances could be transferred between spouses and civil partners.

This means that you and your partner can still pass on up to £5 million of qualifying BR and AR assets without an IHT charge, provided the allowances are structured and used correctly.

If you hold business or agricultural assets beyond the allowance, it’s worth reviewing your estate plan now. Alternative strategies, such as gifting during your lifetime or using trusts, could help reduce your future IHT liability.

A financial planner can help you assess your options and work with you to ensure the thoughtful transfer of wealth across generations remains tax efficient.

2. The Dividend Tax rate is to change

From 6 April 2026, Dividend Tax rates will rise by two percentage points for basic- and higher-rate taxpayers.

The new rates will be:

10.75% for basic-rate taxpayers
35.75% for higher-rate taxpayers
39.35% for additional-rate taxpayers, which remains unchanged

If you hold shares, whether in your own company or as part of your investment portfolio, you may receive income in the form of dividends, and this new increase could result in a higher tax bill.

Although dividends will still typically be taxed more favourably than a salary subject to Income Tax and National Insurance, the advantage is narrowing. As a result, you may need to reassess how your income is structured to maintain the same level of take-home pay.

A financial planner can help you review your current arrangements and explore alternative strategies to keep your income as tax efficient as possible.

3. Making Tax Digital will apply to sole traders, the self-employed, and landlords

From 6 April 2026, new groups of taxpayers will be brought into Making Tax Digital (MTD) for Income Tax Self Assessment.

In 2025, MTD became mandatory for all VAT-registered businesses, regardless of their turnover. And as of April 2026, you’ll be required to comply with MTD for Income Tax if you are self-employed or a landlord and your qualifying income exceeds £50,000 a year.

Under MTD, when reporting income, you’ll need to:

Keep digital records – All income and expenses must be recorded digitally.
Submit quarterly updates to HMRC – Instead of filing a single annual Self Assessment return, you’ll submit four quarterly updates each tax year. These provide HMRC with a summary of your income and expenses and generate an estimated tax position, although this estimate is not final.
Complete an End of Period Statement (EOPS) – After the end of the tax year, you’ll submit an EOPS for each source of business or property income. This is where you finalise your figures and claim any allowances or reliefs.

A financial planner can work alongside your accountant to help you understand how these changes affect your wider financial plan and ensure you are prepared for the new requirements.

4. Statutory payments will rise

Statutory pay rates generally increase annually, and this year will be no exception.

From 6 April 2026, the rates will be:

£12.71 an hour for the National Living Wage
£10.85 an hour for the National Minimum Wage
£8.00 an hour for the apprentice rate.

If you employ lower-paid, entry-level, or junior staff, it’s important to review staffing budgets and plan ahead to accommodate these new rates.

A financial planner can help you assess how these increases affect your wider business finances and explore strategies to manage rising employment costs.

5. The State Pension will increase in line with the triple lock

The State Pension also rises each year under the triple lock. In April 2026, it will increase by 4.8% in line with average earnings.

This means you’ll receive:

£241.30 a week, or £12,547.60 a year, if you’re entitled to the full new State Pension
£184.90 a week, or £9,614.80 a year, if you receive the old State Pension.

It’s worth noting that the full new State Pension will sit around £20 below the Personal Allowance. As a result, even a small increase in your pensions, savings, or investments could push more of your income into tax.

A financial planner can help you prepare for the year ahead

A financial planner can work with you to create a clear plan that gives you confidence and clarity for the year ahead.

They can help you make decisions based on your long-term goals and the changing financial landscape to build a plan that gives you the freedom to focus on the important things in life.

To speak to a financial planner, get in touch.

Email [email protected] or call us on 01625 466360.

Please note

This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.