Tax Planning
Making Tax Digital & the Entrepreneur Tax Reliefs – What UK Businesses Must Know in April 2026
Significant legislative changes around Making Tax Digital (MTD) and key reliefs like EMI, EIS, and VCT that came into force 6 April 2026 are reshaping tax strategy for entrepreneurs and landlords.
By NomadicTax Research Team • 5-8 min read • May 13, 2026
## What’s Changed from 6 April 2026
- **Making Tax Digital for Income Tax** kicks in for sole traders and landlords with income over £50,000 — necessitating quarterly digital reporting of all business and rental income and expenses. ([salarytax.uk](https://salarytax.uk/guides/2026-27-tax-year-changes?utm_source=openai))
- **Expansion of Enterprise Management Incentives (EMI)**: thresholds for eligibility have been greatly broadened. Companies can now have up to **£120 million** in gross assets (up from £30 million), up to **500 employees** (up from 250), and option values doubled to £6 million. The qualifying exercise period for EMI options increases from 10 years to 15 years. ([gov.uk](https://www.gov.uk/government/publications/budget-2025-overview-of-tax-legislation-and-rates-ootlar/budget-2025-overview-of-tax-legislation-and-rates-ootlar?utm_source=openai))
- **Plastic Packaging Tax increase**: the rate for plastic packaging with less than 30% recycled content rose from £223.69 to **£228.82 per tonne**, effective 1 April 2026. ([gov.uk](https://www.gov.uk/government/publications/budget-2025-overview-of-tax-legislation-and-rates-ootlar/annex-a-rates-and-allowances?utm_source=openai))
## What This Means in Practice
| Stakeholder | Action Points |
|-------------|----------------|
| **Landlords and small business owners** (with £50,000+ income) | You must adopt MTD-compliant digital accounting; submit quarterly updates; ensure records are retained. Software and accounting practices will need updating. |
| **Entrepreneurial companies and start-ups** | Review eligibility for EMI: SMEs may use the expanded limits to incentivise employees with share options; existing option agreements may need amendment to extend exercise periods. |
| **Manufacturers and importers** under Packaging Tax scope | Check packaging composition carefully; reconcile supply chains; track recycled content; prepare for potentially higher costs. |
## Strategy Tips & Examples
- *Example 1*: A landlord who previously filed Self Assessment only once a year and owns multiple properties with income over £60,000 must now break out income/expenses quarterly using MTD-filled software. |
- *Example 2*: A small tech start-up with 20 employees and £100 million assets can now offer EMI options under the new thresholds; this can help recruit top engineers without incurring prohibitive upfront costs. |
## Pitfalls to Watch Out For
- Missing quarterly deadlines under MTD can result in penalties. |
- Incorrect classification of reimbursements vs benefits can lead to unexpected tax/NIC liabilities. |
- For Plastic Packaging Tax: recycled content must meet regulatory standards; non-compliance may result in tax liability and audit risk. |
## Bottom Line
Entrepreneurs, landlords, and SMEs need to adjust today’s operations to align with these changes. Early adoption and good advice will help you leverage the reliefs and avoid non-compliance risks.