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)
- 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)
- 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)
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.