Key Changes Starting 6 April 2026
- The basic personal allowance remains £12,570 for the UK. PAYE thresholds are £242 per week / £1,048 per month. Emergency tax code 1257L applies broadly. (gov.uk)
- Sole traders and landlords with gross income (before expenses) over £50,000 will be mandated to keep digital records and send quarterly updates to HMRC under Making Tax Digital for Income Tax. Those with income over £30,000 follow in 2027. (gov.uk)
Implications for Employers & PAYE
- Employers have to update payroll systems: ensure current tax codes are applied from new tax year. Use form P9(T) notifications or online notifications if using PAYE Online. (gov.uk)
- For employees with new student loan repayment plan (Plan 5), PAYE agents will from March 2026 receive start notices. Employers must collect repayments accordingly from April 2026. (gov.uk)
Compliance Risks & Opportunities
Risks:
- Failure to digital-record or make quarterly submissions if required may lead to penalties or tax code adjustments.
- Incorrect tax code assignment can cause underpaying or overpaying tax—employees will face surprises later.
Opportunities:
- Streamlining record-keeping software now saves time; early adoption of compatible systems for sole traders, landlords.
- Aligning payroll and benefits, correctly registering for student loan collection, may improve cash flows and avoid compliance costs.
Example Scenario
Sam, a self-employed landlord with £55,000 gross rental plus self-employment income, must begin digital records & quarterly updates for both streams from 6 April 2026. If Sam fails to update his system, his return may be delayed or penalised. Meanwhile, Lucy, with £40,000 gross income, remains unaffected until 2027 but should begin preparing now.
What You Can Do Now
- Confirm software tools support Making Tax Digital’s requirements (compatible with quarterly updates, digital records).
- For employers: ensure your payroll provider supports student loan Plan 5 and updated tax codes.
- Engage with advisors to avoid misclassification of income, choose correct tax codes for employees.
- Stay informed via HMRC publications to track transitional guidance or changes.
These shifts mark a continued move by the UK toward more real-time, digital, transparent systems. Proper preparation unlocks smoother compliance and fewer surprises come due dates.