By Josh Turner | April 1, 2026
With the start of the new 2026 tax year, the UK Government is set to implement major reforms to the tax system. From today, significant changes are being introduced to income tax, inheritance tax, and the minimum wage.
The most widely discussed change is the substantial increase in the National Living Wage, which has risen to £12.71 per hour. The increase has been met with a mixture of praise and criticism. Supporters argue that it will help workers feel more financially secure amid rising living costs. However, critics contend that the raise is insufficient to keep pace with inflation, describing it as “putting a plaster on a severe wound.”
In addition, the Making Tax Digital (MTD) scheme is being rolled out across the UK. The new rules, which primarily affect sole traders and landlords, require them to maintain digital records and submit updates to HMRC every three months. While the government claims the system will spread the workload and simplify tax reporting, concerns have been raised about the increase from one annual submission to five quarterly ones. The mandatory use of HMRC-compatible software has also drawn criticism, with fears that some individuals particularly those less familiar with digital systems may struggle to adapt. Non-compliance will result in penalties for missed deadlines.
Inheritance Tax (IHT) has also been a key focus during Labour’s time in government. Two major changes to IHT rules take effect this tax year.
First, shares listed on the Alternative Investment Market (AIM) will now receive only 50% Business Property Relief (BPR), down from the previous 100% relief. This results in a 20% tax liability on those assets. Second, the threshold for 100% relief on business and agricultural property has been increased to £2.5 million.
These three changes are by no means the only significant reforms…
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