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January Wrapped Up – Key Finance News
Happy New Year! We’re back with our first roundup of the latest developments and updates for 2026, and we’re starting the year on a positive note with some good news for those affected by Making Tax Digital (MTD):
- HMRC has confirmed that during the first year of the new system (2026/27), late filing penalties will not apply to missed quarterly updates. This gives businesses time to adjust without the worry of immediate fines.
Please note: this easement only applies to the quarterly updates. The annual tax return for 2026/27 has not changed and must still be filed by 31 January 2028. Any missing quarterly updates will need to be submitted before the final return can be completed.
We advise you to check whether MTD will affect you, and make sure your bookkeeping software is ready. You can view our MTD blog here for further information.
31 January 2026: Personal Tax Return Deadline (Self Assessment)
The deadline for filing your 2024/25 Personal Tax Return is 31 January 2026.
If you haven’t submitted yet, there is still time to file, but it’s important to act quickly. Missing the deadline triggers an automatic £100 late filing penalty, even if no tax is due, with further penalties and interest added the longer it remains outstanding.
If your return is already filed, now is a good time to double-check the figures and make sure you’re prepared for any tax payment due.
Dividend Tax Rates Set to Increase from April 2026
If part of your income comes from dividends, this is something to keep on your radar.
For the 2024/25 tax year, the dividend allowance is £500. Any dividends above this are taxed at:
- 8.75% (basic rate)
- 33.75% (higher rate)
- 39.35% (additional rate)
These rates determine how much dividend tax is due by 31 January 2026.
Looking ahead, dividend tax rates will increase from April 2026, meaning many company owners who pay themselves through dividends could pay slightly more tax in future. This makes it a good time to start thinking about how you’ll take income from your company in 2026/27 and whether any changes may be needed.
Why January Tax Bills Can Feel So Expensive
If January always feels like an expensive month, you’re not alone.
Many self-employed people and landlords have to make more than one payment in January because of something called payments on account. This means you may be paying:
- The final balance for last year, and
- A payment towards next year’s tax bill at the same time.
This often comes as a surprise and can put pressure on cash flow.
Planning ahead and setting money aside during the year can make this much easier to manage. If you’re unsure what you need to pay, get in touch with us! We’re more than happy to help explain it.
Electronic Invoicing is Becoming the New Normal
The government has confirmed that electronic invoicing will become compulsory for many VAT invoices from 2029.This means businesses will eventually need to send and receive invoices using compatible digital systems rather than PDFs or paper copies.
Although this change is still a few years away, it forms part of a wider move towards more digital reporting to HMRC.
When reviewing your accounting software or systems in the future, it may be worth keeping this in mind, so you are well prepared when the rules change.
Changes to How Employee Benefits Are Taxed from April 2027
From April 2027, most employee benefits, such as company cars or private medical insurance, will need to be taxed through payroll as they are provided, rather than being reported after the end of the year.
This means employees will pay tax on their benefits in real time, and employers will need to make sure their payroll systems can handle the changes. Some employees may notice changes to their tax codes or take-home pay during the transition.
Preparing early and explaining the changes clearly to staff will help avoid confusion and make the move as smooth as possible.
New National Minimum Wage Rates
The following National Minimum Wage and National Living Wage rates will apply from April 2026:
- £12.71 per hour - age 21 and over
- £10.85 - age 18 to 20
- £8.00 - under 18 and apprentices
Plus – HMRC is Increasing Enforcement
Nearly 500 employers were recently fined for underpaying staff, with heavy penalties and public naming.
With a new Fair Work Agency planned for 2026, employers should make sure their payroll and pay rates are correct to avoid fines and reputational damage.
Auto-Enrolment Pension Thresholds Staying the Same
The government has confirmed that auto-enrolment pension thresholds will remain unchanged for 2026/27. This means:
- Employees earning over £10,000 must still be auto-enrolled
- Contribution limits remain the same
This is good news for employers as there will be no need to adjust your payroll systems next year!
MAIN TAX EVENTS HAPPENING IN JANUARY/FEBRUARY: GET AHEAD
DATE
WHAT’S DUE
31 January
Deadline for filing 2024/25 self-assessment tax return online and paying your outstanding tax for 2024/25 and first payment on account of 2025/26 tax |
1 February
Corporation Tax for year to 30/04/2025, unless quarterly instalments apply
19 February
PAYE & NIC deductions, and CIS return and tax, for month to 05/02/2026 (due 22/02 if you pay electronically)
If any of these updates affect you or your business, or if you would like advice on how to prepare for the changes ahead, please get in touch – our team is always happy to help.
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