April 2026 tax and cost changes: what’s changing and what to do

April brings a rare set of changes landing within days of each other - household bills, tax and compliance shifting at the same time. From our Novuna Business Barometer research, businesses are not standing still, but many are operating with limited slack and heightened sensitivity to cost and compliance shocks: 84% of small business owners started 2026 planning growth initiatives, but 40% are prioritising reducing fixed costs and 31% are building reserves. That combination tells you headroom is tight, so even smaller policy changes can have an outsized impact on cash flow.

What’s changing in April 2026 (at a glance)

• Making Tax Digital (MTD) for Income Tax begins for eligible sole traders and landlords earning over £50,000 (from 6 April 2026)
• Energy price cap changes for the quarter (from 1 April 2026)
• Vehicle Excise Duty (VED) rates update, including an EV “expensive car” threshold shift (from 1 April 2026)
• Agricultural Property Relief (APR) and Business Property Relief (BPR) reforms start (from 6 April 2026)

Making Tax Digital (Income Tax): compliance that will feel like cash flow

Making Tax Digital is a change to how some people report tax: eligible sole traders and landlords will need digital records and quarterly updates. From 6 April 2026, it applies to those with qualifying income over £50,000. This could bring around 780,000 people into scope from April, with an average transition cost of around £320 and ongoing annual costs estimated at £110 - useful rule-of-thumb numbers for budgeting.

Long-term, it could improve cashflow discipline, quarterly updates create a more real-time view of income and costs, which many small firms tell us they’re already prioritising. 

What to do now

• Start early: confirm timing using HMRC eligibility criteria and sign-up guidance- don’t wait for a letter. 
• Choose recognised software and run a rehearsal quarter (shadow reporting) to identify missing records and categorisation issues.
• Budget explicitly for transition and ongoing admin time (the £320 and £110 figures are useful planning prompts, even if your costs differ).
• HMRC won’t apply penalty points for late quarterly updates in the first mandated year, but year-end returns and payments still matter.

Energy price cap: a little breathing room, not a reset

The April energy price cap reduction is welcome, but it’s not a return to cheap energy. The new cap works out at about £1,641 a year for a typical home, which is £117 less over the year than before - roughly a tenner a month. Helpful, but not a saving you’ll really feel like a pay rise.

What’s easy to miss is why it’s falling. The cap is falling mainly because wholesale costs have dropped (about £38 a year off the bill). But other charges have gone up- especially network costs - adding around £66 a year back on. So the drop you see is smaller than you might expect.

What to do now

• Check your tariff and payment method - small differences can add up across the year.
• Review your Direct Debit level so you avoid debt or a large catch-up payment later.
• If you save a little, rebuild a buffer before increasing discretionary spend. 
  

Car tax (VED): small changes that add up and a key EV threshold shift

Vehicle Excise Duty (VED) is moving towards a more level playing field, with electric vehicles increasingly treated like other cars. From 1 April 2026, the standard annual rate rises to £200, and for the most polluting new cars the highest first-year rate reaches £5,690.

For EV drivers, this is more about principle than a dramatic annual hit, it slightly increases ownership costs and narrows the tax advantage versus petrol and diesel, but EVs can still deliver strong overall running costs thanks to lower fuel and maintenance.

It’s also worth watching the “expensive car” detail: from 1 April 2026 the EV Expensive Car Supplement threshold rises to £50,000 (while remaining £40,000 for other cars), with a supplement of £440 a year in years 2–6 on top of the standard rate.

What this means for businesses and fleets

• Update total cost of ownership models to include 2026/27 VED and the EV £50,000 threshold.
• For salary sacrifice schemes, ensure employee communications reflect what has changed (and what has not).
• Compare vehicles using tax, energy/fuel, insurance and maintenance - not just the monthly payment.

APR/BPR reforms: for those affected, liquidity is the pressure point

From 6 April 2026, reforms to Agricultural Property Relief (APR) and Business Property Relief (BPR) mean some larger farms and family businesses may face higher inheritance tax exposure. For those affected, the real issue is often liquidity rather than profitability — the key is to plan early, because the wrong structure can create a cash-flow squeeze at exactly the point a business needs stability.

Help isn’t limited to tax advice. Across the market, lenders and specialist brokers are working with farm businesses on practical mitigation — protecting working capital, structuring repayments around seasonal trading, and funding essential equipment investment without draining cash reserves. The Government is also extending the option to pay inheritance tax on property eligible for APR/BPR by equal annual instalments over 10 years, interest-free, underlining how central cash-flow planning is under the new rules.

At Novuna Business Finance, we’re having more conversations with agricultural businesses about practical cash-flow resilience - how to fund essential kit, protect working capital and keep investment plans moving as the tax landscape shifts.

What to do now

• Map likely exposure early and stress-test liquidity (especially where estates are asset-rich but cash-light).
• Take professional tax and legal advice and build a funding plan in good time - avoid rushed decisions.
• Where instalments apply, plan cash flow over the 10-year horizon and protect working capital.
  

The bottom line: small changes add up when they land together

Individually, many of these changes are incremental. Together, they can shift behaviour, especially for households and small firms already focused on buffers and fixed costs. The most practical response is early preparation: understand which changes apply to you, update your budgets, and put simple routines in place so April doesn’t arrive as a surprise.

Quick FAQs (April 2026 changes)

When does Making Tax Digital for Income Tax start?

6 April 2026, for eligible sole traders and landlords with qualifying income over £50,000. 
What is the energy price cap from April 2026?

What is the energy price cap from April 2026?

£1,641 per year (typical annualised figure) for 1 April to 30 June 2026 for a dual-fuel household paying by Direct Debit. 

What is the standard VED rate from April 2026?

£200 per year from 1 April 2026.

What changes for the EV “Expensive Car Supplement” from April 2026?

From 1 April 2026, the threshold rises to £50,000 for zero-emission cars (and remains £40,000 for other cars). The supplement is £440 per year in years 2–6. 

What is changing with APR/BPR from April 2026?

From 6 April 2026, a combined £2.5m allowance applies for 100% relief across qualifying agricultural and business property; above that, relief applies at 50%.