Top UK Business Changes Coming in 2026 – What Every Business Owner Should Know

31 Dec

As we head into 2026 and beyond, the UK business landscape is undergoing significant changes — from tax reforms and business rates to employment rights and digital compliance. Staying ahead of these shifts is key for every company owner, director, and finance professional. At Welf Accountants, we’ve rounded up the most important developments that will impact your business in the year ahead.

1. Major Tax and Financial Adjustments

Corporation Tax and Compliance

The UK Government has confirmed that the corporation tax rate will stay at 25% for most businesses in 2026 — a relief for many companies planning ahead. However, late filing penalties for corporation tax returns will double from 1 April 2026, making timely submissions more important than ever.

Changes to capital allowances also take effect, including a new 40% first-year allowance for certain plant and machinery assets from 1 January 2026 and reduced writing down allowances.

Enterprise Incentives and Investment Schemes

Good news for growth businesses: Enterprise Management Incentive (EMI) schemes are being expanded. From 6 April 2026, companies with up to 500 employees can grant EMI options, with higher asset thresholds and share value limits — making it easier to attract and retain key talent.

Dividend and Relief Changes

Dividend taxes are set to rise in April 2026 — affecting small company owners who rely on dividends as a source of income.

Meanwhile, changes to Inheritance Tax reliefs, including increases to thresholds, will affect business owners passing on assets or planning succession.

2. Business Rates and Support for Small Businesses

The 2026 Supporting Small Business Relief (SSBR) scheme is being introduced to help businesses cope with higher property valuations through a cap on business rate bill increases — offering a smoother transition for many growing firms.

Additionally, business rates multipliers — which help calculate rates — are being permanently lowered for retail, hospitality and leisure sectors, offering targeted relief.

3. Employment Rights Revolution

One of the most noteworthy developments is the new Employment Rights Act, which received Royal Assent and will be introduced gradually over the next two years. It brings day-one employment rights, improved protections for pregnant workers, sick pay reforms, and stronger safeguards against unfair dismissal — a big shift in how UK employers manage HR.

These changes aren’t just legal updates — they’ll affect recruitment, contracts, payroll and HR compliance across all sectors.

4. Digital Tax Compliance — Making Tax Digital (MTD)

From 6 April 2026, Making Tax Digital for Income Tax becomes even more relevant. Many businesses and sole traders with qualifying turnover will need to use compatible digital software to submit quarterly updates and maintain detailed records digitally — a shift from annual filings to continuous compliance.

For forward-thinking businesses, adopting digital accounting and payment tools now isn’t just about compliance — it’s an opportunity to streamline processes, reduce errors, and improve cash flow management.

5. Tech and Investment Trends — AI and Growth Focus

According to recent research, around a third of UK businesses plan to invest in artificial intelligence (AI) during 2026 as a strategy to improve productivity and competitiveness.

Coupled with broader strategic investments and government incentives aimed at supporting innovation, AI is shaping up to be a central theme in business growth strategies.

Final Thoughts

2026 is shaping up to be a transformative year for UK business — with tax reforms, modernised employment law, digital compliance requirements, and growth incentives all coming into play. Whether you’re a small business owner, an SME scaling up, or a larger enterprise, preparing now will save time, money and stress later.

At Welf Accountants, we specialise in helping businesses navigate change — from tax planning and payroll compliance to strategic advice and digital transformation.

Disclaimer: The information provided in this blog is for general informational purposes only and does not constitute financial or tax advice. Before making any investment decisions or relying on any of the information provided, you should seek professional advice tailored to your specific circumstances. Welf Accountants accepts no responsibility for any losses or liabilities arising from the use of this information. Correct as of date of publication.

Paul Knappett