A round-up of the big changes affecting UK businesses and employers in 2026/27: Making Tax Digital for Income Tax, the rise in HMRC mileage rates to 55p, new National Minimum and Living Wage rates, and the statutory sick and family pay reforms, including day-one sick pay.
The 2026/27 tax year brings some of the most significant changes UK businesses and employers have seen in years. From a major shift in how the self-employed report their income, to the first increase in the HMRC mileage rate in over a decade, new minimum wage rates, and a reshaping of statutory sick pay, there is a lot to keep on top of. Here is a clear, practical round-up of what is changing and what it means for you.
Making Tax Digital for Income Tax
Making Tax Digital (MTD) for Income Tax is now live. From 6 April 2026, sole traders and landlords with qualifying income above £50,000 must keep digital records and send quarterly updates to HMRC using compatible software, rather than filing a single annual Self Assessment return.
An important point that catches many people out is that qualifying income means your total gross income (your turnover), not your profit. It is also combined across your sources. If you have £45,000 of self-employed turnover and £6,000 of rental income, your qualifying income is £51,000, so you are inside the new rules even though neither source reaches £50,000 on its own.
- From 6 April 2026: mandatory for sole traders and landlords with qualifying income over £50,000.
- From April 2027: the threshold drops to £30,000.
- From April 2028: the threshold drops again to £20,000.
- Qualifying income is gross turnover plus gross rental income, not profit. Wages taxed under PAYE, dividends, and savings interest do not count towards it.
- You will need to keep digital records and submit quarterly updates through HMRC-compatible software.
If you are likely to be affected, the time to prepare is now: choose your software, get your record-keeping in order, and make sure you are signed up before your first quarterly deadline.
HMRC mileage rate rises to 55p
For the first time in well over a decade, the HMRC Approved Mileage Allowance Payment (AMAP) rate for cars and vans has increased. From 6 April 2026, the rate for the first 10,000 business miles in the tax year rose from 45p to 55p per mile. The change was announced in May 2026 and backdated to the start of the tax year.
- Cars and vans: 55p per mile for the first 10,000 business miles (up from 45p), then 25p per mile thereafter (unchanged).
- Motorcycles: 24p per mile, and bicycles: 20p per mile (both unchanged).
- Passenger payments: 5p per mile for carrying a colleague on a business journey (unchanged).
- The new rates apply to AMAPs, Mileage Allowance Relief, and the simplified motoring expenses used by the self-employed.
If you reimburse employees for business mileage, or claim it yourself, this is a welcome increase, but it is worth reviewing your expense policies and payroll settings to make sure you are using the new figure.
National Minimum and Living Wage increases
From 1 April 2026, the National Living Wage and National Minimum Wage rates increased. If you employ staff, you will need to make sure your pay rates meet the new minimums and budget for the additional cost.
- National Living Wage (age 21 and over): £12.71 per hour, a rise of 4.1%.
- 18 to 20 year olds: £10.85 per hour, a rise of 8.5%.
- 16 to 17 year olds: £8.00 per hour, a rise of 6.0%.
- Apprentice rate: £8.00 per hour, a rise of 6.0%.
Remember that these are minimums and the rate an employee is entitled to depends on their age and, for apprentices, where they are in their apprenticeship. Getting this wrong can lead to penalties, so it is worth checking your payroll carefully.
Statutory pay reforms for 2026/27
2026/27 brings both the usual annual uplift in statutory payments and a major structural reform to Statutory Sick Pay under the Employment Rights Act 2025. Together these are some of the biggest changes employers need to plan for.
The headline change is to Statutory Sick Pay (SSP). From 6 April 2026, SSP becomes payable from the first day of sickness absence. The three unpaid waiting days are removed, and the Lower Earnings Limit no longer applies, meaning lower-paid employees who were previously excluded now qualify. SSP is paid at the lower of the flat weekly rate or 80% of the employee's average weekly earnings.
- Statutory Sick Pay: now payable from day one of absence, with no waiting days and no Lower Earnings Limit, at the lower of £123.25 per week or 80% of average weekly earnings.
- Statutory Maternity, Paternity, Adoption, Shared Parental, and Parental Bereavement Pay: increased to £194.32 per week (up from £187.18).
- The Lower Earnings Limit used for qualifying for most statutory payments increased to £129 per week.
- April 2026 also brings wider day-one rights, including new and expanded family leave entitlements.
The day-one SSP change in particular is likely to increase costs for some employers and will mean reviewing absence policies, payroll processes, and budgeting. It is a good moment to make sure your systems and staff handbook are up to date.
How we can help
There is a lot changing in 2026/27, but you do not have to navigate it alone. At LN Accountants we help clients get ready for Making Tax Digital, set up compatible software, run compliant payroll that reflects the new wage and statutory pay rates, and make sure expense and mileage claims are handled correctly.
If you would like to understand how any of these changes affect your business, or you would simply like them taken care of for you, get in touch with our team. We will explain exactly what applies to you and make sure you stay compliant.
