As we move through the early months of the year, now is a good time to stay ahead of upcoming tax deadlines and prepare for several important changes on the horizon. With February and March bringing a number of key compliance dates, along with new rules and reforms scheduled over the coming year, keeping informed and planning ahead can help you avoid penalties and make confident financial decisions.
In this edition, we highlight the latest tax diary deadlines, outline what the introduction of Making Tax Digital for Income Tax will mean in practice, and explain recent updates to Agricultural and Business Property Relief. We also cover important considerations around Capital Gains Tax when selling property and the latest changes to the Construction Industry Scheme.
We hope you find this month’s update helpful and informative. If you would like to discuss how any of these developments affect you or your business, please don’t hesitate to get in touch -we’re always here to help.
Are you ready for Making Tax Digital for Income Tax (MTD for IT)? This new way of reporting will become mandatory in phases from April 2026. If you are self-employed or a landlord earning over £50,000, now is the time to prepare for digital record keeping, quarterly updates and the new penalty system that will apply under MTD for IT.
The date from which you must start using MTD for IT depends on your level of qualifying income. If your qualifying income exceeded £50,000 in the 2024-25 tax year, you will need to use MTD for IT from 6 April 2026. If your qualifying income exceeded £30,000 in the 2025-26 tax year, you will need to use MTD for IT from 6 April 2027. Where qualifying income exceeds £20,000 in the 2026-27 tax year, the government has confirmed that MTD for IT will apply from April 2028. Qualifying income is defined as the total income you receive in a tax year from self-employment and property before expenses.
You are currently exempt from MTD for IT if you meet specific conditions that automatically exempt you from the service, such as reasons relating to age, disability, or location, if you have applied for and been granted an exemption by HMRC, or if your qualifying income is £20,000 or less in a tax year.
HMRC’s guidance on MTD for IT has been updated and now includes further information on both permanent and temporary exemptions. It explains which exemptions apply automatically and which require an application. Permanent exemptions are generally automatic and continue to apply unless your circumstances change. You will need to apply for an exemption if you believe you are digitally excluded from using MTD for IT. If you are not required to use MTD for IT, you must continue to report your income and gains through the self-assessment tax return where applicable.
The government recently announced significant changes to the planned reforms to Agricultural Property Relief (APR) and Business Property Relief (BPR). The threshold for 100% relief will be increased from £1 million to £2.5 million when the changes take effect from 6 April 2026. The change will be introduced via an amendment to the Finance Bill 2025 with relief reduced to 50% on qualifying assets above the new level.
Spouses or civil partners will be able to pass on up to £5 million of qualifying agricultural and business assets between them free of inheritance tax, in addition to the existing nil rate bands. The transferable allowance will also apply to surviving spouses or civil partners who were widowed before the new policy was announced.
These changes adjust the reforms first announced at Autumn Budget 2024, which had attracted strong criticism from the farming community and rural businesses over the potential impact on small farms and family-owned enterprises. By raising the threshold, the government aims to significantly reduce the number of estates affected by higher inheritance tax charges, ensuring that the reforms are focused primarily on the largest estates.
The government estimates that around 85% of estates claiming APR in 2026-27, including those also claiming BPR, will pay no additional inheritance tax as a result of these changes.
Shares designated as “not listed”, such as those traded on AIM, will attract BPR at a flat rate of 50% (reduced from 100%) from April 2026. This measure was unaffected by the latest announcement.
CGT on certain UK residential property sales often has a strict 60-day reporting and payment deadline, so early planning can avoid penalties.
If you are selling a second property, such as a buy-to-let or a former home that is no longer your main residence, CGT will usually apply. This is different from selling your main home, which is often covered by Principal Private Residence (PPR) relief and therefore exempt from CGT.
The annual exempt amount applicable to Capital Gains Tax (CGT) is currently £3,000. CGT is normally charged at a simple flat rate of 24% and this applies to most chargeable gains made by individuals. If taxpayers only pay basic rate tax and make a small capital gain, they may only be subject to a reduced rate of 18%. Once the total of taxable income and gains exceed the higher rate threshold, the excess will be subject to 24% CGT.
Most homeowners do not pay CGT when selling their main family home, as PPR relief usually applies. However, CGT is commonly payable on gains from:
Any CGT due on the sale of UK residential property must usually be reported and paid within 60 days of completion. This requires submitting a UK Property CGT return and making a payment on account within that timeframe.
Failing to meet the 60-day deadline can result in penalties and interest, so it is important to plan ahead and obtain advice as early as possible when selling a property that is not fully exempt.
Tackling fraud in the Construction Industry Scheme (CIS) was one of the measures addressed in the recent Budget. The changes are intended to allow faster intervention where fraud is suspected, while also simplifying certain administrative aspects of the CIS.
From 6 April 2026, HMRC will be able to act immediately where a business makes or receives a payment that it knew, or ought to have known, was connected to fraud.
In these cases, HMRC will have the authority to withdraw Gross Payment Status (GPS) straight away, assess the business for any related tax loss and impose penalties of up to 30%. Penalties may apply to the business itself or, in some circumstances, to its officers. Where GPS status is removed due to fraud or serious non-compliance, the business will also be prevented from reapplying for five years, a significant increase from the current one-year restriction.
The government also announced plans to simplify the operation of the CIS. Planned changes include exempting payments made to local authorities and certain public bodies from the scheme and reinstating the requirement for contractors to submit nil returns. These measures are expected to take effect from 6 April 2026, following a period of technical consultation.
The CIS applies special tax and National Insurance rules to construction businesses, with contractors generally required to deduct tax from payments made to subcontractors. Deduction rates depend on whether the subcontractor is registered and whether they hold GPS, which allows payment without deductions.
1 February 2026 - Due date for Corporation Tax payable for the year ended 30 April 2025.
19 February 2026 - PAYE and NIC deductions due for month ended 5 February 2026. (If you pay your tax electronically the due date is 22 February 2026)
19 February 2026 - Filing deadline for the CIS300 monthly return for the month ended 5 February 2026.
19 February 2026 - CIS tax deducted for the month ended 5 February 2026 is payable by today.
1 March 2026 - Due date for Corporation Tax due for the year ended 31 May 2025.
2 March 2026 - Self-Assessment tax for 2024-25 paid after this date will incur a 5% surcharge unless liabilities are cleared by 1 April 2026, or an agreement has been reached with HMRC under their time to pay facility by the same date.
19 March 2026 - PAYE and NIC deductions due for month ended 5 March 2026 (If you pay your tax electronically the due date is 22 March 2026).
19 March 2026 - Filing deadline for the CIS300 monthly return for the month ended 5 March 2026.
19 March 2026 - CIS tax deducted for the month ended 5 March 2026 is payable by today.