As we start 2026, several important tax, employment, and compliance changes are moving closer. Below is a clear summary of what’s changing, why it matters, and what business owners should be thinking about now.
HMRC Moves to Digital Correspondence
HMRC is accelerating its shift away from paper letters, with most correspondence moving to digital from spring 2026.
Email or text alerts will notify taxpayers when new messages are available in their Personal Tax Account or the HMRC app. HMRC’s aim is for 90% of interactions to be digital by the 2029/30 tax year, with an expected saving of £50 million a year in printing and postage costs.
Only taxpayers who are digitally excluded, or who actively opt out, will continue receiving paper letters. New legislation will also allow HMRC to require digital contact details from users of online services.
Why this matters: if you don’t regularly check your HMRC account or app, it becomes much easier to miss deadlines, notices, or payment demands. Staying digitally organised is no longer optional.
HMRC Resumes Direct Recovery of Debts from Businesses
HMRC has restarted its Direct Recovery of Debts powers, which were paused during the COVID-19 pandemic.
Under this process, HMRC can recover tax debts of £1,000 or more directly from business bank or building society accounts. This only happens once appeal windows have passed and repeated attempts to contact the business have failed. Before any funds are taken, HMRC will carry out a face-to-face visit to confirm identity, explain the debt, and discuss alternatives such as a Time to Pay arrangement.
The rollout is currently limited and tightly controlled, but some businesses have already begun receiving letters.
If you receive a letter or know you have overdue tax, acting quickly is key. In many cases, agreeing a payment plan can prevent direct recovery.
Six-Month Qualifying Period for Unfair Dismissal Confirmed
After months of debate, the Government has confirmed a six-month qualifying period before most employees gain protection from unfair dismissal.
This change is not expected to take effect before 2027, but it still represents a major shift from the current two-year qualifying period. Employers, particularly smaller businesses, will need time to review contracts, probation periods, and performance management processes.
Alongside this, statutory sick pay and paternity leave are set to become day-one rights from April 2026, and the new Fair Work Agency will be launched.
The direction of travel is clear: employment protections are expanding, and businesses will need to adapt their people processes accordingly.
National Living Wage and Minimum Wage Increases from April 2026
The Government has confirmed significant wage increases from 1 April 2026.
The National Living Wage for those aged 21 and over will rise by 4.1% to £12.71 per hour. The National Minimum Wage for 18 to 20-year-olds will increase by 8.5% to £10.85 per hour. Rates for 16 to 17-year-olds and apprentices will rise by 6% to £8 per hour.
Around 2.4 million workers are expected to benefit. However, these increases come on top of the £24 billion rise in employers’ National Insurance that took effect in April 2025.
For business owners, this means higher staffing costs that should be factored into pricing, cashflow forecasting, and budgeting well ahead of April 2026.
Final Thought
This month’s updates reinforce a consistent theme: greater digital interaction with HMRC, firmer enforcement of tax debts, expanding employee rights, and rising employment costs.
Businesses that plan ahead will be far better placed than those forced to react at the last minute. If any of these changes affect you and you want to talk through the implications, we’re here to help.