The start of a new financial year brings a fresh opportunity to refocus, plan ahead and ensure everything is in order for the months to come. It’s the perfect time to review key responsibilities, stay on top of important deadlines and put strong foundations in place for continued success.
In this newsletter, we’re sharing useful insights, practical updates and guidance to help you navigate the year ahead with clarity and confidence.
We look forward to supporting you throughout the year and helping you and your business thrive.
Employment Rights Act 2025
What Employers Need to Know
The Employment Rights Act 2025 introduces a number of important changes to UK employment law, many of which will come into effect from April 2026. Below is a summary of the key updates and what they mean for employers.
Scope of the Act
The Act received Royal Assent on 18 December 2025 and applies across Great Britain. It does not extend to Northern Ireland, where employment law remains devolved.
Paternity and Parental Leave Enhancements
From April 2026:
- Employees will have a day one right to give notice for both paternity leave and unpaid parental leave
- Paternity leave and pay can now be taken after shared parental leave and pay (this was previously not permitted)
- Transitional rules apply where a baby is expected between 5 April and 25 July 2026 – only 28 days’ notice is required (instead of the usual 15 weeks). From 26 July 2026, standard notice requirements resume
- Leave cannot be taken under these new rules before 6 April. From 26 July, the usual notice period applies
- These changes apply to leave only; existing eligibility rules for paternity pay remain unchanged
Bereaved Partner’s Paternity Leave
From 6 April 2026:
- Fathers or partners will be entitled to take up to 52 weeks of bereaved partner’s paternity leave if the mother or primary adopter dies
- This is a day one right
- Leave must be taken within 52 weeks of the child’s birth, adoption placement, or entry into Great Britain (for overseas adoptions)
- Pay during this leave is at the employer’s discretion
Statutory Sick Pay (SSP Reforms
From 6 April 2026:
- SSP will be payable from day one of sickness, removing the current four day waiting period
- The lower earnings limit will be abolished, extending eligibility to lower paid workers
- SSP will be calculated at 80% of average weekly earnings or the flat rate (whichever is lower)
- The flat rate will increase to £123.25 per week
Collective Redundancy Penalties
From 6 April 2026:
- The maximum period for a Collective Redundancy Award will double from 90 to 180 days’ pay
- This applies where employers fail to properly consult on proposals affecting 20 or more redundancies within a 90 day period
New Enforcement Body – Fair Work Agency
From 7 April 2026:
- A new Fair Work Agency will be established on 7 April 2026
- It will oversee inspections and enforce compliance with employment rights
Whistleblowing Protections Strengthened
- Workers who report sexual harassment will now be explicitly protected under whistleblowing laws
- Protections include safeguards against detriment and unfair dismissal
What This Means For Employers
These reforms significantly expand employee rights and increase compliance obligations. Employers should review and update policies, contracts and internal procedures to ensure readiness.
Corporation Tax Update
Important Changes
There are a couple of key corporation tax changes coming into effect from April 2026 that companies should be aware of. We’ve summarised the main points below.
Late Filing Penalties – Set to Increase
For corporation tax returns with a filing deadline of 1 April 2026 or later, HMRC will apply higher penalties for late submission:
- £200 if your return is late
- £400 if it is more than 3 months late
- £1,000 if returns are filed late on 3 successive occasions
- £2,000 if returns are more than 3 months late on three successive occasions
These increases make it more important than ever to ensure returns are submitted on time to avoid unnecessary costs.
Loans to Participators – Higher Tax Charge
Although corporation tax rates will remain unchanged at 25% (main rate) and 19% (small profits rate), there is a change affecting close companies.
For loans made to participators on or after 6 April 2026, the tax charge will increase from 33.75% to 35.75%.
If your company regularly makes loans to shareholders or other participators, this change may increase the overall tax cost and should be factored into planning.
Winter Fuel Payments & Tax Codes
What You Need to Know
HMRC has started adjusting tax codes to recover Winter Fuel Payments and this may affect clients who are of State Pension age.
What’s Changing?
From the 2025/26 tax year, HMRC is beginning to reclaim Winter Fuel Payments through your tax code. This means your tax-free Personal Allowance may be reduced to collect the tax due on payments you’ve already received.
Example
If you:
- Receive the basic State Pension and
- Received a Winter Fuel Payment of £200 in December 2025
HMRC may reduce your Personal Allowance by £1,000 in 2026/27.
This could result in a ‘K’ tax code, meaning additional tax is collected through your pension or other income.
Looking Ahead to 2027/28
In the 2027/28 tax year, HMRC plans to go further by recovering two years’ worth of Winter Fuel Payments at once:
- 2026/27 payment
- 2027/28
This could mean up to £2,000 is deducted from your Personal Allowance.
Importantly, this also means tax on the 2027/28 Winter Fuel Payment may start being collected from April 2027, before you actually receive the payment in December 2027.
What This Means For You
- Your tax code may change unexpectedly
- You could see reduced take-home income from pensions or other taxable sources
- Some individuals may be pushed into a ‘K’ tax code
What Should You Do?
If you receive a tax code notice and are unsure how it affects you, it’s important to review it carefully. Errors can occur and the impact on your income may be significant.
If you’d like help checking your tax code or understanding how these changes affect you, please get in touch.
How We Can Help
If you have any questions about the topics covered in this month’s newsletter and how they might affect you or your business, please don’t hesitate to reach out.
We are committed to keeping our clients ahead of regulatory changes, so you can focus on running your business with confidence.
At Clear Vision, we’re more than a team of professionals; we’re a group of people who genuinely enjoy supporting our clients. We’re here to help you.
However you need us to support you through your journey as a business owner, we’re here for you!
This month’s Clear Vision positive thought:
“Real change, enduring change, happens one step at a time.”
Ruth Bader Ginsburg