Why April 2026 is a huge month for businesses

Big changes are afoot for small businesses – and many will mean higher costs at a time when margins are already under pressure.

From rising energy and employment costs to expanded employee rights, these are some of the big changes firms need to prepare for in April. 

Energy standing charges will rise

UK business energy costs are already among the highest in the developed world, threatening competitiveness and deterring investment. 

According to the Federation of Small Businesses (FSB), small firms will see their annual standing charges (fixed daily fees paid regardless of energy usage) jump by more than 40% this April. 

By way of example, a business with an annual electricity consumption of around 40,000kWh – akin to what a small restaurant, hair salon or gym might use – would see their annual standing charge rise from £3,680 to £5,283, according to the FSB. 

Another business group, the British Chambers of Commerce (BCC), found in a recent survey that around half (52%) of businesses felt under pressure to raise their prices because of high utility costs. 

The ongoing conflict in the Middle East could push bills higher still in what the manufacturers’ trade body Make UK has warned could be the “last straw” for some ventures. 

Labour costs will go up again

The National Living Wage (NLW) is set to increase again in April, to £12.71 per hour.

The high and growing cost of paying staff is one of the biggest challenges facing many small employers. 

For many, these higher costs are already leading to cutbacks. A survey published by the BCC in January suggested less than a quarter (23%) of businesses were planning to increase the size of their workforce in the next three months.

The FSB analysed the cumulative effect of labour cost increases between January 2025 and April 2026. It found that a small employer with nine staff on the national living wage would have seen its annual employment costs rise by £25,850 during that time. The same business’s employer national insurance bill would have increased by £4,400.

Business rates will change

Many companies in England will see their business rates bills rise from April. Key changes include: 

• All business properties will receive a new Rateable Value (RV) based on April 2024 market rents. This is intended to ensure bills better reflect current property values.
• The temporary 40% relief for retail, hospitality, and leisure businesses will be replaced by permanently lower multipliers (tax rates) for eligible properties (typically those with RVs below £500k).
• The system will also expand from two tax rates to five, reflecting both business type and property value. 
• Pubs and live music venues will receive an extra 15% relief for the 2026/27 tax year, and their bills will be frozen in real terms for the following two years.

A new approach to sick pay will come into effect

Some of the main changes from the Government’s flagship set of reforms, the Employment Rights Act 2025, come into effect in April.

One of the biggest changes is to make all employees eligible to Statutory Sick Pay (SSP) payments from day one of sickness. This is considered part of a major shift in the UK’s approach to sick pay, and the FSB has calculated that will add around £110 a year for every worker on the minimum rate. There are also concerns that staff could take more time off because of the changes.

The month will also see the launch of the Fair Work Agency (FWA). This new agency, attached to the Department for Business and Trade, has been set up to make the enforcement of certain employment rights more effective and easier to access for employees.

Inheritance tax business relief changes will start

Changes to the Inheritance Tax reliefs available for assets which qualify for Business Property Relief and Agricultural Property Relief will also come into force in April. 
Chancellor Rachel Reeves announced the changes in her maiden 2024 Autumn Budget, but after significant opposition – particularly from farmers – watered them down the following year.

The result is that the first £2.5 million of qualifying assets will be exempt from IHT, while any value above this will attract 50% relief.

Other changes coming in April 2026
It doesn’t stop there. Among other changes coming into force this month are:

• Vehicle Excise Duty (VED) for HGVs will increase in line with the Retail Price Index (RPI), marking the first hike since 2014, while the government will also uprate the HGV Levy in line with the RPI.
• Dividend tax rates are increasing by 2% - a blow for company directors who rely on dividends for part of their income.
• HMRC’s new Making Tax Digital policy, which makes it compulsory for businesses to use a digital system to record and report income, will start to be phased in. The system applies to sole traders and landlords, with start dates dependent on their level of qualifying income.

Taken together, the many changes landing at once mean that cost pressures and regulatory demands are intensifying at the same time - April 2026 is a big month for UK businesses.