The small business landscape in the UK has seen a flurry of activity this March 2026, with the government unveiling what they call the “toughest crackdown on late payments in 25 years” and several tax deadlines looming for April.
Here is a breakdown of the most significant news for UK SMEs and sole traders.
1. The "Time to Pay Up" Crackdown (March 24, 2026)
In a major policy shift, the government announced sweeping new powers for the Small Business Commissioner to tackle the £11 billion-a-year late payment crisis.
- New Fines: Large firms and “persistent offenders” can now face multi-million-pound fines for failing to pay suppliers on time.
- 60-Day Cap: A legal maximum 60-day payment term is being introduced for all large firms.
- Mandatory Interest: Commercial contracts must now include statutory interest set at 8% above the Bank of England base rate for late invoices.
- Board Accountability: Large company boards will be required to publish explanations for poor payment performance in their annual reports.
2. April 2026 Tax & Compliance Changes
With the new tax year starting on April 6, 2026, several major changes are taking effect:
- Making Tax Digital (MTD): This is the “big one.” If you are a sole trader or landlord with a turnover over £50,000, you must now keep digital records and send quarterly updates to HMRC instead of a single annual return.
- Dividend Tax Hike: The standard dividend tax rate increases from 8.75% to 10.75% for the 2026-27 tax year.
- Capital Gains Tax (CGT): The rate for business asset disposals is increasing to 18%.
- Business Rates Reform: A new, permanently lower tax rate for retail, hospitality, and leisure properties with a rateable value below £500,000 begins this April.
3. Employment Law Shifts
The Employment Rights Act 2025 begins its phased rollout this April, significantly expanding worker protections:
- Statutory Sick Pay (SSP): The “lower earnings limit” and the three-day waiting period are being removed. SSP is now payable from day one of absence for more low-paid workers.
- Day-One Rights: Paternity Leave and Unpaid Parental Leave become “day-one” rights, meaning employees no longer need a year of service to qualify.
- Minimum Wage Increase: The National Living Wage (for those 21+) rises to £12.71 per hour on April 1.
4. New Funding & Procurement Targets
- SME Procurement Targets: The government has set a target to spend £7.4 billion annually directly with small businesses by 2028. Departments like DSIT (40%) and DCMS (33%) have set particularly high SME spending goals.
- EV Grants: A new £1 billion boost was announced on March 25 for the “Zero Emission Truck and Van” grants. Small firms can save up to £5,000 off new electric vans and up to £81,000 off heavy electric trucks.
- Regional Grants: New competitive grants for small businesses in “priority regions” (75 towns and 275 trailblazer areas) are expected to open in April 2026.
Quick Summary for Sole Traders: If your turnover is above £50k, ensure your accounting software is MTD-compatible before April 6 to avoid HMRC penalties.