Finance Act 2026: Essential Tax Changes for UK CFOs from April 2026
Published: April 20, 2026
The Finance Act 2026 received Royal Assent on March 18, 2026, enacting Budget 2025 measures. These changes hit from April 6, 2026, reshaping compliance, capital spend, deal structures, and exit planning for UK businesses and PE firms. CFOs must act now: review portfolios, update forecasts, tighten controls.
Making Tax Digital (MTD) for Income Tax
From April 6, 2026, sole traders and landlords with >£50k gross income must use digital records and submit quarterly updates via MTD-compatible software. Phase-in: £30k in 2027, £20k in 2028. Affects subcontractors, key-person consultants in PE-backed firms.
Implication: Portfolio companies face higher admin costs if owners non-compliant. HMRC letters incoming; exemptions rare. ICAEW estimates 864k impacted initially. ICAEW guidance.
Capital Allowances: FYA Boost but WDA Cut
Main rate writing-down allowance drops 18% to 14% from April 6 (unincorporated) / April 1 (companies). Offset: New 40% first-year allowance for main-rate assets from Jan 1, 2026 – vital for leasing firms unable to full-expense.
Zero-emission cars/EV chargers: 100% FYA extended to 2027. CFOs: Accelerate capex planning; model hybrid periods. Deloitte TaxScape.
Carried Interest into Income Tax
From April 2026, carried interest taxed as trading profits at up to 47% + NICs (effective 34% post-multiplier for qualifying). Ends CGT 28% regime. PE carry pools hit hard; restructure incentives now.
ICAEW: Multiplier 72.5% adjusts taxable amount. ICAEW individuals.
IHT: APR/BPR Capped at £2.5m for 100% Relief
Combined £2.5m allowance per person for 100% APR/BPR; excess at 50% (effective 20% IHT). AIM shares: Flat 50% BPR. Refreshes 7/10 years; spousal transfer ok.
PE implication: Distressed turnaround assets lose appeal for estates. Succession planning urgent. Armstrong Watson top 10.
CGT: BADR/Investors’ Relief to 18%
Gains under BADR/IR: 14% → 18% from April 6. £1m lifetime limit unchanged. Exit tax up 28% vs pre-2025. M&A: Price deals accordingly; consider holdcos.
Business Rates Revaluation
England/Wales: Nationwide reval April 1. Lower multipliers for RHL <£500k RV; hikes above. Transitional relief caps rises. Pubs/music: 15% relief 2026/27.
CFOs: Budget property costs; challenge RVs. Deloitte.
CIS: Fraud Crackdown
From April 6: HMRC instant GPS revocation + liability/penalties if knew/should-know fraud links. Reapply wait: 1→5 years. Nil returns mandatory.
Construction-heavy PE: Audit supply chain. ICAEW.
VAT Relief for Charity Donations
From April 1: Zero-rate goods donations for needy/distribution or charity non-business use. Caps: £100/item, £200 essentials. No excise goods.
Opportunity: Clear inventory tax-free. Taxis/private hire out of TOMS Jan 2.
Umbrella Companies & EMI Expansion
Umbrellas: Joint/several PAYE/NIC liability up chain from April 6. Recruitment risks rise.
EMI: Limits up – 500 employees (£120m assets). Options hold 15 years. Attract talent cheaper.
Action Items for CFOs
- MTD readiness: Software, training for self-employed.
- Capex: FYA claims Q1 2026.
- PE: Model carry tax; IHT-proof portfolios.
- Rates/CIS: Vendor audits.
- Forecast: Factor rate hikes (dividends, CGT).
Stay ahead. Tanous Limited offers PE-facing CFO advisory on compliance, M&A tax, turnarounds. Contact Mark Hendy for tailored strategy.
Sources: Deloitte, ICAEW Tax Faculty, HMRC, Armstrong Watson.