Venture Capital Trust (VCT) and Enterprise Investment Scheme (EIS)
From 6 April 2026, there will be a significant increase to the VCT and EIS company investment limit from £5 million to £10 million per year. The company investment limit will also rise to £20 million for Knowledge Intensive Companies (KICs). The lifetime company investment limit will rise to £24 million for VCTs and EIS, and £40 million for KICs. The gross assets test will increase to £30 million before share issue, and £35 million after, from April 2026.
The government is reducing the amount of VCT Income Tax relief from 30% to 20% with effect from April 2026.
Enterprise Management Incentives (EMI) company eligibility expansion
From 6 April 2026, the EMI company eligibility criteria will be expanded. The employee limit will increase from 250 to 500, the gross assets test from £30 million to £120 million, and the company share option limit from £3 million to £6 million.
Capital Allowances
From April 2026, the main rate of writing down allowances will be reduced from 18% to 14%. This is the rate of annual allowances applied to assets in the main pool, which includes most plant and machinery. This only applies to assets on which 100% capital allowances were not claimed on purchase.
However, a new 40% First-Year Allowance (FYA) will be introduced for main rate expenditure from 1 January 2026. This will not be available for cars, second hand assets or assets for overseas leasing. There were no changes to the existing 100% Annual Investment Allowance, which remains limited to £1 million, or full expensing for companies.
The 100% FYA for zero emission vehicles and electric-charge points have been extended for another year to 31 March 2027 for companies and 5 April 2027 for unincorporated businesses.
Late Filing Penalties
The government will double the penalty for taxpayers submitting a late Company Tax return from 1 April 2026. This will be legislated for in Finance Bill 2025-26.
Late submission penalties will not apply for quarterly updates during the 2026-27 tax year for Income Tax Self-Assessment (ITSA) taxpayers required to join Making Tax Digital (MTD). The government will apply the new penalty system for late submission and late payment to all ITSA taxpayers not already due to join the new system from 6 April 2027.
Penalties due for late payment of ITSA and VAT will increase from 1 April 2027.
Capital Gains Tax
There were no changes to the headline rates for Capital Gains Tax (CGT), which many had expected.
The government is restricting the rate of Employee Ownership Trust CGT relief from 100% to 50% with immediate effect.
For the transfer of a business to a limited company on or after 6 April 2026, incorporation relief will no longer be applied automatically. There will be a new requirement to claim the relief.
National Minimum Wage and Living Wage
From April 2026 the National Living Wage increases to £12.71 per hour. The National Minimum Wage for 18-20 year olds increases to £10.85 per hour and for 16-17 year olds and apprentices to £8 per hour.
