UK Business Update 2026: Key Tax, Compliance & Financial Changes You Need to Know

Welcome to our round-up of the latest business news for our clients. To discuss how these updates may impact your business, contact us today for expert support and guidance tailored to your needs.

Disincorporation: Does it Make Sense for You?

Previously, incorporating as profits grew was standard advice. Now, company owners may wonder, “Do I still need a limited company?”

This question often arises from higher tax bills, especially after reduced dividend allowances and higher tax rates. Sometimes, operating as a sole trader is now more tax-efficient than as a limited company.

Tax is just one aspect of the decision.

This article explores the key factors to consider when thinking about disincorporating your business.

Loss of limited liability

A limited company is a separate legal entity that protects your personal assets from business liabilities.

As a sole trader, that protection is gone. If financial or legal issues arise, you may be personally liable.

Some businesses can manage this risk through insurance. Others may retain limited liability for its protection, even if tax benefits decline.

What happens to the company’s assets?

Disincorporation involves transferring the company’s assets to the individual owner.

This creates tax issues, especially for property or goodwill. Transfers usually occur at market value, so corporation tax may be due, even if no cash changes hands.

This is why disincorporation needs thoughtful planning, not quick action. A good first step is to schedule a free review with our advisor to discuss your specific situation and map out the process. This ensures that your decisions are well-informed from the outset.

How about VAT?

In many cases, when a VAT-registered business sells assets, VAT is chargeable.

However, where a business is transferred from a company to an individual, it may qualify as a Transfer of a Going Concern (TOGC). If the relevant conditions are met, VAT may not be payable.

Meeting these conditions is vital to avoid unexpected VAT costs.

How is the company closed?

In addition to transferring the trade, the company must be formally closed.

Common options include:

• Members’ Voluntary Liquidation (MVL): typically used for larger companies, but can be costly and requires an insolvency practitioner
• Voluntary strike-off: a simpler and more cost-effective option for smaller companies

The chosen method can affect the taxation of distributed profits or reserves.

Ongoing tax position after disincorporation

As a sole trader or partner, profits are taxed as earned.

This means:

• You cannot control the timing of income extraction.
• Profits cannot be retained in the business at lower tax rates.
• Payments on account may create cash flow challenges.

Know how this impacts your finances before deciding.

Commercial and practical considerations

Disincorporation may also have wider implications, including:

• Contracts held in the company’s name
• Banking and finance arrangements
• Professional registrations and insurance
• How your business is perceived by customers and suppliers

Do not overlook these practical considerations.

Is disincorporation right for you?

Disincorporation is not the simple reverse of incorporation. Often, exiting a company structure is more complex than entering one.

Thoroughly assess the financial and practical effects to make the right decision.

Thinking about disincorporating your business?
Book a free consultation with us for personalised advice on disincorporation. We can review your numbers, explain tax implications, and guide you through each step of the process with confidence.

Next, we turn to developments in e-invoicing.

HM Revenue & Customs (HMRC) has recently released a research paper exploring how small and medium-sized enterprises (SMEs) view electronic invoicing (e-invoicing).

In the Autumn Budget 2025, the government announced that mandatory e-invoicing for VAT invoices will be introduced from 2029. This research informs policies supporting SME needs and competitiveness.

An e-invoice, sent in digital format, can be automatically processed by accounting systems. This integration streamlines bookkeeping and boosts efficiency.

The government also sees e-invoicing as a way to improve tax accuracy.

Current Adoption Levels

The research highlights a mixed level of awareness and adoption:

• 59% of businesses are familiar with e-invoicing
• Only 29% are currently using it.
• Just 10% of SMEs both send and receive e-invoices.

At present, the most common methods remain PDFs and email, with many businesses still relying on paper-based invoicing.

What This Means for Your Business

E-invoicing will not be mandatory until 2029, but it signals a major change in how businesses manage invoicing and tax reporting.

Preparing early can help you:

• Improve efficiency and reduce manual admin.
• Minimise errors in financial records
• Ensure a smoother transition ahead of the deadline.

Start Preparing Now

Review your current systems now to strengthen your position when changes take effect.

Book a free consultation today to check if your accounting software supports e-invoicing or to discuss upgrading your systems. Starting early gives you more time to train staff, identify any gaps, and resolve any issues before the switch becomes mandatory in 2029. We’ll help you plan ahead and implement the right solution for your needs.

Read more:

State Pension Amounts Increase… But So Does the State Pension Age

The UK government confirms a 4.8% rise in basic and new State Pensions, boosting payments for millions.

For many, this means an extra £575 per year to help with rising costs.

What Has Changed?

The latest increases include:

Payment Type	New Amount	What It Means for You
New State Pension	£241.30/week	Up by £11.05 per week
Basic State Pension	£184.90/week	Up by £8.45 per week
Pension Credit	£4,300/year (avg)	Extra support for low-income retirees
Single Guarantee	£238.00/week	Minimum income level increased
Couple Guarantee	£363.25/week	Higher joint support threshold

These increases are part of the government’s Triple Lock Guarantee, ensuring pensions rise in line with inflation, earnings or 2.5%, whichever is highest.

These changes are automatic; your payments should reflect the increase.

State Pension Age Begins to Rise

Alongside the increase in payments, there is also a significant change to be aware of.

The current State Pension age is 66, but it will gradually rise from April 2026.

• Individuals born between 6 April and 5 May 1960 will see their State Pension age increase by one month.
• Those born between 6 May and 5 June 1960 will see their age increase by 2 months.

This gradual increase continues until the State Pension age reaches 67.

What This Means for You

While higher pension payments are positive, the increase in State Pension age means:

• You may need to wait longer before accessing your pension.
• Retirement planning becomes even more important.
• Future increases in pension age are likely as life expectancy rises.

Plan Ahead with Confidence

Knowing how these changes affect your retirement plans is essential.

Need help planning for retirement?
Book a free consultation today to understand your retirement options and to get tailored advice and support as you plan for the future.

Read more:
https://www.gov.uk/government/news/over-12-million-pensioners-to-receive-575-state-pension-boost

New Rules to Eliminate Costly Subscription Traps

The UK government has announced new rules to protect consumers from subscription traps, with the changes coming into effect in spring 2027.

These measures increase transparency, ease cancellations, and give consumers more control over payments.

What Will Change?

The proposed rules will introduce several key protections:

• Clear upfront information before any subscription is agreed upon
• Reminders before free or discounted trials end, and before annual (or longer) contracts automatically renew
• Simplified cancellation processes, including easy online cancellation for digital sign-ups
• A new 14-day cooling-off period:
  • After a free or discounted trial ends
  • When an annual (or longer) contract renews

How Refunds Will Work

The government has confirmed that cooling-off rights and refunds will largely align with existing consumer protection rules.

This means:

• Consumers may receive a full or proportionate refund if they cancel within the cooling-off period.
• Proportionate refunds allow businesses to retain payment for services already provided
• Current rules and digital content waivers will remain in place.

Are There Any Exemptions?

Some subscriptions are exempt from these rules.

Charitable, cultural, and heritage organisation memberships are excluded from the new rules.

What This Means for Your Business

If your business relies on subscription-based revenue, these changes could have a direct impact on:

• Customer onboarding processes
• Renewal communications
• Cancellation procedures
• Revenue forecasting

Now is a good time to review your subscription model to ensure it aligns with upcoming regulations. Key review points include:

• Reviewing the clarity and transparency of your subscription terms and conditions
• Making sure your cancellation process is straightforward and accessible, including online options if you offer digital sign-ups
• Implementing renewal reminders before free or discounted trials end, and before annual contracts automatically renew
• Checking that you offer the required 14-day cooling-off period after renewals and trial periods
• Verifying any exemptions or special cases relevant to your business

Working through this checklist can help you identify any gaps and prepare for compliance in advance.

Stay Ahead of the Changes

Although the rules are not expected until 2027, early preparation can help you avoid disruption and maintain customer trust.

Need help reviewing your subscription model?
If you would like advice on how these changes may affect your business or support in updating your processes, book a free consultation with us today. We are here to help you stay compliant and plan ahead with confidence.

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Farewell to the Valuation Office Agency

From April 2026, the Valuation Office Agency (VOA) has been formally integrated into HM Revenue & Customs (HMRC) as part of a government cost-saving initiative.

As a result, the VOA has ceased to exist as a separate executive agency.

What Has Changed?

The Valuation Office now operates as part of HMRC and continues to be responsible for:

• Valuing business rates
• Assessing council tax bands

This structural change is administrative, and businesses have been reassured that there will be no disruption to existing services.

What Stays the Same?

Despite the organisational shift, the core services remain unchanged:

• Business rates valuation checks and challenges
• Council tax band appeals
• Work carried out by rent officers

The customer helpline and online contact form are still available, although you may notice that caseworker email addresses now end in @hmrc.gov.uk.

What This Means for Your Business

For most businesses, this change will be seamless. However, it is worth being aware of:

• Updated contact details
• Potential future integration with HMRC systems, Ongoing access to the same valuation and appeals processes
• Although disruption is not expected, as with any major structural change there is a slight risk of administrative delays or new processes emerging during the transition. We recommend monitoring any changes in how your cases are handled and keeping an eye on communications from HMRC, so that any unforeseen issues can be addressed quickly.

Stay Informed and Prepared

While this is largely an administrative change, keeping up to date ensures you know where to go for support when needed.

Need help with business rates or valuations?
If you would like advice on challenging your business rates, understanding valuations, or managing related costs, book a free consultation with us today. We are here to help you navigate the process with confidence.

Read more:
https://www.gov.uk/government/news/valuation-office-joins-hm-revenue-and-customs

New Access to Sick Pay and Parental Leave for Workers in Great Britain

New provisions under the Employment Rights Act came into effect on 6 April 2026, introducing significant changes to employee entitlements across Great Britain.

Key Changes for Employers and Employees

The new rules include:

• Statutory Sick Pay (SSP) from day one
  Employees are now entitled to SSP from the first day of sickness absence, rather than waiting until the fourth day.
• Immediate access to paternity leave
  New fathers and partners can now take paternity leave from their first day of employment, removing the previous six-month qualifying period.
• Day one rights to unpaid parental leave
  Employees are now eligible for unpaid parental leave immediately, rather than after one year of service.
• Bereaved Partner’s Paternity Leave
  A new right allows partners to take leave following the death of a child’s mother or primary adopter.
• Launch of the Fair Work Agency
  A new enforcement body has been created by combining three existing agencies to improve the monitoring and enforcement of employment rights.

What This Means for Your Business

Employers should take steps to:

• Update sickness and HR policies.
• Ensure payroll systems reflect the new SSP rules.
• Account for regional differences when operating across Great Britain and Northern Ireland. For example, sick pay and parental leave entitlements can differ between these regions. Be sure to review the official government guidance for each country, or speak with your advisor, to ensure your business policies remain up to date and compliant.

Stay Compliant

Need help updating your payroll or HR processes?
If you would like support implementing these changes or ensuring your business remains compliant, book a free consultation with us today. We are here to help you navigate the updates with confidence.

Read more:
https://www.gov.uk/government/news/millions-of-workers-get-new-access-to-sick-pay-and-parental-leave

Pioneering Employment Rights for Employees in Northern Ireland

In April 2026, Northern Ireland introduced ground-breaking employment rights, becoming the first jurisdiction in the northern hemisphere to provide specific support for miscarriage and early pregnancy loss.

New Entitlement for Miscarriage

Employees in Northern Ireland who experience a miscarriage, or those with a defined connection to someone who has, are now entitled to:

• Parental Bereavement Leave and Pay
• Coverage for:
  • Loss of a child under 18 (including stillbirth from 24 weeks)
  • Miscarriage (including both spontaneous loss and certain medical interventions)

Importantly:

• No medical evidence is required.
• Employees simply need to submit a written self-declaration

Day One Right to Bereavement Pay

From April 2026:

• Statutory Parental Bereavement Pay becomes a day one right.
• Previous service and minimum earnings requirements have been removed.

Please note: these changes are not retrospective and only apply to qualifying events from 6 April 2026 onwards.

Who Do These Changes Apply To?

These new rights apply only to employees in Northern Ireland.

For businesses operating across both Northern Ireland and Great Britain, it is essential to:

• Apply the correct rules based on employee location.
• Update payroll systems and HR policies accordingly.

Prepare Your Business

Operating across multiple regions?
If your business employs staff in both Great Britain and Northern Ireland, it is vital to ensure compliance with the different rules.

Book a free consultation with us today for expert support in aligning your payroll, policies and processes with the latest employment legislation.

Read more:
https://www.nibusinessinfo.co.uk/content/changes-parental-bereavement-leave-and-pay-april-2026

FAQ

1. What is disincorporation, and when should I consider it?

Disincorporation is the process of moving from a limited company structure to operating as a sole trader or partnership. It may be worth considering whether tax changes reduce the benefits of incorporation, but professional advice is essential given the tax and legal implications.

2. When will e-invoicing become mandatory in the UK?

E-invoicing is expected to become mandatory for VAT-registered businesses from 2029. However, businesses are encouraged to prepare early to improve efficiency and compliance.

3. How much has the State Pension increased in 2026?

The State Pension has increased by 4.8%, with the full new State Pension rising to £241.30 per week.

4. Is the State Pension age changing?

Yes, from April 2026, the State Pension age will gradually increase from 66 to 67, depending on your date of birth.

5. What are the new subscription rules for businesses?

New rules (expected in 2027) will require clearer terms, easier cancellations, renewal reminders, and a 14-day cooling-off period for subscriptions.

6. What changes have been made to Statutory Sick Pay (SSP)?

From April 2026, employees are entitled to SSP from the first day of sickness absence, rather than the fourth day.

7. What is the impact of HMRC absorbing the Valuation Office Agency?

The change is mainly administrative. Services such as business rates, valuations, and council tax assessments will continue as normal under HMRC.

8. Should businesses prepare now for these changes?

Yes. Early planning can help reduce risks, improve compliance, and ensure your business is financially prepared for upcoming changes.