UK Tax Year-End 2025/26: The Fintech CFO's Post-6-April Cleanup

What Closed on 5 April, and Why It Matters More This Year

The UK tax year runs from 6 April to 5 April, and 2025/26 has just closed. For fintech CFOs, tax year-end is not just a personal-tax event. It is a structural checkpoint for the company: several corporate reliefs, share scheme mechanics, and reporting obligations reset or accrue at this date. The window between 6 April and roughly 5 May is when the cleanup happens.

The 2025/26 close matters more than usual because three structural changes ran through the tax year and are now bedded into practice for the first full cycle: the merged R&D expenditure credit scheme (in force for accounting periods beginning on or after 1 April 2024, so most Dec 2025 year-ends closed under the new regime), the ongoing MTD-VAT rollout for businesses below the £85,000 threshold, and the abolition of the FHL regime that some venture-backed founders had used for property portfolios. The Spring Statement in March 2026 confirmed no further rate changes to corporation tax, R&D, or EIS/SEIS for the 2026/27 year, so this is a year of consolidation rather than new complexity — which makes it a good year to close cleanly rather than defer.

R&D Tax Relief: The New Claim Window Reality

For accounting periods that ended between 6 April 2025 and 5 April 2026, R&D claims are now filed under the merged R&D expenditure credit (RDEC) scheme for most SMEs, or the enhanced R&D intensive scheme (ERIS) for loss-making SMEs where R&D expenditure exceeds 30 per cent of total expenditure. The old SME repayable credit route is gone for accounting periods beginning on or after 1 April 2024.

The practical implication for a CFO closing a March or December 2025 year-end is that the claim mechanics have changed. Under the merged RDEC, the headline rate is 20 per cent of qualifying expenditure, taxed at the marginal corporation tax rate, giving a net benefit of approximately 15 to 16.2 per cent depending on profit level. Under ERIS, loss-making R&D-intensive SMEs receive an enhanced deduction of 186 per cent and a payable credit at 14.5 per cent, giving a net cash benefit of approximately 27 per cent of qualifying expenditure.

Two operational items require immediate attention. First, if you are a first-time claimant or have not claimed in the past three accounting periods, HMRC requires an advance notification form within six months of the accounting period end. Missing this window forfeits the claim entirely, and there is no reasonable-excuse relief. For a March 2026 year-end, the deadline is 30 September 2026. Diarise it now.

Second, the Additional Information Form (AIF) is mandatory for all R&D claims and must be submitted before or alongside the CT600 amendment. Ensure your R&D adviser is not planning to submit the claim without the AIF pre-lodged; HMRC will reject the claim and treat it as never submitted.

EMI Option Pool: Post-Year-End Housekeeping

Enterprise Management Incentive (EMI) schemes remain the workhorse of UK startup equity, and tax year-end is when several EMI mechanics require CFO attention. The reporting deadline for EMI events in the 2025/26 tax year (grants, exercises, lapses, cancellations) is 6 July 2026 via the ERS annual return. Miss this deadline and HMRC levies fixed penalties, but more importantly, unreported exercises can be treated as taxable at the market value at exercise rather than the option price, creating a large personal tax bill for the option holder.

Beyond compliance, the year-end is also when three strategic EMI decisions should be revisited.

Exercise Windows for Leavers

Under most EMI plans, a leaver has 90 days from termination to exercise vested options before they lapse. The tax year-end is a useful checkpoint to reconcile HR records against the option register and confirm no exercise windows are being missed. In practice, we see roughly 3 to 5 per cent of leaver-exercise decisions handled incorrectly at the point of departure, resulting in either options being incorrectly lapsed (a lost economic value to the leaver) or exercised outside the window (a taxable event under income tax rather than CGT).

Working Time Test Compliance

An EMI option holder must meet the working time test — 25 hours per week or 75 per cent of working time, on the company's business — throughout the vesting period. For hybrid or fractional employees, this test is not automatic. If a founder moved to part-time during 2025/26 to work on a second venture, or if a key engineer took a sabbatical, the working time test may have been broken. Once broken, further vesting under the EMI scheme is disallowed and the tax advantages are lost from that date forward.

Option Pool Sizing for the Next Round

The end of the tax year is a natural cadence for reviewing the option pool size ahead of the next funding round. Institutional investors typically require a 10 to 15 per cent post-money option pool at Series A and 8 to 12 per cent at Series B, refreshed pre-money at the round. If your current pool is below the level required, refreshing before the round means existing shareholders bear the dilution; refreshing after means new investors bear it. This is a term-sheet negotiation but the modelling needs to be done now, before your next investor conversation.

MTD-VAT: The 2026 Cutoff and What Compliance Actually Means

Making Tax Digital for VAT is now mandatory for all VAT-registered businesses regardless of turnover, following the April 2024 extension to sub-threshold businesses. For fintech CFOs whose companies registered voluntarily to reclaim input VAT on early-stage spend, this creates a specific compliance obligation: digital records maintained in functional-compatible software, digital links between systems, and submissions via API-enabled software.

The failure modes we see most often are:

• Manual reformatting between systems. If your VAT return is prepared by copying figures from your accounting system into a spreadsheet, then keying totals into a submission tool, you are not compliant. Digital links means the entire chain from source data to submission must be electronic without human transcription.
• Bridging software workarounds. Bridging software is legitimate for connecting an accounting system to HMRC's API but does not exempt you from digital-links requirements upstream. Bookkeepers occasionally use bridging tools to paper over gaps in the digital chain; HMRC's soft-landing period for this ended in April 2024.
• Reverse-charge VAT on services. For fintech companies that consume EU services (cloud providers, marketing tools, consulting), the reverse-charge mechanism must be applied. Many small companies get this wrong and either fail to declare or double-count.

The cleanup action at year-end is straightforward: reconcile your VAT return submissions for 2025/26 against your accounting records and confirm the digital-links requirement was met on every quarterly return. If it was not, correcting historic returns and disclosing to HMRC under the voluntary disclosure route now is materially cheaper than being found in an enquiry later.

Corporation Tax: Instalment Planning for 2026/27

For companies with taxable profits exceeding £1.5 million (or £10 million as part of a large group), corporation tax is paid in quarterly instalments rather than nine months after the accounting period end. The instalment regime is often overlooked at year-end because it does not have a single hard deadline, but the first instalment for a Dec 2026 year-end is due in October 2026, which requires an estimate of full-year taxable profits by roughly mid-year.

The change worth flagging for 2026 is the interaction between R&D relief and the instalment regime. Under the merged RDEC, the credit is recognised as taxable income above the line, which increases the taxable profit figure used to determine instalment status. Companies that were previously below the £1.5 million threshold on a pre-R&D basis may now be pushed above it once RDEC income is added back, triggering the instalment regime for the first time. If you are close to the threshold, model both routes before setting your first instalment.

Dividend Timing Decisions for Owner-Managers

For founder-CFOs and owner-managers, dividend timing at tax year-end is a personal-tax event with company cashflow consequences. The dividend allowance for 2025/26 was £500, having been reduced from £1,000 in 2024/25. Dividend tax rates for 2025/26 remain at 8.75 per cent basic, 33.75 per cent higher, and 39.35 per cent additional. The Spring Statement 2026 confirmed no changes to these rates for 2026/27.

The strategic question at year-end is whether to declare and pay dividends before 5 April to use the current-year personal allowance and basic-rate band, or defer into the new tax year for personal cashflow reasons. For most owner-managers, using each year's allowance is the default, but there are situations where deferral makes sense: a planned property purchase requiring a mortgage where higher declared income would exceed lending criteria, or an EIS or SEIS carry-back opportunity that shifts a taxable event.

For the 2025/26 close, the specific check is whether the dividend was properly declared before 5 April (a board minute is not sufficient in itself; the dividend must be legally payable) and whether the payment was made or shown as a director's loan credit. A common error is treating an intended-but-not-declared dividend as having crossed into the year, which HMRC will treat as a personal loan requiring s.455 tax charge if outstanding at the corporate year-end plus nine months.

The Thirty-Day CFO Cleanup Checklist

In practical terms, the thirty days after 5 April should be spent on the following:

1. R&D advance notification: Confirm the advance notification form has been filed for any first-time claimant with a period end in the past six months. This is the single item with the highest cost-per-missed-deadline.
2. EMI event reconciliation: Reconcile HR records against option register for grants, exercises, lapses, and terminations in 2025/26. Prepare the ERS annual return draft. Deadline: 6 July 2026.
3. MTD-VAT digital-links audit: Trace one quarter's VAT return from source to submission and confirm no manual steps. If any exist, plan the fix before Q1 2026/27 return is filed.
4. Corporation tax instalment forecasting: Update the taxable profit forecast for the current accounting period and reconfirm instalment status, particularly if R&D credit income is now above-the-line.
5. Dividend documentation: Confirm any 2025/26 dividends were properly declared and paid before 5 April. Where payments were shown as director's loans, model the s.455 exposure and plan repayment before period-end plus nine months.
6. Board minute back-check: Confirm the 2025/26 tax year-end minute (typically part of a March board pack) covers dividend declarations, EMI grants, and share issues. Retrospective minute drafting is legal but auditors flag it.

Key Takeaways

• Tax year 2025/26 closed on 5 April. The first 30 days of 2026/27 is the CFO cleanup window and should not slip past mid-May.
• R&D advance notification is now mandatory for first-time claimants within six months of period end. There is no reasonable-excuse relief for missing this deadline; a March 2026 year-end must file by 30 September 2026.
• The merged RDEC scheme delivers approximately 15–16 per cent net benefit for most SMEs; ERIS delivers approximately 27 per cent for loss-making R&D-intensive SMEs at the 30 per cent expenditure threshold.
• EMI year-end tasks include the ERS annual return by 6 July 2026, leaver-exercise reconciliation, working time test check for hybrid or fractional staff, and option pool sizing for the next round.
• MTD-VAT applies universally to VAT-registered businesses regardless of turnover. Manual reformatting between systems is non-compliant; digital links are required end-to-end.
• Corporation tax instalment status can be shifted by RDEC's above-the-line treatment. Companies near the £1.5 million profit threshold should model both routes.
• Dividend timing decisions taken at year-end should be properly declared and paid before 5 April; retrospective treatment risks s.455 exposure and HMRC challenge.