2024 UK Autumn Budget

Last week saw the House of Commons debate the Budget resolutions following which the Finance Bill was published and introduced to the House. Finance (No. 2) Bill 2025/26 had its first reading last week with second reading subsequently scheduled for 16 December 2025. The Bill, as introduced, contains the legislation for a range of announcements in November’s Budget but also features the draft legislation on the changes to agricultural property relief and business property relief from 6 April 2026. Explanatory notes to the Bill are also available. The House of Commons Library has also published a research briefing on the Autumn Budget 2025 and the Finance Bill.  The Finance Bill also includes the primary legislation for the UK’s carbon border adjustment mechanism legislation (CBAM) which will commence from 1 January 2027. More information on the UK’s CBAM is available in a policy update and factsheet. Finance (No. 2) Bill 2025/26 also includes further amendments to the UK's Pillar Two multinational top-up tax and domestic top-up tax. According to HMRC, these amendments are “those identified from stakeholder consultation or otherwise necessary to ensure the UK’s legislation remains consistent with the commentary and administrative guidance to the GloBE rules developed by the UK and other members of the OECD/G20 Inclusive Framework”. HMRC has also confirmed that the Finance Bill does not include any amendments to reflect any ‘side-by-side package’ as this is still being finalised by the Inclusive Framework. The ‘side by side package’ is a proposed political agreement which would allow the existing Global Intangible Low-Taxed Income Tax regime of the USA to coexist with the OECD's Pillar Two global minimum tax rules. The objective of this arrangement would be to exempt US parented multinational enterprises from some key Pillar Two rules.

Following the Budget, HMRC sent an email setting out key details that will directly affect tax agents, in addition to information that might be useful for their clients, or which agents may receive enquiries about. HMRC also confirmed that as set out at the Budget, the Finance Bill includes the legislation that requires tax advisers who interact with HMRC on behalf of clients to register with HMRC and meet certain eligibility conditions. This requirement was due to take effect from April 2026 but has now been delayed to take effect from May 2026. HMRC expects to publish detailed guidance on this next month. Chartered Accountants Ireland responded to the consultation on the draft legislation for this measure in September and had recommended that the measure be delayed. Our submission also recommended that the meaning of tax adviser be restricted to only require those at the highest level working in tax to be within the scope of the rules. The draft legislation now published confirms that this recommendation is largely being implemented for organisations with more than six officers (as defined). Officer is defined as follows: “(a) in relation to a company, a director; (b) in relation to a body corporate whose affairs are managed by its members, a member who exercises functions of management with respect to it; (c) in relation to a body corporate not within paragraph (a) or (b), an officer of the body whose functions correspond to those of a director of a company; (d) in relation to a partnership, a partner; (e) in relation to any other organisation, a person who exercises functions of management with respect to it.” Clauses 222 and 223 of the Finance Bill sets out details of the application process and who within that process is a relevant individual and officer whose details must be included in the application for registration.  More details are available in the associated policy paper which confirms that there will be a three-month transition period. Further details on registration timelines and the transition arrangements for specific tax adviser groups will be communicated by HMRC to stakeholders in advance. The Institute has been engaging with HMRC in the previous weeks and months as HMRC developed this amended draft legislation and will continue to do so.

The Government made two announcements at the Budget as part of its ongoing Tax Administration Framework Review (TAFR) project on the correction of errors (there will be a consultation in 2026 on new HMRC powers obliging taxpayers to correct inaccuracies where they are identified) and reform of behavioural penalties. HMRC subsequently sent a detailed update on the next steps for both of these in addition to its ongoing dispute resolution reform work. Earlier in the year Chartered Accountants Ireland responded to the associated consultations on new ways to tackle non-compliance (which contained the proposals on correction of errors) and reform of behavioural penalties. On modernising the correction of errors, HMRC is progressing work on key design elements of the proposals, including the introduction of a general obligation to correct. According to HMRC, the feedback received through this consultation indicated that this measure would be a welcome addition, hence legislation will be drafted for stakeholder input which will take place via bespoke sessions in early 2026. On behavioural penalty reforms, HMRC is currently working through the detailed policy design, including some of the operational practicalities, ahead of moving onto drafting legislation. As this work continues, it will bring up policy choices which HMRC will discuss with stakeholders ahead of publishing any draft legislation.  HMRC has also been analysing the responses received to the consultation on improving HMRC's approach to dispute resolution and is continuing to develop options and prepare a summary of responses for publication. HMRC is also working on launching a new quarterly update which will provide more regular TAFR news; the first edition is currently in development.

The announcements in this area range from changes to VAT groups to a new charitable VAT relief which will commence from April 2026. VAT groups The Government has removed the requirement to consider Revenue and Customs Brief 18 (2015): VAT grouping rules and the Skandia judgement when making cross-border transactions between members of a VAT group. According to HMRC, this returns the UK to its previous position of operating ‘unmodified whole-entity VAT grouping’. This measure took effect from 26 November 2025. HMRC has therefore published Revenue and Customs Brief 7 (2025): Revised VAT grouping rules and the Skandia judgment as a result which sets out the updated position in detail. Under the new ‘whole-entity VAT grouping’ principle, HMRC now considers an overseas branch of a UK VAT group member to be part of the UK VAT group, even if that branch is in a separate VAT group in an EU member state. As a result, such transactions are now disregarded for UK VAT purposes. Charity tax relief From 1 April 2026 a new VAT relief will be introduced for business donations of goods to charity for distribution to those in need or use in the delivery of their charitable services. The relief will remove the requirement for businesses to account for VAT on eligible goods that are donated for onward distribution or use in a charity or eligible organisation’s services. Value limits will apply to donated items to safeguard against misuse, with higher limits available for listed goods. More information is available in a policy paper. Private hire vehicle services From 2 January 2026 suppliers of private hire vehicle and taxi services will be excluded from the scope of the Tour Operators Margin Scheme, except where these are supplied in conjunction with certain other travel services. Deposit return schemes (DRS) In an effort to simplify administration of the DRS, the Government will remove the requirement for individual producers to account for VAT on unreturned deposits. Instead, this will be done by the Deposit Management Organisation. Land intended for social housing A consultation is to be launched in early 2026 on the reform of VAT rules to incentivise the development of land intended for social housing. Landfill tax From 1 April 2026 the standard rate of landfill tax will increase by RPI inflation and the lower rate will increase by the cash amount of the increase in the standard rate. However, the Government has decided not to proceed with transitioning to a single rate of this tax by 2030 and the exemption for quarries with disposal permits will be retained. This was confirmed in the Government’s consultation response published on Budget day. Plastic packaging tax (PPT) To incentivise businesses to use recycled instead of new plastic in packaging, the PPT rate for 2026/27 will increase in line with Consumer Price Index (CPI) inflation. A consultation will also be launched in early 2026 on the introduction of mandatory certification for mechanically recycled plastic packaging for businesses to claim an exemption from the PPT. Finance Bill 2025/26 also provides for a mass balance approach to be used to attribute chemically recycled plastic for the purposes of the PPT from 1 April 2027. This draft legislation also removes pre-consumer waste as a source of recycled content from the same date. Soft drinks industry levy (SDIL) From 1 January 2028 the threshold at which the SDIL applies will be reduced from 5g to 4.5g sugar per 100ml and the exemptions for milk-based and milk substitute drinks with added sugar will be removed. Open cup beverages, such as those bought in cafes, will remain unaffected. The Government also published a summary of responses to its consultation on these reforms. From 1 April 2026 the SDIL will also increase in line with CPI inflation plus one fifth of the ‘catch-up’ increment to reflect the 27 percent CPI increase between 2018 and 2024.  

Last week the Institute’s tax team and a representative from the NI Tax Committee met with HMRC to feedback our initial reaction to the 2025 Autumn Budget. The Institute highlighted a range of concerns, including our disappointment that the transferability of the £1 million allowance for agricultural property relief and business property relief, whilst welcome, was the minimum attempt made to protect the succession plans of genuine farming activity, family-owned businesses, and older farmers. Members are welcome to feedback their concerns and queries on the Budget’s tax announcements at any time by email to tax@charteredaccountants.ie. Leontia Doran, UK Tax Manager, outlined to HMRC that the early announcement of the soft landing for Making Tax Digital (MTD) for income tax quarterly filings in 2026/27, as one of our ongoing recommendations, was a welcome announcement given the scale of the change that MTD for income tax represents. The Institute also highlighted that the confirmation on Budget Day by the Government that it will not regulate tax advisers, another Institute lobbying win, provided certainty to the regulated tax agent community, and particularly our members, that they would not be facing dual regulation in future. Other matters raised included the roadmap for e-invoicing and how HMRC plans to engage on this ahead of its publication at the next Autumn Budget given our concerns about this for smaller businesses, earlier Self-Assessment payments and the forthcoming consultation on close companies reporting certain  transactions to HMRC. The Institute will continue to engage with HMRC on the Budget’s outcomes and will be discussing its impact on Northern Ireland with local Government in the coming weeks and months. For all things UK Budget related, visit our UK Autumn Budget 2025 page for useful links, news stories, guidance and analysis.  

A new excise duty on electric vehicles (EVs) from 2028, a further freeze on fuel duty until August 2026 and the annual increases in tobacco duty also featured on Budget day. Fuel duty The temporary 5p fuel duty cut has been extended for a further five months from 31 March 2026 to 31 August 2026. Thereafter, the cut is being reversed with three increases in stages as follows: 1p on 1 September 2026, 2p on 1 December 2026, and 2p on 1 March 2027. The planned inflationary increase for 2026/27 will not take place. However fuel duty will begin to increase with inflation again in accordance with the Retail Prices Index (RPI) starting from April 2027. EVs From April 2028 a new EV excise duty (eVED), a new mileage charge for electric and plugin hybrid cars, will take effect. Drivers will pay for their mileage on a per-mile basis alongside their existing vehicle excise duty. EVs will pay half the equivalent fuel duty rate for petrol and diesel cars, and plug-in hybrid cars will pay a reduced rate equivalent to half of the electric car rate. This will be a self-reported per-mile levy. Other electric vehicle types, such as vans, buses, motorcycles, coaches and HGVs, will be out of scope of the eVED when it is introduced as the transition to electric for these vehicle types is less advanced than for cars. At the same time, the Government also announced specific measures to help consumers choose EVs and to support effective and accessible charging infrastructure to support the transition to EVs. A consultation was launched on Budget Day which provides further detail on how the eVED will work and which also seeks views on its implementation. The consultation will remain open until 18 March 2026. According to the Budget Red Book, when the eVED takes effect, an average EV driver will pay around £240 per year or £20 per month. Tobacco duty Duty rates on all tobacco products increased by RPI inflation plus 2 percentage points from 6pm on 26 November 2025. A one-off increase of £2.20 per 100 cigarettes or 50g of other tobacco products and the annual uprating of tobacco duty by RPI plus 2 percentage points next year will take effect from 1 October 2026. Air passenger duty (APD) rates All rates of APD will increase in line with the RPI from 1 April 2027 and will be rounded to the nearest penny. In last Autumn’s Budget the Government announced plans to extend the higher APD rate to private jets over 5.7 tonnes. A summary of consultation responses to the associated consultation has been published which confirms that this will be legislated in Finance Bill 2026 to take effect from 1 April 2027. Alcohol duty All alcohol duty rates will increase in line with RPI inflation from 1 February 2026. The small producer relief discounts will also increase from the same date. Vaping duty The previously announced vaping products duty will commence as planned from 1 October 2026 at a flat rate of £2.20 per 10ml. It will apply to all vaping liquid and will work alongside the vaping duty stamps scheme to drive compliance. £10 million of funding has also been redirected from HMRC to the Border Force in 2026/27 with the aim of enhancing operational information gathering capabilities ahead of the introduction of this new duty and to support enforcement at the border. Gambling duty Following consultation, the Government has decided not to proceed with a single tax on remote betting and gaming. Instead, duties on remote gambling will be increased with different rates applying to remote betting and remote gaming. Remote gaming duty will increase from 21 percent to 40 percent from 1 April 2026. A new remote betting rate will be introduced at 25 percent from 1 April 2027 as part of the general betting duty. This new rate will not apply to self-service betting terminals, spread betting, or pool betting. Remote bets on horseracing will be excluded from these changes and will remain taxed at 15 percent. Bingo duty will be abolished from 1 April 2026. Details of the changes are set out in a policy paper. Gaming duty bands The gross gaming yield bandings for gaming duty will be frozen from 1 April 2026 until 31 March 2027. Duty free allowances A duty free allowance of 50ml per passenger for vaping products will be introduced in October 2026, alongside moving cider and sparkling wine into the beer and still wine duty free categories, respectively. Vehicle excise duty (VED) Search and rescue vehicles will be exempt from VED; work will begin with stakeholders to design and implement this exemption from April 2027. The VED rates for cars, vans, HGVs and motorcycles will increase in line with RPI inflation from 1 April 2026. The HGV levy will also increase in line with RPI inflation from the same date. The VED expensive car supplement threshold will increase from £40,000 to £50,000 for zero-emission vehicles only. This change will take effect from 1 April 2026 and will apply to zero-emission EVs registered from 1 April 2025 onwards.