2024 UK Autumn Budget

The Chancellor has asked the Office for Budget Responsibility to prepare an economic and fiscal forecast for publication on 3 March 2026, which is being referred to as the Spring Forecast. This will be followed in Parliament with a statement by the Chancellor, known as the Spring Statement. The Institute will report on this in full when it is announced. Following on from the Autumn Budget, the House of Commons Library has published a further research briefing on the Autumn Budget and the Finance (No. 2) Bill, in addition to a research briefing on the National Insurance Contributions (Employer Pensions Contributions) Bill. Last month the Treasury Committee held an evidence session with the Chancellor to discuss the Budget.

On 23 December 2025 the Government announced that the £1 million allowance for 100 percent agricultural property relief (APR) and business property relief (BPR) for inheritance tax (IHT) will now be increased to £2.5 million from 6 April 2026. Relief will remain limited to 50 percent on the amount of qualifying assets valued above this threshold resulting in an effective IHT charge of 20 percent (i.e., half the standard 40 percent IHT rate). Details of the announcement were made in a news release published by HM Treasury on 23 December 2025. Having lobbied heavily on this issue since the 2024 Budget and throughout 2025, the Institute issued a Press Release on 23 December reacting to the announcement noting this welcome mitigation including the confirmation of transferability of the allowance between spouses. A timeline of all formal lobbying and Press Releases on this issue by the Institute since it was announced in 2024 is set out below. When combined with the transferability of any unused amount of the allowance between spouses and civil partners, another Institute recommendation that was announced at the Autumn Budget in November 2025, this effectively means that a couple will have a combined allowance of £5 million before any unused amount of their transferable nil rate band is taken into account. This would potentially increase the overall 100 percent amount on which no IHT will be payable to £5.65 million should their full £325,000 nil rate band be unused. As a result, many farms and family owned businesses in Northern Ireland will continue to receive 100 percent APR and BPR and not have any IHT liability, protecting the succession plans of these businesses for the next generation. HMRC has published an updated policy paper on this issue which also confirms that if the first spouse or civil partner’s death was before 6 April 2026, it will be assumed that the entirety of their £2.5 million allowance is unused and thus will be available for transfer to the surviving spouse or civil partner. HMRC has also published an explanatory note on the Government’s tabled amendment for this change. Clause 62 and Schedule 12 of Finance (No. 2) Bill have since been amended and the full amendment papers have been published. Finance (No. 2) Bill has now had its second reading in the House of Commons; the next stage is Committee of the whole House which is scheduled to take place today, 12 January 2026. We also understand that during an exchange in Parliament between the Exchequer Secretary (XST) Dan Tomlinson and Robin Swann MLA, it has been suggested that the ability to transfer individual allowances to a spouse/civil partner may potentially also apply to intergenerational farms owned by other family members. The Hansard exchange discussing this has also been published. At present, this is not fully clear and requires Government clarification which we will monitor. The Hansard exchange also confirms that the Government now expects to raise around £300 million from this change. The expected tax take by 2029/30 from the original policy announced in the 2024 Autumn Budget was £520 million. It remains unclear if the Chancellor intends to announce new tax increases in the Spring Forecast to cover this new deficit. However this may not be needed given the £22 billion fiscal headroom provided by the most recent Budget. The full timeline of formal Institute representations and Press Releases on this issue since the Autumn Budget in 2024 is as follows: November 2024: meeting with HMRC on Autumn Budget 2024, December 2024: press release on APR and BPR, April 2025: letter to XST on APR and BPR, April 2025: response to consultation on APR and BPR, July 2025: press release on APR and BPR, September 2025: meeting with local Government on APR and BPR, October 2025: submission to House of Lords Finance Bill Sub-Committee on APR and BPR, October 2025: Autumn Budget 2025 pre-Budget submission, October 2025: evidence session by Leontia Doran to House of Lords Finance Bill Sub-Committee, November 2025: Autumn Budget Press Release, and December 2025: meeting with HMRC on Autumn Budget 2025.  

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.