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.

In recognition that the existing limits in some of these schemes restrict their availability to companies in their critical scale-up phase, the Government announced a package of tax changes to support scaling companies to attract investment and talent. There is also an objective to take further steps to ensure tax support is ‘founder friendly’. A call for evidence has therefore been published seeking input from across the scale-up and investor community on the impact of existing schemes and options to provide further support to ensure the UK entrepreneurial ecosystem thrives. The VCT and EIS company investment limits will increase to £10 million (£20 million for Knowledge Intensive Companies (KICs)) and the lifetime company investment limit will increase to £24 million (£40 million for KICs). From April 2026, the gross assets test will increase to £30 million before share issue, and £35 million after. However, the rate of VCT income tax relief will decrease from 30 percent to 20 percent. No changes were announced to the Seed Enterprise Investment Scheme.

A soft landing for Making Tax Digital (MTD) for income tax, no changes to corporation tax rates, e-invoicing from 2029, more timely payments of VAT and PAYE, and frozen employer NICs thresholds were the main features with some minor changes to capital allowances and a new consultation on entrepreneurship. More details on these and other relevant changes is set out below. Making Tax Digital (MTD) for income tax As lobbied for by the Institute, the Government announced a soft landing for MTD for income tax. Late submission penalties for quarterly updates will not apply during the 2026/27 tax year. However, from 6 April 2027 the new penalty regime will apply for late submission and late payments for all taxpayers. The penalties due for late payment of income tax self-assessment and VAT will also increase from April 2027. More details on these announcements were provided in a subsequent email received from HMRC. It was also confirmed that HMRC will update its guidance to clarify that childminders within qualifying sole trade income above the mandation threshold must follow the MTD rules. For other childminders, HMRC will clarify how existing arrangements apply to those working from non-domestic premises. In addition, taxpayers who have a power of attorney and those under a deputyship (as appointed by the Court of Protection) are now permanently exempt from MTD. The MTD start date has also been deferred to 6 April 2027 for some others (recipients of trust and estates income, individuals who use averaging adjustments, those eligible for qualifying care relief and non-UK resident foreign entertainers or sportspeople). E-invoicing from 2029 From April 2029, all VAT invoices will need to be issued in a specified electronic format. The Government will work with stakeholders to develop an implementation roadmap to be published at Budget 2026. The decision to mandate from April 2029 follows the announcement on e-invoicing in Ireland’s most recent Budget subsequent to which the Revenue Commissioners published “Implementation of eInvoicing in Ireland”. Employers The £5,000 per-employee secondary NICs threshold for employers is frozen until 5 April 2031 after dropping from £9,100 from 6 April 2025. As the NICs upper earnings limit and upper profits limits will both remain at £50,270 until April 2031, the other employer NICs reliefs thresholds are also frozen to that date. The employer NICs relief for employers hiring veterans in their first civilian role is being extended to April 2028, from which point support for veterans into employment will be covered through spending review settlements rather than through this tax relief. And finally, the income tax and NICs exemption for employer-provided benefits is to be extended to cover reimbursements for eye tests, home working equipment, and flu vaccinations. This will take effect from 6 April 2026. VAT and PAYE liabilities A consultation will be published in early 2026 to consider ways that VAT and PAYE liabilities can be paid promptly without the taxpayer falling behind on payments, including requiring more tax payments by direct debit. Capital allowances From April 2026 (1 April for companies and 6 April for unincorporated businesses), the rate of writing down allowances in the main pool will be reduced from 18 percent to 14 percent. However, from 1 January 2026 a new first-year allowance (FYA) of 40 percent will be available for main‑rate assets. Cars, second-hand assets and assets for leasing overseas will not be eligible. The benefit this new FYA remains to be seen given that 100 relief is already available for all main pool expenditure via the £1 million annual investment allowance limit with companies also having unlimited 100 percent relief for new main pool expenditure under full expensing. Capital Gains Tax (CGT) anti-avoidance: share exchanges and reorganisations The anti-avoidance provisions that apply to share exchanges and company reorganisations were amended from 26 November 2025 to ensure ‘that they apply to those persons who have entered into arrangements where the main purpose, or one of the main purposes, of the arrangement is to secure a tax advantage that they would not ordinarily have been entitled to’. CGT: non-resident capital gains for UK land and property This legislation was amended from 26 November 2025 to close what the Government refers to as loopholes for protected cell companies. Further administrative reforms are expected from 6 April 2026. Stamp duty reserve tax new UK listing relief A new UK listing relief, a three-year exemption from stamp duty reserve tax (SDRT) for companies listing in the UK has been introduced. The measure provides for an exemption from the 0.5 percent SDRT charge on agreements to transfer securities of a company whose shares are newly listed on a UK regulated market. The exemption applies from the listing of the company’s shares. Once in the post-listing period the exemption will apply to all of the company’s securities (not just shares). The new relief took effect for agreements to transfer made on or after 27 November 2025 and applies if the shares of the relevant company are newly listed on or after that date. Customs system reporting and low value imports Reforms are expected to be made to simplify reporting requirements and improve HMRC services. Further reforms to streamline processes and improve the taxpayer experience are expected to be announced in Spring 2026. The customs duty relief for low value imports (£135 or less) is being removed from March 2029 at the latest. How these goods are declared into the UK is also being changed from the same date meaning new import arrangements will apply. The Government will consult on the technical detail of these new arrangements and is stressing that it is not alone in taking this approach to low value imports, with its international partners, taking similar steps, including the US and the EU. Corporation tax The new service to provide major investment projects with advance tax certainty which was committed to in the Corporate Tax Roadmap published in October 2024 will be launched in July 2026. The penalties for taxpayers submitting a corporation tax return late will be doubled from 1 April 2026 and £59 million is also to be invested in new technology over the next five years to provide taxpayers with real-time digital prompts for VAT filing software from April 2027, and Corporation Tax filing software from April 2028. The Government will also consult in early 2026 on delivery timescales and enforcement for prescribing the content and tagging of the corporation tax computation. A consultation will also be published in early 2026 to explore introducing new requirements to report transactions between close companies and their shareholders to HMRC. The Government will also pilot a targeted R&D tax relief advance assurance service from Spring 2026 to enable small and medium-sized enterprises to gain clarity on key aspects of their R&D tax relief claims before submission to HMRC. A summary of responses to the advance clearance consultation was also published. The following was also announced: The shadow advanced corporation tax rules will be repealed from 1 April 2026, The Government will legislate in Finance Bill 2025/26 to simplify administration in relation to reporting companies under the corporate interest restriction with most of the changes expected to take effect for periods ending on or after 31 March 2026, Finance Bill 2025/26 will contain legislation setting out the treatment for corporation tax purposes of intra-group payments made in return for surrendered various tax credits for research and development, audio-visual expenditure, and video games expenditure. This is effective for payments made on or after 26 November 2025, For Pillar Two, technical amendments to the multinational top-up tax and the domestic top-up tax will feature in Finance Bill 2025/26 to incorporate the latest published international updates and stakeholder feedback, Legislation in the Bill will provide for the payment of interest on amounts collected from taxpayers and now repayable following a successful challenge of a European Commission Decision on controlled foreign companies and the reversal of State aid recovery, and The Government will also work with industry stakeholders over the coming months to explore targeted legislative changes aimed at ensuring that the qualifying asset holding companies regime continues to operate effectively. Any legislative changes will be introduced in a future Finance Bill. Transfer pricing, permanent establishment and the diverted profits tax In-scope multinationals will be required to submit an international controlled transaction schedule which will report information annually on cross-border related party transactions. This measure is expected to take effect for accounting periods beginning on or after 1 January 2027. Technical consultation on its design will take place in Spring 2026. Finance Bill 2025-26 will also include legislation to simplify the taxation of related party transactions, non-resident companies trading in the UK, and profits diverted from the UK, for chargeable periods beginning on or after 1 January 2026.

Frozen thresholds, increased rates of income tax for property, savings, and dividend income, earlier self-assessment payments, reduced cash ISA thresholds, and national insurance contributions (NICs) for pensions salary sacrifice were the main announcements last week. More details on these and other relevant changes is set out below. Tax thresholds The continued freeze on various personal tax thresholds was confirmed. The income tax thresholds and the equivalent NICs thresholds for employees and self-employed individuals will stay at their current levels for a further three years until 5 April 2031. The inheritance tax (IHT) nil rate bands are also frozen for a further year to the same date. As a result, the £12,570 personal allowance which applies UK wide will remain at this level until April 2031. The additional rate threshold (which is also the threshold at which the higher rate band ends) will remain at £125,140 until the same date. The higher rate threshold for non-savings, dividend, and property income applies to taxpayers in England, Wales and Northern Ireland, and for savings and dividend income it applies UK wide. On the IHT front, the £325,000 nil rate band and £175,000 residence nil rate band are already fixed until April 2030 and will now remain frozen until April 2031. It was also announced that the combined (and now transferable) allowance for the 100 percent rate of agricultural property relief and business property relief will also be fixed at £1 million until April 2031. The NICs primary threshold and lower profits limit will stay at £12,570 from April 2028 until April 2031. The NICs upper earnings limit and upper profits limit will also be maintained at £50,270 from April 2028 to April 2031. The lower earnings limit and the small profits threshold will increase from 2026/27 to £6,708 and £7,105 respectively. For those paying voluntarily, Class 2 and Class 3 NICs will increase to £3.65 per week and £18.40 per week respectively from 2026/27. From 6 April 2026, access to paying voluntary Class 2 NICs will be removed for those who are abroad and ‘the initial residency or the contributions requirement to pay voluntary NICs outside of the UK will increase to 10 years’. A wider review of voluntary NICs via a call for evidence will be launched in early 2026. Ordering of reliefs and allowances The Budget Red Book also confirmed that the income tax rules will be changed so that reliefs and allowances deductible at steps 2 and 3 of the income tax calculation will only be applied to property, savings and dividend income after they have been applied to other sources of income. This will take effect from 6 April 2027 and is linked to the increased rates of income tax applicable to these types of income. NICs on salary sacrifice pension contributions For pension contributions above £2,000 per annum made via salary sacrifice, employer and employee NICs will both be payable from 6 April 2029. More details on this are available in guidance published by HM Treasury. This is another change which will disincentivise saving for retirement and reduce the attractiveness of employer contributions. Property, savings, and dividend income From 6 April 2026, the basic rate of tax for dividend income will increase from 8.75 percent to 10.75 percent, and the higher rate will increase from 33.75 percent to 35.75 percent. There will be no change to the dividend additional rate which will remain at 39.35 percent and the dividend tax credit for non-UK residents will be abolished from 6 April 2026. For both property income and savings income, a 2 percent increase to all rate bands will take effect from 6 April 2027.The property basic rate will be 22 percent, the higher rate will be 42 percent, and the additional rate will be 47 percent. The tax rates on savings income will also increase to these rates from 6 April 2027. The starting rate for savings will remain at its £5,000 threshold in 2026/27 until 5 April 2031. These increases are likely to act as a disincentive to investment, and for property income will most likely be passed on by landlords to their tenants via higher rents. It was also confirmed that the changes to property income rates will apply in England, Wales and Northern Ireland. The Government therefore will engage with the devolved Governments of Scotland and Wales to provide them with the ability to set property income tax rates in line with the current income tax powers in each of their fiscal frameworks. Earlier self-assessment payments From April 2029, self-assessment (SA) taxpayers with PAYE income will be required to pay more of their SA liability in-year via PAYE. The Government will publish a consultation in early 2026 on delivering this change, and also on ‘timelier tax payment’ for those with only SA income. This change comes as a surprise given discussions in the last few years in the context of Making Tax Digital that the Government was not seeking to target earlier payments of SA tax. Individual savings accounts (ISAs) From 6 April 2027 the annual ISA cash limit will be reduced from £20,000 to £12,000. Annual subscription limits will remain at £20,000 for ISAs, £4,000 for Lifetime ISAs and £9,000 for Junior ISAs and Child Trust Funds until 5 April 2031. Savers over the age of 65 will continue to be able to save up to £20,000 in a cash ISA each year. Image rights payments From 6 April 2027 all image rights payments related to an employment will be treated as taxable employment income and subject to income tax, and employer and employee NICs, a move which is viewed as targeting the UK’s sporting sector. Capital gains tax (CGT): incorporation relief claims process and employee ownership trusts From 6 April 2026 Section 162 TCGA 1992 incorporation relief for capital gains tax (CGT) which is available for transfers of a business to a company will no longer apply automatically where its conditions are met, therefore a new claims process will be introduced for this relief. From 26 November 2025 the CGT relief available on qualifying disposals to Employee Ownership Trusts was reduced from 100 percent of the gain to 50 percent. Miscellaneous increased thresholds The married couples allowance, blind persons allowance and qualifying care relief (the amount of income tax relief available to foster carers and shared lives carers) will all increase by 3.8 percent from 6 April 2026. Loan charge review outcome and new settlement opportunity In response to Ray McCann’s independent review of the loan charge and the Government’s subsequent response to this, both of which were published alongside the Budget, the Government published details in a policy paper of a new settlement opportunity to bring this issue to a close for taxpayers. Employment expenses for homeworking and cancelled shifts Income tax relief for non-reimbursed home working expenses will be removed for employees from 6 April 2026. However, employers will still be able to reimburse employees for these costs, where eligible, without having to deduct PAYE. Legislation will also be introduced to ensure that payments introduced by Section 27BP of the Employment Rights Act 1996 for shifts cancelled, moved, or curtailed at short notice will be treated as earnings from 6 April 2026. IHT: treatment of unused pension funds/death benefits and anti-avoidance As announced at Autumn Budget 2024, the Government will bring most unused pension funds and death benefits into the scope of UK IHT from 6 April 2027. However, personal representatives will be able to direct pension scheme administrators to withhold 50 percent of taxable benefits for up to 15 months and pay the IHT due in certain circumstances. After they have received clearance from HMRC, personal representatives will also be discharged from the liability to pay IHT on pensions discovered. According to the Budget Red book, the Government will legislate to prevent IHT avoidance through certain loopholes, ‘including ensuring UK agricultural property held via non-UK entities is treated as UK-situated addressing changes in status of trust assets before and exit charge, and restricting charity exemptions to direct gifts to UK charities and clubs’. These changes, which are yet to be legislated for, took effect for trust exit charges from 26 November 2025, for gifts to charities in lifetime from 26 November 2025 or on a death from 6 April 2026, and for UK agricultural property from 6 April 2026. A cap of £5 million will also be introduced on relevant property trust charges for pre 30 October 2024 excluded property trusts. This change applies retrospectively to trust charges from 6 April 2025. Residence-based tax regime The Government also says that it will publish legislation to make minor corrections to the residence-based tax regime which took effect from 6 April 2025 for income tax, CGT and IHT. Temporary non-residence anti-avoidance Legislation will apply from 6 April 2026 to remove the post departure trade profits provisions from this legislation which will mean that all dividends received during a period of temporary non-residence will be chargeable to UK tax. Overseas workday relief The proportion of earnings an employer can exclude from PAYE through a PAYE notification will be limited to a maximum 30 percent if the individual is a qualifying new resident and eligible for overseas workday relief. This will take effect from 6 April 2026. Defined benefit (DB) pension scheme surplus payments From April 2027 the government will enable ‘well-funded’ DB pension schemes to pay surplus funds directly to scheme members over the normal minimum pension age, where scheme rules and trustees permit it.