Last week’s Autumn Budget, the second for Chancellor of the Exchequer Rachel Reeves, featured tax rises of £26 billion and are being used to finance additional spending and provide more fiscal headroom of almost £22 billion, up from £9.9 billion after last year’s Budget. You can read the Institute’s initial reaction to the Budget here, see coverage of our comments across the media later in this newsletter, and visit our UK Budget 2025 page for useful links, all UK Autumn Budget 2025 news stories and useful guidance. Last week a Special Budget Newsletter issued to members on the day covering our reaction and key announcements. In depth coverage of the 2025 UK Autumn Budget features later in this newsletter and in next Monday’s edition of Chartered Accountants Tax News. The Institute will be discussing the Budget in the coming weeks with HMRC and local Government. Last Wednesday the Chancellor confirmed that the April 2026 changes to agricultural property relief and business property relief for inheritance tax are proceeding; the only mitigation announced is that the £1 million allowance will be transferable between spouses and civil partners. Whilst this is welcome and was amongst a range of recommendations made by the Institute in previous submissions to Government on this issue, it does not go far enough to protect genuine farming activity and older farmers, particularly in Northern Ireland. The Institute continues to call for a special derogation from these changes for the region given the importance of our agricultural and family owned business sectors. Our Budget 2025 analysis this week and next is based on the publications of HMRC and HM Treasury. The Budget 2025 Overview of Tax Legislation and Rates has also been published and HMRC has sent a detailed update by email. The Chancellor’s Budget Resolutions were subsequently introduced to Parliament on the afternoon of the Budget. These are expected to be followed later this week with the publication of the draft Finance Bill. A date is yet to be set for first reading of this Bill in the House of Commons, which will be known as Finance No. 2 Bill. The Treasury Select Committee has also announced a series of evidence sessions to scrutinise the Budget.

Today’s Autumn Budget and the second for Chancellor of the Exchequer Rachel Reeves, as predicted, featured tax rises, £26 billion in total to be exact (down slightly from £32 billion in the last Budget), which appear to be mostly financing additional spending and providing additional fiscal headroom. According to the Chancellor, the Budget will build ‘fiscal headroom’ of almost £22 billion, up from £9.9 billion after last year’s Budget. The rises come on the back of the Office for Budget Responsibility’s downgraded productivity forecast, which had been published online early by mistake and saw Parliamentarians poring over the document on their phones as they sat in the House of Commons chamber before the Chancellor stood up to speak. Disappointingly, the only mitigation that has been announced to the controversial changes to agricultural property relief and business property relief is that the £1 million allowance will be transferable between spouses and civil partners, albeit that this was among our recommendations on this issue made here, here and most recently in our evidence submission to the House of Lords Finance Bill Sub-Committee inquiry into draft Finance Bill 2025/26. This, and a range of other mitigations, were also highlighted by the Institute’s UK Tax Manager, Leontia Doran, in last month’s oral evidence session to that Committee. Whilst this is a welcome mitigation, it does not go far enough to ensure the changes are targeted at wealthier farms and businesses. Further, there have been none transitional measures announced to protect older farmers in particular. The Institute will continue to call for a special derogation from these changes for Northern Ireland. You can read our full reaction to the Budget in our Press Release. Buried in the Budget publications was also the news that in 2026/27 there will be no late submission penalties for Making Tax Digital (MTD) for income tax quarterly updates. The Institute has been continually calling for the Government to announce a soft landing for MTD and did so as recently as last month in our Pre-Budget submission and in a letter in September to HMRC’s new CEO. Also hidden on page 110 of the Budget Red Book was the news that the Government will not regulate tax advisers. What this precisely means is not yet clear, however this a welcome confirmation that our members are not facing dual regulation which we recommended in our response to the consultation ‘Raising standards in the tax advice market – strengthening the regulatory framework and improving registration’ in 2024. On the personal taxes side, several thresholds will continue to be frozen until 5 April 2031, and, commencing from April 2026, there will be an increase to the income tax rates for dividends of 2 percent for both the basic and higher rate, followed by a 2 percent increase for all rate bands for property and savings income from April 2027. This will apply in England, Wales, and Northern Ireland. On the business front, e-invoicing will be mandatory for business from April 2029. There are also proposals to require income tax Self-Assessment taxpayers with PAYE income to pay more of their tax liability in-year via PAYE from April 2029. The Northern Ireland Executive will receive an additional £240 million resource funding and £130 million capital funding through the operation of the Barnett formula. The Government also announced the proposed sector, geography, and co-investment for the Northern Ireland Enhanced Investment Zone. And to boost trade between Northern Ireland and Great Britain, £16.55 million will be provided over three years from 2026/27 to “create a ‘one stop shop’ support service that will help businesses navigate the Windsor Framework, unlock opportunities for trading across the UK internal market, and enable businesses based in Northern Ireland to take advantage of their access to UK and EU markets”. The Institute will continue its campaign for a lower rate of corporation tax for Northern Ireland and last week wrote to the Exchequer Secretary to the Treasury ahead of the Budget on this issue. The analysis herein is based on the publications of HMRC and HM Treasury. More detail on the key tax announcements features in the remainder of this newsletter and will continue in next Monday’s edition of Chartered Accountants Tax News.

It was again confirmed that there will not be any increases in the basic, higher, or additional thresholds for income tax, or the rates of employee National Insurance Contributions (NICs). However, the freeze on certain personal tax thresholds will now continue to 2031 and the rates of income tax will increase by 2 percent for property, savings, and dividend income, commencing for dividend income received from April 2026. The deep freeze continues…. The expected continued freeze on 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 nil rate bands are also frozen for a further year to the same date. The £5,000 secondary NICs threshold for employers will also be frozen until 5 April 2031 after dropping from £9,100 from 6 April 2025. 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. For both property income and savings income, the 2 percent increases 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 by 2 percent points across all bands from 6 April 2027. 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. 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 changes 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.

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 a pensions salary sacrifice cap were the main features with some minor changes to capital allowances. 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 increase from 1 April 2027. These changes will be legislated for via secondary legislation. 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 when, on 8 October 2025 after Minister Donohoe’s Budget Speech announcement, Revenue’s paper “Implementation of eInvoicing in Ireland” was published. VAT and PAYE 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. Pensions salary sacrifice cap From 6 April 2029, both employer and employee NICs will apply on pension contributions above £2,000 per annum made via salary sacrifice. These changes will be legislated for through primary and secondary legislation which will be introduced in due course. At present, what exactly will be classed as salary sacrifice requires clarification. However again, this is another change which will disincentivise saving for retirement and reduce the attractiveness of employer contributions. Capital allowances From April 2026, 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 will have remains to be seen given that 100 relief is already available for all main pool expenditure via the annual investment allowance limit of £1 million and with unlimited 100 percent relief available for new main pool expenditure via full expensing.    

On Wednesday at 12:30pm Chancellor Rachel Reeves will deliver her second Budget with much speculation that tax rises and Government department spending cuts will feature for the second time. But will the Chancellor break the Government’s manifesto pledge? In just two days’ time we will know all the details. After last year’s Budget the Chancellor had £9 billion "headroom" in case of tougher times, which certainly have come to pass since President Trump took up office in January. On Wednesday the Institute will be analysing and reacting to the Budget with full analysis to follow in next Monday’s Chartered Accountants Tax News. The Institute’s Pre-Budget submission is also available to read. Ahead of the Budget: HM Treasury published the transcript of what is referred to as a scene setter speech delivered by the Chancellor earlier this month, The House of Commons Library published an economic insight article about how slow economic growth could impact the Chancellor’s Budget decisions, The Federation of Small Businesses is urging the Government to ease cost pressures and back entrepreneurship at the Budget, The House of Commons Treasury Committee published details of an evidence session examining the issues facing the Chancellor ahead of the Budget, and The House of Lords recently debated the impact of government economic and taxation policies on jobs, growth, and prosperity, and As part of its inquiry into the draft Finance Bill Clauses, the House of Lords Economic Affairs Finance Bill Sub-Committee held further evidence sessions on 27 October, 3 November and 10 November after the Institute’s UK Tax Manager, Leontia Doran, delivered oral evidence on the changes to agricultural property relief and business property relief to the Committee on 20 October. Ahead of the Scottish Budget which will take place on the later date of 13 January 2026, the Scottish Parliament has published the Finance and Public Administration Committee’s report on pre-budget 2026/27 scrutiny. Revenue Scotland has also published a summary of a round table event held with the Centre for Public Policy to discuss devolution of tax in Scotland. The round table, which is part of a series of events in a year-long celebration to mark Revenue Scotland’s tenth anniversary took place after the Scottish Tax Conference in September. In Wales, the draft 2026/27 Budget was published in October and the detailed draft Budget was published earlier this month, with the final Budget expected to be published on 20 January 2026.  

The Institute’s UK Tax Manager, Leontia Doran, delivered evidence on Monday in the Palace of Westminster to the House of Lords Economic Affairs Finance Bill Sub-Committee. As set out in the Institute’s Pre-Budget submission, Leontia told the Committee’s inquiry into draft Finance Bill 2025/26 that the number of farms affected in Northern Ireland will be much higher than the Government says. The Institute is also concerned about the impact on family-owned businesses in Northern Ireland. You can watch the evidence session here. Leontia highlighted the cost and administrative burden of the changes and the lack of consultation by the Government on these policy changes, which thus far have failed to consider the human impact and the wider economic ripple effect. In the lead in period to the changes taking effect from 6 April 2026, tax agents are already managing a very challenging workload including preparations for Making Tax Digital for Income Tax and mandatory tax adviser registration. Leontia discussed the potential for transitional measures to reduce the impact on older taxpayers who may be unable to make lifetime gifts and survive the seven years necessary to avoid an Inheritance Tax liability. Overall, the Institute is urging the Government to rethink the draft legislation and to introduce a range of mitigations to protect smaller farms and family-owned businesses. If this is not possible, Northern Ireland should be exempted from the changes given its unique circumstances. Further detail on the Institute’s recommendations is set out in our pre-budget submission. Earlier this year the Institute wrote to the Exchequer Secretary to the Treasury to highlight the disproportionate impact of these changes on Northern Ireland.

Last week, the Institute’s Northern Ireland Tax Committee wrote to the new Exchequer Secretary to the Treasury, Dan Tomlinson MP, to highlight a range of tax policy and tax administration recommendations and concerns ahead of the Budget on Wednesday 26 November. In our Pre-Budget submission, the Institute continues to press the Government to reframe the draft legislation on agricultural property relief and business property relief given the disproportionate impact the proposed changes will have on family owned farms and businesses in Northern Ireland (NI). The Institute’s UK Tax Manager, Leontia Doran, is scheduled to deliver oral evidence on this issue today to the House of Lords Finance Bill Sub-Committee as part of its inquiry into the draft Finance Bill 2025/26 clauses. In our submission, we continue to implore Government that it is not too late to reframe this policy ahead of April 2026. However, if the Government is not willing to do so, we continue to recommend that a specific carve out from the rules is included in the final legislation to protect NI. Given how deeply connected agricultural is throughout the island of Ireland, the unique circumstances of NI farmers cannot be ignored and must be addressed. The cross-border nature of NI’s agri-food industry, where Ireland is its largest export market, means that NI needs to remain competitive in order to be able to serve its largest market, particularly if its dual market access to the EU is to grow to its true potential. This will only be achieved via a coherent tool kit of economic policies, not the least of which should include pro-business and pro-family succession tax reliefs. It is for this reason that the Government should exclude NI from these changes. The Committee also highlighted a range of other issues in the submission as follows: The campaign to reduce the rate of corporation tax in NI, The tax burden and complexity arising from cross-border and remote/hybrid working on the island of Ireland, Tax simplification and the lack of progress in this area, Making Tax Digital for Income Tax and the need to delay the implementation of mandatory tax adviser registration from 1 April 2026, and The ongoing need for climate and environmental objectives to feature significantly in UK budgets, which includes a range of tax policy recommendations. We encourage you to read the full submission at the link above.

Earlier this week, the Institute’s Northern Ireland Tax Committee wrote to new the Exchequer Secretary to the Treasury, Dan Tomlinson MP to highlight a range of tax policy and tax administration recommendations and concerns ahead of the next Budget on Wednesday 26 November. In our Pre-Budget Submission, the Institute continues to press the Government to reframe the draft legislation on agricultural property relief and business property relief given the disproportionate impact this will have on family-owned farms and businesses in Northern Ireland (NI). The Institute’s UK Tax Manager, Leontia Doran, is scheduled to deliver oral evidence on this issue on Monday 20 October to the House of Lords Finance Bill Sub-Committee as part of its inquiry into the draft Finance Bill 2025-26 clauses. The Institute is telling the Government that it is not too late to reframe this policy ahead of April 2026. However, if the Government is not willing to do so, we continue to recommend that a specific carve out from the rules is included in the draft legislation to protect NI. Given how deeply connected agriculture is throughout the island of Ireland, the unique circumstances of NI farmers cannot be ignored and must be addressed. The cross-border nature of NI’s agri-food industry, where Ireland is its largest export market, means that NI needs to remain competitive in order to be able to serve its largest market, particularly if its dual market access to the EU is to grow to its true potential. This will only be achieved via a coherent tool kit of economic policies, not the least of which should include pro-business and pro-family succession tax reliefs. It is for this reason that the Government should exclude NI from these changes. The Committee also highlighted a range of other issues in the submission as follows: The campaign to reduce the rate of corporation tax in NI, The tax burden and complexity arising from cross-border and remote/hybrid working on the island of Ireland, Tax simplification and the lack of progress in this area, Making Tax Digital for Income Tax and the implementation of mandatory tax adviser registration from 1 April 2026, and The ongoing need for climate and environmental objectives to feature significantly in UK budgets, which includes a range of tax policy recommendations.

The Institute recently responded to the House of Lords Economic Affairs Finance Bill Sub-Committee inquiry into ‘Draft Finance Bill 2025-26’ which closed last week. The submission focused solely on the draft Finance Bill clauses which will restrict the scope of agricultural property relief (APR) and business property relief (BPR) from April 2026 and the disproportionate economic impact of these, especially in Northern Ireland (NI). The Institute is calling again for the Government to reframe this draft legislation ahead of April 2026, or alternatively, that the Government exclude NI from these changes. The Institute is scheduled to deliver oral evidence to this Committee in the Palace of Westminster next Monday 20 October. Our full response to this call for evidence will be published in due course in the Tax Representations section of our website, once the Committee has published its final report. The Institute’s response follows on from ongoing lobbying earlier this year when we wrote to the Exchequer Secretary to the Treasury and responded to the related consultation. You can read more about the Institute’s work in this space since the Autumn Budget 2024 announced these changes via various stories in Chartered Accountants Tax News at the following links: https://www.charteredaccountants.ie/News/institute-meets-hmrc-to-discuss-the-autumn-budget-2024, https://www.charteredaccountants.ie/News/institute-tells-government-to-reframe-its-proposed-policy-changes-on-agricultural-property-relief-and-business-property-relief, https://www.charteredaccountants.ie/News/treasury-responds-to-institute-on-inheritance-tax-reliefs, https://www.charteredaccountants.ie/News/l-day-confirms-changes-to-key-inheritance-tax-reliefs-will-proceed-as-planned, and https://www.charteredaccountants.ie/News/institute-meets-with-local-government-to-discuss-april-2026-restrictions-to-iht-reliefs.