Latest Tax news

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.

Personal taxes measures 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 which would appear to include the 0 percent band for the first £5,000 of savings income which would increase to 2 percent. 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.    

Chartered Accountants Ireland has reiterated its concerns about the proposed changes to agricultural property relief (APR) and business property relief (BPR), due to come into effect in April 2026, and the disproportionate impact these changes will have on Northern Ireland. The largest professional body on the island of Ireland that represents over 5,500 members in Northern Ireland has advocated extensively for a specific carve out from the rules to be included in the draft legislation to protect Northern Ireland’s economy. UK Tax Manager with Chartered Accountants Ireland, Leontia Doran said  “The proposed changes are already having massive ripple effects across the UK economy, but most notably for the farming community. These changes are disappointing and particularly damaging in Northern Ireland where family-owned businesses and farms are the heartbeat of the economy. 84% of businesses here are either family owned or managed, and they support over 325,000 jobs.  “A carve-out is needed to exempt genuine farming activity and protect family-owned businesses in NI. The Government could have included a threshold which would have continued to provide smaller farms and businesses with 100% relief if their farming and/or business assets comprise a minimum proportion of their overall estate. It is also disappointing to see that no transitional measures have been announced to protect older taxpayers. The announcement that any unused allowance will be transferable between spouses is welcome. This is the minimum that could have been done to remove the legislation’s cliff edge effect for smaller farms and businesses. More is needed to support genuine farming activity and family-owned businesses here in NI.” Personal tax thresholds The Chancellor has confirmed that the income tax and National Insurance Contributions (NICs) thresholds will remain frozen at their current level until 2031. Doran noted “The continuing freeze on personal tax thresholds is having an ever-increasing effect on people’s net after tax income and is expected to bring many more taxpayers into the higher rate tax bracket by 2030/31, a phenomenon known as "fiscal drag". This is likely to have a strong disincentive effect on decisions to take on extra work and will reduce household spending power. Coupled with the changes to employers’ NICs from April 2025, this is likely to lead to a more stagnant labour market, damaging productivity further.  “Policy measures are seriously needed to drive Northern Ireland’s productivity, the profitability of its businesses, and by extension boost both corporation and income tax takes so that we can make this a thriving place to live and work for all our citizens.” Northern Ireland Corporation Tax To unlock the economic potential of the region and its dual market access, and drive FDI, the Institute has been engaged in a campaign for a reduced rate of corporation tax which is more closely aligned with the rate across the rest of the island.    Leontia Doran concluded “At a time when the Government has been grappling with how to grow the economy, it might initially appear counter-intuitive to seek a reduction in the corporation tax rate in Northern Ireland. However, a reduction in this rate would in the longer run ultimately increase tax take by driving the creation of better jobs and incentivising business growth.  “Add to this higher value FDI and the gains for Northern Ireland would set a real benchmark for what can be achieved with ambitious tax policies. This is something our members want and which we will continue to advocate for in 2026.”  

In Irish news, the Minister for Finance has published a feedback statement on the reform of the taxation regime for interest and Revenue has published new guidance on VAT groups. In UK news, we bring you an update on recent developments relating to the research and development (R&D) tax relief, and in this week’s miscellaneous updates you can read about HMRC’s statement outlining the standards it expects from intermediaries (tax agents). In International news, the European Commission published the second evaluation of the Directive on Administrative Cooperation (DAC). Ireland 1. The Minster for Finance has published a feedback statement to initiate a consultation on phase one of the reform of Ireland’s taxation regime for Interest. 2. Revenue has published several guidance documents on VAT groups including new guidance on the territorial scope of VAT groups. UK 3. HMRC has published a new tool to assist in making R&D tax relief claims and its new R&D advisory panel is now operational. 4. This week’s miscellaneous updates feature, inter alia, the publication by HMRC of a statement outlining the standards expected of tax agents and the measures it will take to address the small minority who harm the UK tax system. International 5. Read about the second evaluation of the Directive on Administrative Cooperation (DAC) recently issued by the European Commission. Keep up to date with all the latest Irish, UK, and international tax developments through Chartered Accountants Ireland’s Tax Newsletter. Subscribe to the Tax News by updating your preferences in MyAccount. You can also read this week’s Cross-border developments and trading corner here.

Revenue has published several new guidance documents on VAT groups covering the territorial scope of VAT groups, transitional VAT groups and relevant general information on VAT groups. In the guidance Revenue has outlined that VAT grouping is available to establishments located within the State which means that only a head office or branch established in Ireland is entitled to be a member of an Irish VAT group. The guidance has immediate effect for any VAT Groups formed after its publication and must be implemented by all existing VAT Groups no later than 31 December 2026. The general guidance on VAT groups outlines the conditions required to form a VAT group, the application of VAT group provisions and the consequences and deductibility of the group together with other relevant information.  The transitional VAT groups guidance contains similar information and will remain in place until 31 December 2026. It relates to existing VAT groups which are impacted by the new guidance on the territorial scope of VAT groups

Revenue issued a press release, ahead of Black Friday and Cyber Monday advising consumers to confirm whether advertised prices include all applicable taxes and duties before purchasing. If these costs are excluded, additional charges such as VAT and Customs Duty may apply when goods are delivered in Ireland. As outlined in the press release, Ms Maureen Dalton, Head of Revenue’s South East Frontier Management Branch, advised: “Import VAT is payable on all goods arriving into Ireland from outside the EU, no matter how small the purchase. For example, if you buy a Christmas decoration online for €15 from a non-EU country, and the postage is €3.50, VAT at 23% will apply to the combined amount, resulting in €4.26 VAT to be paid before delivery.” If the purchase price of the goods alone exceeds €150, both Customs Duty and VAT may apply.”

Revenue has updated Appendix 2 of the VIES Traders Manual Version 2 to include a link to the guide to preparing VIES returns on the Return Preparation Facility (RPF) which replaces the ROS Offline Application. Appendix 2 also includes a link to the VIES CSV template (Excel).

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.  

Revenue is inviting VAT-registered businesses managed by its Large Corporates Division to complete a VAT Modernisation and eInvoicing survey to inform Ireland’s implementation of the EU’s VAT in the Digital Age (ViDA) package, formally adopted on 11 March 2025. ViDA will require eInvoices and real-time reporting for cross-border B2B supplies across the EU. On 8 October 2025, following Minister Donohoe’s Budget Speech announcement, Revenue’s paper “Implementation of eInvoicing in Ireland” was published. The paper outlines a phased approach, with Phase 1 introducing mandatory eInvoicing and real-time reporting for domestic B2B transactions by VAT-registered large corporates. Receipt of the survey is not a notification that these businesses are mandated to issue eInvoices in Phase 1. The survey has issued directly to businesses through Revenue’s Online Service (ROS), with a timeline to submit responses by 5:00pm on Friday 12 December 2025. Queries can be sent to VATmodernisation@revenue.ie, and all relevant updates on VAT Modernisation will be published at revenue.ie/vatmod. Furter details of Revenue’s plans for the implementation of ViDA requirements were outlined in a previous news item.

Last month HMRC confirmed that its new research and development (R&D) expert advisory panel has been established with the appointment of six independent industry specialists. HMRC has also recently published a new tool that can be used to check if a company has undertaken qualifying R&D before a claim for R&D tax relief is made. The new advisory panel is known as the RDEAP and its aim is to provide sectoral insight and guidance to support the administration of R&D tax reliefs. It meets quarterly and will contribute to HMRC communications, guidance, and the strategic understanding of innovation across sectors. The Chair and Secretariat of the RDEAP are from HMRC’s Corporation Tax Innovation and Growth team. Other HMRC representatives, and representatives from other government departments may be invited to the RDEAP meetings by invitation. The RDEAP is advisory only so does not have decision-making authority, though it may make recommendations to existing governance and decision-making bodies as appropriate. The newly published R&D tool takes users though a number of the key tests which define qualifying R&D for tax purposes. Explanations and links to further guidance are provided. According to HMRC, a competent professional will be needed to help answer some of the questions. Once all of the questions have been answered, HMRC says that the tool will give the user a clear indication of whether or not the project is qualifying R&D.   It is recommended that results are saved and a record is kept of the information used to answer each question to assist with making claims. In the event of a compliance check HMRC says that it is “unlikely to disagree” that a project involves R&D for tax purposes if the answers given when using the tool were “based on your project’s facts and you can clearly support and explain them”. We have also been advised that HMRC does not store or use any of information provided when using the tool.  

Last week, Tánaiste and Minister for Finance, Simon Harris TD, published a Feedback Statement for Phase One of reform of Ireland’s Taxation regime for Interest. The consultation period will run until 16 January 2026. It follows on from the Public Consultation on the Tax Treatment of Interest in Ireland which had been launched in September 2024 and an Action Plan for the reform of Ireland’s taxation regime for interest published by the Department of Finance on Budget Day. You can read the Institute’s response (under the auspices of the CCAB-I) to that earlier consultation here. The phase one feedback statement outlines a strawman proposal which sets out a possible approach for how the underlying framework for the taxation and deductibility of interest in Ireland may be reformed.  The key areas being examined in the consultation are as follows: Scope of phase one reforms Outline of new interest deductibility rule for corporation tax Transfer pricing Enhancements of the Interest Limitation Rule Transitional and simplification measures Taxation of interest income Taxation and deduction of interest equivalents The Institute will be responding to this consultation under the auspices of the Tax Committee South of CCAB-I. If you would like to submit views for our consideration, you can do so by emailing tax@charteredaccountants.ie.