UK Autumn Budget 2025

The Autumn Budget 2025 introduces extensive reforms across personal taxes, property taxes, business incentives, indirect taxes, trusts and cross-border rules.

To frame the measures:

A large portion of tax-raising provisions only take effect from 2026, 2027 or later, whereas government spending commitments begin sooner. This creates a temporal shift where revenue comes after expenditure.

Financial markets have broadly welcomed the package, a factor that may support gradual reductions in interest rates. Lower borrowing costs translate into reduced public-spending pressure.

Given the highly domestic focus of many measures (council tax, PAYE reforms, ATED, business rates, NICs), most provisions do not directly affect foreign investors or multinational structures. Because the Budget is unusually large and dense, we recommend contacting us for specific analysis.

We will continue monitoring forthcoming secondary legislation and HMRC (His Majesty’s Revenue & Customs) guidance, contacting affected clients proactively.

1)  Property and local taxation

1.1  High-Value Council Tax Surcharge — from April 2028

CURRENT RULE:

Council tax is charged by local authorities according to band; there is no additional charge purely for high property value.

WHAT CHANGES:

Following the 2026 national revaluation by the Valuation Office Agency (VOA), residential properties valued over £2 million will be subject to an annual High-Value Council Tax Surcharge. The surcharge is payable by the owner (not the occupier).

Annual surcharge bands

VOA 2026 valuation	Annual surcharge
£2,000,000–£2,499,999	£2,500
£2,500,000–£3,499,999	£3,500
£3,500,000–£4,999,999	£5,000
£5,000,000+	£7,500

WHY IT MATTERS:

This introduces a recurring ownership cost for high-value homes. A consultation will address exemptions (e.g., job-related accommodation), complex ownership and hardship provisions.

What ACT can do – as with ATED, our Property Team will assist you in obtaining a compliant valuation for the purposes of the High-Value Council Tax Surcharge.

1.2  Annual Tax on Enveloped Dwellings — claims to relief

CURRENT RULE:

Companies holding UK residential property over £500,000 may be within Annual Tax on Enveloped Dwellings (ATED). Reliefs (e.g., commercial letting, development) must currently be claimed within one year of the end of the chargeable period; late claims are normally refused in full, leaving the ATED charge payable.

WHAT CHANGES:

The one-year claim limit is abolished. ATED relief claims will instead follow the standard tax-return amendment windows.(being within 12 months from the end of the relevant chargeable period).

WHY IT MATTERS:

Removes a common compliance trap and gives companies more room to correct past returns.

What ACT can do: 

Our Property Team will assist you in obtaining a compliant valuation for the purposes of ATED.

1.3  Business rates multipliers (England) — from April 2026

CURRENT RULE:

The Retail, Hospitality and Leisure (RHL) sector currently benefits from temporary business-rates reliefs.

WHAT CHANGES:

Temporary reliefs will end and be replaced with permanent multiplier adjustments:

Property type	Rateable value	New multiplier approach
RHL hereditaments	< £500,000	5p below the national multiplier
RHL hereditaments	≥ £500,000	2.8p above the national multiplier

WHY IT MATTERS:

Support is refocused toward smaller premises. This sits within a wider multi-year reform and call for evidence.

What ACT can do – once the legislation is enacted, our team will review its impact on your premises and contact all affected retail, hospitality and leisure clients with tailored guidance.

2)  Personal taxes

2.1  Personal allowances and thresholds — frozen to 2030–31

CURRENT RULE:

The Personal Allowance (£12,570) and the Higher-rate (£50,270) and Additional-rate (£125,140) thresholds were frozen to 2028–29.

WHAT CHANGES:

The freeze is extended to 2030–31. Why it matters

Prolonged freezes increase “fiscal drag”, pushing more people into higher bands as incomes rise.

2.2  Ordering of income-tax reliefs — from 6 April 2027

CURRENT RULE:

No fixed statutory order for allocating allowances and reliefs across employment/trading, property, savings and dividends, allowing taxpayers to optimise outcomes.

WHAT CHANGES:

From 6 April 2027, reliefs must be set against income in this order:

1.     general earned income (employment and trading), 2) property, 3) savings, 4) dividends.

WHY IT MATTERS:

Reduces optimisation flexibility; landlords and those with significant dividends may see higher overall liabilities.

2.3  Rates on property, savings and dividends

2.3.1  Property income — from 6 April 2027

CURRENT RULE:

Property income is taxed at 20% / 40% / 45% (basic/higher/additional). The mortgage-interest credit is 20%. Withholding for Non-Resident Landlords (NRLs) and for Real Estate Investment Trust (REIT)/Property Authorised Investment Fund (PAIF) distributions is 20%.

WHAT CHANGES:

Measure	Before	From 6 Apr 2027
Property income rate (basic)	20%	22%
Property income rate (higher)	40%	42%
Property income rate (additional)	45%	47%
Mortgage-interest credit	20%	22%
NRL withholding	20%	22%
REIT/PAIF withholding	20%	22%

WHY IT MATTERS:

Raises tax on rental returns and on property-linked distributions, for residents and non-residents.

2.3.2  Savings income — from 6 April 2027

Band	Before	From Apr 2027
Basic	20%	22%
Higher	40%	42%
Additional	45%	47%

WHY IT MATTERS:

Increases the tax cost of interest-based returns.

2.3.3  Dividend income — from 6 April 2026

Band	Before	From Apr 2026
Ordinary	8.75%	10.75%
Upper	33.75%	35.75%
Additional	39.35%	39.35%

WHY IT MATTERS:

Dividend income becomes less advantaged; the notional dividend tax credit for non-UK residents is also abolished.

2.4  Individual Savings Accounts and Gift Aid

CURRENT RULE:

The Individual Savings Account (ISA) cash allowance (under age 65) is £20,000.

WHAT CHANGES:

From 6 April 2027, the cash ISA allowance (under 65) reduces to £12,000. Gift Aid is unchanged. For individuals aged 65 and over, the £20,000 allowance remains unchanged.

WHY IT MATTERS:

Reduces annual tax-free savings capacity.

2.5  Residence and temporary non-resident rules

CURRENT RULE:

The Foreign Income and Gains (FIG) regime takes effect from 6 April 2025. Temporary non-resident rules can tax certain income/gains on return to the UK.

WHAT CHANGES:

Technical amendments ensure FIG operates as intended. The temporary non-resident rules will tax specified

trade-profit distributions made after departure if the individual returns on or after 6 April 2026.

WHY IT MATTERS:

Relevant for leavers/returners with business distributions shortly after departure.

What ACT can do - We will keep the matter under review and will contact affected clients once the amendments are finalised.

3) Employment, NICs, mobility and benefits

3.1  Homeworking — from 6 April 2026

CURRENT RULE:

Employers can reimburse allowable homeworking costs tax-free (flat rate or actuals). Employees can currently

claim a deduction if not reimbursed.

WHAT CHANGES:

Employee deductions for unreimbursed homeworking expenses are removed. Employer reimbursements remain exempt.

WHY IT MATTERS:

Employees who rely on self-claims will lose relief unless employers reimburse.

3.2 Employer reimbursements: eye tests, equipment, flu vaccines — from 6 April 2026

CURRENT RULE:

Reimbursements can be taxable unless an exemption applies.

WHAT CHANGES:

Reimbursements for eye tests, homeworking equipment and flu vaccines become exempt from income tax and NICs; flu vaccines receive a dedicated exemption.

WHY IT MATTERS:

Simplifies compliant benefits policies.

3.3  Image-rights payments — from 6 April 2027

CURRENT RULE:

Some payments tied to an individual’s image may be treated outside employment income.

WHAT CHANGES:

All employment-related image-rights payments will be treated as employment income and subject to PAYE and Class 1 National Insurance contributions (NICs).

WHY IT MATTERS:

Removes favourable structuring; aligns with salary.

3.4  Overseas Workday Relief (OWR) — PAYE cap

CURRENT RULE:

Under OWR (within the FIG regime), certain new UK residents can exempt up to £300,000 or 30% of overseas duties. Employers can operate reduced PAYE via a Globally Mobile Employee (GME) notification.

WHAT CHANGES:

From 6 April 2026, payroll reductions via GME are capped at 30%, even if an individual’s OWR entitlement would be higher.

WHY IT MATTERS:

Employers must cap PAYE reductions; any extra entitlement is settled via the tax return.

3.5  Umbrella companies — joint and several liability

CURRENT RULE:

If an umbrella company fails to operate PAYE/NICs correctly, liabilities can be hard to collect.

WHAT CHANGES:

From 6 April 2026, liabilities become joint and several with the agency (or the end client if no agency) when the umbrella fails to operate PAYE/NICs.

WHY IT MATTERS:

Raises compliance exposure for agencies and end users.

3.6  Employee Car Ownership Schemes — from 6 April 2030 (transition to 2031)

CURRENT RULE:

Some schemes replicate company-car benefits outside normal benefit-in-kind rules.

WHAT CHANGES:

Schemes that replicate company-car benefits are brought within the benefit-in-kind regime from 6 April 2030, with transition to 2031 for some arrangements.

WHY IT MATTERS:

Closes an alternative route to car benefits.

3.7  Plug-in hybrid electric vehicles — deeming rule

CURRENT RULE:

Company-car benefit follows certified CO₂.

WHAT CHANGES:

For qualifying plug-in hybrid electric vehicles (PHEVs) registered on/after 1 January 2025, a deemed CO₂ of 1 g/km applies until 5 April 2028 (some models transition to 2031).

WHY IT MATTERS:

Gives certainty through the transition period.

3.8  Employee share schemes—Enterprise Management Incentive (EMI) / private company options — from 6 April 2026

CURRENT RULE:

EMI eligibility: ≤250 employees; ≤£30m gross assets; £3m unexercised options; 10-year exercise window.

WHAT CHANGES:

Measure	Current	From 6 Apr 2026
Employee limit	250	500
Gross assets	£30m	£120m
Unexercised options	£3m	£6m
Exercise window	10 years	15 years (extends qualifying existing grants)

WHY IT MATTERS:

Broadens access to growth-equity incentives.

This is one of the few clearly positive measures, and we consider it highly useful. Businesses should actively evaluate the opportunity.

3.9  NIC thresholds and voluntary rates

CURRENT RULE:

Thresholds are generally uprated; overseas Class 2 access requires 3 years.

WHAT CHANGES:

Employer and employee thresholds (including the Upper Earnings Limit) are frozen to 2030–31; the Lower Earnings Limit is uprated by CPI. Overseas Class 2 gateway rises to 10 years. From April 2026, Class 2 is £3.65/week and Class 3 is £18.40/week.

WHY IT MATTERS:

Freezes increase NICs over time; expatriates face tighter access to voluntary contributions.

3.10  Salary-sacrifice pension NIC cap — from 6 April 2029

CURRENT RULE:

Salary-sacrifice pension contributions are NIC-free without limit.

WHAT CHANGES:

An annual £2,000 NIC-free cap applies; contributions above this are treated as employee contributions and subject to NICs.

WHY IT MATTERS:

Reduces NIC savings for high salary-sacrifice contributions.

3.11  National Living Wage / National Minimum Wage — from 1 April 2026

Category	New rate
Age 21+	£12.71
Age 18–20	£10.85
Under 18	£8.00
Apprentice	£8.00
Accommodation offset (daily)	£11.10

WHY IT MATTERS:

Increases wage costs across labour-intensive sectors.

4) Corporation tax, capital allowances and investment reliefs

4.1  Corporation Tax rate

CURRENT RULE:

Main rate 25%.

WHAT CHANGES:

No change.

WHY IT MATTERS:

Provides rate stability.

4.2  Capital allowances — new 40% First-Year Allowance

CURRENT RULE:

Main-pool Writing-Down Allowance (WDA) is 18%; certain First-Year Allowances (FYAs) apply to electric vehicles and chargepoints.

WHAT CHANGES:

From 1 January 2026, a 40% First-Year Allowance (FYA) applies to qualifying main-rate expenditure. Main-pool WDA falls to 14%. FYAs for electric vehicles/chargepoints continue to March/April 2027. Cars, second-hand assets and overseas leasing do not qualify for the new 40% FYA.

WHY IT MATTERS:

Front-loads relief on new investment while shrinking ongoing WDA.

4.3  Capital Gains Tax reforms

Employee Ownership Trusts (EOTs) (Employee Ownership Trusts)

CURRENT RULE:

Transfers of a controlling interest to an Employee Ownership Trust (EOT) can be fully exempt from Capital Gains Tax (CGT).

WHAT CHANGES:

From 26 November 2025, only 50% of the gain is exempt. Business Asset Disposal Relief (BADR, CGT relief for qualifying business disposals) and Investors’ Relief (IR, a\ CGT relief for external investors subscribing for newly issued shares) cannot apply to the remaining taxable 50%.

WHY IT MATTERS:

Reduces the attractiveness of EOT exit routes relative to traditional share sales.

Incorporation relief — claim required

CURRENT RULE:

Relief applies automatically when a business is transferred to a company wholly in exchange for shares.

WHAT CHANGES:

For transfers on or after 6 April 2026, the relief must be claimed in the tax return. Why it matters

Failure to claim results in an immediate CGT charge on incorporation.

Share reorganisation anti-avoidance

CURRENT RULE:

Reorganisation reliefs may be denied where arrangements have a tax avoidance purpose.

WHAT CHANGES:

From 26 November 2025, reliefs may also be denied where steps result in a tax advantage, even without a specific avoidance purpose.

WHY IT MATTERS:

Broadens the scope of anti-avoidance rules affecting restructurings.

Non-resident CGT — Protected Cell Companies

CURRENT RULE:

The CGT treatment of individual cells can be unclear for UK-land-related disposals.

WHAT CHANGES:

Each cell will be treated as a separate company for UK land-related CGT rules (from 26 November 2025).

WHY IT MATTERS:

Provides clarity for fund and cell-structured vehicles holding UK land interests.

BADR & Investors’ Relief — comparison table

From 6 April 2026, the CGT rate for Business Asset Disposal Relief and Investors’ Relief will increase to match the main lower rate of CGT at 18%.

BADR/IR — applicable CGT rates

	BADR rate (Business Asset Disposal Relief)
Up to 5 April 2025	10%
From 6 April 2025	14%
From 6 April 2026	18%

Key distinctions BADR:

o    Available to officers/employees owning ≥5% of shares, voting rights and economic entitlement.

o    2-year minimum qualifying period before disposal

o    Lifetime limit £1 million.

o    Applies to disposals of shares in trading companies or holding companies of trading groups.

Investors’ Relief:

o    Available to non- relevant employees only

o    3-year minimum qualifying period before disposal.

o    Shares must be newly issued and subscribed.

o    no minimum or maximum holding requirement

o    Lifetime limit £1 million.

o    Applies to disposal of shares in unlisted trading companies or holding companies of trading groups.

WHY IT MATTERS:

Entrepreneurs and management shareholders will face higher effective CGT rates from April 2025 and April 2026.

ACT should be consulted when planning disposals of shares in UK companies in light of these staged increases.

Brief note:

BPR / BR (IHT) — unchanged but relevant Business Property Relief (BPR, also referred to as Business Relief – BR) under the Inheritance Tax (IHT) regime offers 50% or 100% relief on qualifying business assets, including:

·         shares in unquoted trading companies (100% relief);

·         interests in trading businesses (100% relief);

·         controlling holdings of quoted shares (50% relief);

·         certain land/buildings used by the business (50% relief).

Requirements remain unchanged: minimum two-year ownership and exclusion of investment businesses.

WHY IT MATTERS:

With CGT costs increasing for disposals from April 2025 and April 2026, some shareholders may consider retaining shares for succession planning. BPR can effectively reduce the IHT exposure to nil, which may compare favourably against higher CGT rates on disposal.

4.4  Enterprise Investment Scheme / Venture Capital Trust — from 6 April 2026

Measure	Current	New
Annual / lifetime caps	£5m / £12m	£10m / £24m
Knowledge-intensive lifetime cap	£20m	£40m
Gross-asset limits	£15m/£16m	£30m/£35m
VCT income-tax relief	30%	20%

WHY IT MATTERS:

Greater funding capacity; less generous upfront VCT relief.

How the Enterprise Investment Scheme (EIS) works

The Enterprise Investment Scheme (EIS) encourages investment into early-stage and growth companies by offering Income Tax, Capital Gains Tax (CGT), and loss relief incentives to qualifying investors who subscribe for newly issued ordinary shares in eligible companies.

Income Tax relief

• Relief at 30% of the amount invested.

• Annual limit: £1 million, or £2 million if at least £1 million is invested in knowledge-intensive companies (KICs).

• Shares must be held for a minimum period of three years.

• Relief may be carried back one tax year.

CGT exemption on disposal

Gains on EIS shares are exempt from CGT if the investor:

• held the shares for three years, and

• claimed Income Tax relief on the subscription.

CGT deferral relief

Any Capital Gain can be deferred by reinvesting in EIS-qualifying shares.

There is no upper limit, and the deferred gain becomes chargeable on disposal of the EIS shares.

Loss relief

If the investment results in a loss, the investor may claim loss relief against:

• Income Tax, or

• CGT.

Combined reliefs can significantly reduce the effective capital at risk.

Eligibility requirements — company and investor Company qualification (current rules)

To qualify, the company must:

• be unquoted (AIM-listed permitted);

• have gross assets below the applicable thresholds;

• employ fewer than 250 people (or 500 for KICs);

• carry on a qualifying trade;

• use funds for growth and development within two years.

• certain activities do not qualify (e.g., property development, financial services, energy generation).

Investor qualification, including the control condition Control condition — investor must not control the company EIS relief is not available if the investor controls the company.

Under current legislation, the investor is “connected” and therefore ineligible if they:

1.  Hold more than 30% (alone or with associates) of:

• share capital,

• voting rights,

• rights to assets on winding-up, or

• rights to acquire such interests.

2.  Are employed by the company, unless they are an unpaid director or fall within the business-angel exception allowing “permitted” director remuneration.

3.  Exercise control through arrangements that allow them to direct the company’s affairs, even without exceeding the 30% threshold.

Other investor conditions

The investor must:

• subscribe for new ordinary shares;

• hold the investment for three years;

• not receive value from the company in a way that would create a disqualifying benefit.

4.5  Construction Industry Scheme (CIS)

CURRENT RULE:

Gross Payment Status (GPS) cancellation/re-application is limited; penalties apply.

WHAT CHANGES:

GPS can be cancelled for fraud; re-application wait becomes 5 years; 30% penalties can apply to connected persons for lost tax.

WHY IT MATTERS:

Tougher compliance for CIS operators.

4.6  R&D tax relief

CURRENT RULE:

Intra-group payments can complicate outcomes; SME Advance Assurance exists but limited.

WHAT CHANGES:

Intra-group payments are ignored where they do not exceed surrenderable credits; SME Advance Assurance

pilot launches Spring 2026.

WHY IT MATTERS:

Smoother claims for SMEs and clearer group treatment.

4.7  Corporate Interest Restriction (CIR)

CURRENT RULE:

Constraints on appointments/retrospective filings; penalties apply.

WHAT CHANGES:

Time limits on appointments are removed; annual appointment required; retrospective appointments allowed; £1,000 penalty for invalid appointment; adjustments to tax-EBITDA in specific cases.

WHY IT MATTERS:

Material admin/process updates for groups within CIR.

4.8  Unassessed Transfer Pricing Profits (UTPP)

CURRENT RULE:

Diverted Profits Tax applies at 31%.

WHAT CHANGES:

UTPP replaces DPT from 1 January 2026, charged at CT rate + 6%.

WHY IT MATTERS:

Adds a new pricing-compliance layer.

4.9  Securitisation anti-avoidance

CURRENT RULE:

Mismatches can arise where liabilities are recognised without derecognition of related assets.

WHAT CHANGES:

Relief is denied where arrangements have a main tax-advantage purpose.

WHY IT MATTERS:

Targets structured-finance tax outcomes.

4.10  Permanent Establishments and transfer pricing

CURRENT RULE:

UK rules broadly follow the Organisation for Economic Co-operation and Development (OECD) Model, with local features.

WHAT CHANGES:

Updates align with the OECD Model; broker/investment-manager exemptions clarified; a new International Controlled Transactions Schedule (ICTS) reporting duty begins 2027; knock-ons for controlled foreign company (CFC) rules.

WHY IT MATTERS:

Sharper PE analysis and more reporting for cross-border groups.

4.11 Pillar Two — technical amendments

CURRENT RULE:

The Multinational Top-up Tax (MNTT) and Domestic Top-up Tax (DTT) apply to large groups.

WHAT CHANGES:

Technical updates align UK rules with OECD administrative guidance.

WHY IT MATTERS:

Maintains international coherence.

5)  VAT, customs and border measures

5.1  VAT relief for charitable donations — from April 2026

CURRENT RULE:

Donations of goods can create VAT/friction.

WHAT CHANGES:

New relief for goods donated for onward donation/qualifying charitable use, capped per item:

Item type	Max VAT-free value
General goods	£100
White goods, furniture, computers, mobiles, tablets	£200

Donors must obtain certification and retain delivery evidence.

WHY IT MATTERS:

Encourages donations and reduces VAT leakage.

5.2  Tour Operators Margin Scheme — Private Hire Vehicle Operators

CURRENT RULE:

Private Hire Vehicle Operators (PHVOs) may be in TOMS depending on how the supply is packaged.

WHAT CHANGES:

From 2 January 2026, PHVOs are excluded from TOMS unless their services are merely ancillary to a travel package.

WHY IT MATTERS:

Most PHVOs revert to normal VAT accounting.

5.3  Mandatory e-invoicing — by 2029

CURRENT RULE:

PDF/Word invoices can qualify as VAT invoices.

WHAT CHANGES:

All VAT invoices must be structured e-invoices by 2029; a roadmap will be set out at Budget 2026.

WHY IT MATTERS:

Significant systems change for all VAT-registered businesses.

5.4  Motability — VAT and Insurance Premium Tax (IPT)

CURRENT RULE:

Zero rating and IPT relief apply widely.

WHAT CHANGES:

From 1 July 2026, zero rating/IPT relief is limited to permanently adapted vehicles.

WHY IT MATTERS:

Narrows eligibility; impacts pricing for some users.

5.5  VAT grouping — EU establishments

CURRENT RULE:

The “Skandia” approach fragments VAT treatment across EU/UK establishments.

WHAT CHANGES:

HMRC adopts a whole-entity approach, reversing Skandia-style fragmentation.

WHY IT MATTERS:

Simplifies VAT grouping for UK businesses with EU branches.

5.6 Low-value import relief

CURRENT RULE:

Customs duty may be relieved on consignments ≤ £135.

WHAT CHANGES:

Relief is abolished no earlier than March 2029.

WHY IT MATTERS:

Raises costs on low-value imports.

5.7 Carbon Border Adjustment Mechanism

CURRENT RULE:

No UK CBAM in force.

WHAT CHANGES:

CBAM starts 1 January 2027 via Finance Bill 2025–26.

WHY IT MATTERS:

Impacts importers of carbon-intensive goods.

6)  Stamp taxes

6.1  Stamp taxes on shares — digital modernisation

CURRENT RULE:

Off-market transfers rely on manual processes.

WHAT CHANGES:

A digital self-assessment route will be piloted for off-market share transfers.

WHY IT MATTERS:

Modernises and speeds up stamping.

6.2  Stamp Duty Reserve Tax (SDRT) — UK listings

CURRENT RULE:

SDRT at 0.5% applies widely.

WHAT CHANGES:

SDRT is disapplied for three years for new UK listings, except for transfers via depositary receipt/clearance systems or in M&A contexts.

WHY IT MATTERS:

Encourages UK listings.

7)  Trusts and inheritance tax

7.1  Thresholds — frozen to 2030–31

CURRENT RULE:

Nil-rate band (£325,000), residence nil-rate band (£175,000), and combined Agricultural Property Relief

(APR)/Business Property Relief (BPR) allowance (£1m).

WHAT CHANGES:

All frozen to 2030–31.

WHY IT MATTERS:

Brings more estates within scope as values rise.

7.2  Transfer of unused APR/BPR

CURRENT RULE:

Unused APR/BPR is not transferable.

WHAT CHANGES:

From 6 April 2026, unused APR/BPR may be transferred between spouses/civil partners.

WHY IT MATTERS:

Aids succession planning for farms and family businesses.

7.3  Pensions and inheritance tax — from 6 April 2027

CURRENT RULE:

Some unused pension funds fall outside IHT; scheme-administrator roles vary.

WHAT CHANGES:

Clarifies IHT treatment of retained pension funds and scheme-administrator powers.

WHY IT MATTERS:

Greater certainty for trustees and beneficiaries.

7.4  Excluded-property trusts — cap and anti-avoidance

CURRENT RULE:

“Excluded property” may fall outside the relevant-property regime.

WHAT CHANGES:

Ten-year charges capped at £5m per period for property excluded as at 30 October 2024; anti-avoidance strengthened.

WHY IT MATTERS:

Material for offshore trust planning.

The draft measure appears to apply a combined ceiling of £5 million to the ten-year charge and any exit charge for excluded-property trusts where the property qualified as excluded as at 30 October 2024, with operative effect for charges arising from April 2025.

To illustrate the numerical effect:

• Assume an excluded-property trust settled prior to 30 October 2024 holds a trust fund (“TF”) of £500 million on its ten-year anniversary occurring after April 2025.

• Under the current relevant-property regime (i.e., without the new cap), a standard ten-year charge could produce a liability in the region of £30 million (using an illustrative 6% effective rate on the hypothetical chargeable value).

• Under the draft cap, the charge would instead be limited to £5 million, representing a materially lower outcome.

• If, in addition, an exit charge arose during the same ten-year period (for example, on distributions or appointments), the combined amount of the ten-year charge plus any exit charge(s) would also be capped at £5 million.

For larger structures, for example a TF of £1 billion:

• A conventional ten-year charge might otherwise reach £60 million+ on a similar illustrative 6% basis.

• Under the draft rules, the total would again be restricted to £5 million for that charging period.

While these examples are purely illustrative, they show how the cap may become relevant only to a narrow category of very large excluded-property trusts established before 30 October 2024. We will keep the position under review as the draft legislation progresses and confirm application once final provisions are enacted.

7.5  Agricultural property — anti-avoidance

CURRENT RULE:

Offshore structures can fall outside APR rules.

WHAT CHANGES:

From 6 April 2026, anti-avoidance extends to UK agricultural property held through offshore routes.

WHY IT MATTERS:

Protects the intended scope of APR.

8)  Loan Charge

CURRENT RULE:

Loan Charge applies to certain disguised-remuneration schemes.

WHAT CHANGES:

A targeted settlement opportunity will be offered, while keeping the principle that tax due must be paid.

WHY IT MATTERS:

Provides a route to closure for affected taxpayers.

9)  Gaming, betting, APD, vehicles and product duties

Remote gaming duty: rises 21% → 40% (from 1 April 2026).

Remote betting duty: rises 15% → 25% (from 1 April 2027). Bingo duty: abolished (from 1 April 2026).

Air Passenger Duty (APD): higher rates for private aircraft > 5.7t. Electric vehicle (EV) mileage charge: from 6 April 2028.

Alcohol duty: increased 1 Feb 2026, then annual RPI.

Tobacco duty: increased 27 Nov 2025.

Soft Drinks Industry Levy (SDIL): threshold 5.0g → 4.5g/100ml (from 1 April 2028). Why it matters

Affects pricing and margins across multiple consumer sectors; introduces road-use taxation for EVs.

10)     Administration, CARF and penalties

10.1     Making Tax Digital for Income Tax Self-Assessment

CURRENT RULE:

Quarterly updates start in phases from 2026.

WHAT CHANGES:

Quarterly updates are penalty-free for the first mandated year.

WHY IT MATTERS:

Provides a soft landing for early cohorts.

10.2     Tax-adviser conduct regime

CURRENT RULE:

Limited direct oversight of adviser behaviours.

WHAT CHANGES:

New powers to address recklessness, including penalties, conduct notices, suspensions and public naming.

WHY IT MATTERS:

Raises standards and risk for advisers and their clients.

10.3     Penalties

CURRENT RULE:

Penalties exist for late filing, errors, dishonesty.

WHAT CHANGES:

“Recklessness” is added as a behaviour; Corporation Tax late-filing penalties are doubled; higher penalties where information is withheld.

WHY IT MATTERS:

Strengthens enforcement across the board.

10.4    Cryptoasset Reporting Framework

CURRENT RULE:

Limited reporting by crypto platforms.

WHAT CHANGES:

From 1 January 2026, Relevant Cryptoasset Service Providers must collect and report customer data; the first report is due 31 May 2027 (for 2026).

WHY IT MATTERS:

A major new compliance regime for crypto intermediaries.

11)     Selected effective dates

• 26 Nov 2025: EOT CGT change (50% chargeable); creative-relief admin fixes; R&D intra-group payment rule.

• 1 Jan 2026: 40% FYA begins.

• 1 Apr 2026: VAT relief for charity donations; bingo duty abolished.

• 6 Apr 2026: Dividend rates increase; non-resident dividend credit abolished; BADR 10% → 18%; OWR PAYE cap 30%; incorporation relief by claim; overseas Class 2 abolished and 10-year gateway for Class 3; homeworking rule changes; adviser registration opens.

• 1 Jul 2026: Motability VAT/IPT changes.

• 1 Jan 2027: CBAM live.

• 6 Apr 2027: Property/savings rates 22/42/47; ordering change; image-rights treated as earnings; APR/BPR modernisation.

• Apr 2028: HVCTS begins; e-mileage charge for EV/PHEV.

• 6 Apr 2029: Salary-sacrifice NIC cap.

12)     Planning & Implementation

• High-value homeowners: confirm 2026 VOA valuation; budget HVCTS; monitor consultation on reliefs/exemptions.

• Landlords/investors: model 2027/28 liabilities at 22/42/47 and under new ordering; review non- resident withholding and REIT/PAIF cashflows.

• Owner-managers: review exit timing and earn-out structures ahead of BADR 18%

• Mobility/expats: align payroll for OWR 30% PAYE cap from April 2026.

• Capex planning: incorporate 40% FYA and 14% WDA into financial models.

• Advisers/regulated firms: prepare for registration, enhanced powers and sanctions; update engagement and file-retention processes.

• E-commerce/importers: plan for removal of ≤£135 duty relief (earliest March 2029).

• Crypto providers: implement CARF onboarding, verification and reporting workflows; register by 31 January 2027.