November 2025 Budget Statement Summary
Yesterday’s Budget statement by the Chancellor was much awaited and as always, there is plenty for practitioners and taxpayers to absorb. A summary of the tax provisions (with thanks to the Bloomsbury Professional author team) follows below. Of course we are hard at work already absorbing these provisions and planning relevant updates to our online content in the coming weeks.
Personal tax
Income tax rates and allowances
The personal allowance and higher rate thresholds are to be frozen for a further three years to April 2031, along with the additional rate threshold. The transferrable tax allowance for married couples will also be frozen as it is linked to the personal allowance.
Married Couple’s Allowance and Blind Person’s Allowance will be increased by 3.8% from 6 April 2026.
From 2027/28, there will be separate tax rates for property income. The property basic rate will be 22%, the property higher rate will be 42% and the property additional rate will be 37%. Relief for finance costs relating to residential property, known as the tax reducer, will be given at the property basic rate of 22% from 6 April 2027.
Also from 2027/28, the savings basic rate will rise to 22%, the savings higher rate to 42% and the savings additional rate to 47%.
From 2026/27, the dividend ordinary rate will be increased to 10.75% and the dividend higher rate will be increased to 35.75%. There is no change to the dividend additional rate which remains at 39.35%.
The changes to savings and dividend rates apply across the UK, but the taxation of non-savings income is devolved in Scotland and Wales (although the Welsh have yet to exercise the power to vary the rates). The UK Government will work with the devolved powers to make sure the changes work effectively.
Reliefs and allowances deductible at steps 2 and 3 of the income tax calculation in s23 ITA2007 will be applied to other sources of income in priority to property, savings and dividend income. This will take effect from 6 April 2027.
The starting rate for savings is retained at £5,000.
Non-residents
The dividend tax credit for non-UK residents with UK income will be abolished. This will take effect from 6 April 2026.
Non-UK residents with both UK dividend income and UK rental or partnership income are allocated the better of two alternatives to determine their UK tax position.
The first alternative is that the entirety of their UK income is assessed. This option allows an individual to claim a personal allowance. However, the person is also treated as having paid income tax at the dividend ordinary rate on the amount or value of their distribution. This tax credit was initially introduced to match the tax credit on dividends for UK residents but was not repealed when the UK resident tax credit was abolished. It is this tax credit which is being removed.
The second alternative is that only their UK rental or partnership income is taxable (because all of other income is ‘disregarded income’), however they may not claim their Personal Allowance.
This brings non-UK residents in line with UK residents.
National insurance contributions
For individuals, the primary threshold, the lower earnings limit, the upper earnings limit and the upper profits limit are all maintained at the current level until April 2031. For employers, the secondary threshold is also remaining at its current level until April 2031.
The lower earnings limit will increase from £125 to £129 per week and the small profits threshold will increase from £6,845 to £7,105.
The main Class 2 rate will be £3.65 per week (up from £3.50) and the Class 3 rate will be £18.40 (up from £17.75).
From 6 April 2026, it will no longer be possible to pay voluntary Class 2 contributions if you are abroad and the initial residency/contribution requirement to be able to pay at all will increase to 10 years from its current 3 years. There is to be a wider call to evidence on the whole area of voluntary NICs.
The relief from employers’ NICs for veterans in their first civilian role will be extended to April 2028.
Pension contributions
There will be an employer and employee NIC charge on pension contributions above £2,000 per year made via salary sacrifice. This will take effect from 6 April 2029.
Such contributions will still be exempt from income tax unless contributions exceed the available annual allowance.
All employer contributions will continue to be free of NICs.
Any contributions affected will need to be reported through payroll software so that the NIC charge can be calculated.
The salary sacrifice will still be effective for the purposes of Tax free childcare or child benefit.
Car and van benefit
The van benefit charge for 2026/27 and the van fuel benefit charge will increase by CPI although actual figures have not yet been published.
A temporary BIK easement will apply for plug in hybrid electric vehicles to prevent the tax charge increasing significantly due to new emissions standards. This will apply from 1 January 2025 to 5 April 2028.
Where the following conditions are met, a car is deemed to have a nominal emissions figure of 1:
- Vehicle was first registered on or after 1 January 2025
- Vehicle’s actual emissions figure is 51 or more
- Vehicle was registered under any emission standard other than Euro 6d-ISC-FCM or Euro 6e
- Car’s electric range figure is 1 or more.
Enterprise Management Incentive Schemes
Changes are being made so that more companies can qualify under EMI.
The employee limit is increasing to 500 (from 250), the gross assets test to £120m (currently £30m) and the company share option limit to £6m (from £3m). The maximum holding period for an option will also increase from 10 years to 15 years (and this will also apply to existing options).
These will come in from April 2026.
The requirement to notify HMRC of the grant of an EMI option will be removed from April 2027.
Venture capital schemes
The annual company investment limits for VCT and EIS companies will increase to £20m for Knowledge Intensive Companies and £10m to other qualifying companies. These limits are currently £10m and £5m. The lifetime investment limit for these will increase to £40m and £24m respectively (up from current levels of £20m and £12m).
The gross assets test will increase to £30m before investment and £35m after investment. The current levels are £15m before and £16m after investment.
VCT income tax relief will decrease from 30% to 20%.
All of these changes will come in from April 2026.
Making Tax Digital (MTD)
No late submission penalties will be charged for quarterly updates during the 2026/27 tax year for those required to mandate into MTD. Penalties for late payment of tax will be increased from 1 April 2027.
One further group of taxpayers is exempted from MTD and the start date for others has been deferred until April 2027.
Guidelines have been updated to reflect that MTD will apply to childminders but they are to clarify how arrangements will apply to those working from non-domestic premises.
Share schemes and PISCES
Existing EMI and CSOP contracts will be able to be amended so that listing on PISCES will be an exercisable event. This will apply for contracts agreed before 6 April 2028 and will apply retrospectively from 15 May 2025.
PISCES is a new trading platform which allows private companies to have their shares traded for a short period of time.
Image rights payments
Legislation will be introduced so that all image rights payments related to an employment are treated as taxable employment income and subject to the relevant income tax and NICs liabilities. This will take effect from 6 April 2027.
In certain professions, it is common to have an agreement where an employer may exploit image rights for a fee and it has always been assumed that such payments, if structured corrected, would not be employment income. Further practical guidance will be issued before it is clear which payments will be caught.
Simple Assessment
From 2027/28, there will be no extra tax to pay for pensioners whose sole income is the basic or new State Pension which exceeds the personal allowance at that point (which is deemed likely).
Charity compliance
Legislation will be introduced to strengthen the charity tax rules on tainted donations, approved investments and non-charity investments. These were published in draft form over the summer and will come in from 6 April 2026.
Loan charge
Legislation will be published to give effect to the independent review of the loan charge by announcing a new settlement opportunity for those affected. The key points are:
- instead of being charged at the tax rates that apply to the loan charge and all other income in 2019, the new offer will be worked out based on the tax rates they would have paid in the years that loans were made
- the new amount will be reduced to account for historic promoter fees, up to a maximum discount of £10,000 per year that a taxpayer used a loan scheme
- further to the recommendations in the review, the new amount will be reduced by £5,000, reducing the amount that many people could pay to zero
- no late payment interest will be charged — reducing the amount that many could pay by around 20%
- any inheritance tax already due because of the use of loan schemes covered by the settlement will be written off
- where a person is unable to pay the new amount in full immediately, HMRC will agree a payment arrangement tailored to their ability to pay — anyone can decide to pay the new liability over five years, without having to discuss affordability with HMRC — forward interest will apply as normal if a person decides to pay via instalments
- the maximum reduction for any one person will be no greater than £70,000 on what the person already owed because of the loan charge
- promoters of tax avoidance schemes will not be able to access the new settlement opportunity
Expenses of working from home
The Government will remove the deduction for income tax purposes of non-reimbursed home working expenses. This will take effect from 6 April 2026. This will include all household expenses, including business telephone calls.
Cancelled shifts
The Employment Rights Act was recently amended so that workers will have the right to compensation when shifts are cancelled, moved or curtailed at short notice. Legislation is to be introduced to confirm that such payments are earnings for income tax purposes.
Workplace BIK
The income tax and NICs exemption for certain workplace provided health benefits will be extended to cover eye tests, home working equipment and flue vaccinations. This will take effect from 6 April 2026.
Employee Car Ownership Schemes
The proposed changes to the BIK rules for employee car ownership schemes has been delayed to 6 April 2030.
Changes in taxation for previously non-domiciled individuals
Technical changes are to be made to the legislation introduced last year to the new residence based tax regime. These include:
- an individual who wishes to be treated as a qualifying new resident for the Foreign Income and Gains regime (FIG) must be at least 10 years old at the beginning of the tax year;
- claims for relief under the FIG regime can be deducted only from the foreign income, foreign employment income or foreign gains to which they relate;
- alignment of the qualifying asset holding company (QAHC) rules so that carried interest type returns connected with services to a QAHC qualify for relief under the FIG regime;
- correction to the CGT residence test for personal representatives to ensure that they are not UK resident where the deceased was UK non-resident but was a long-term resident for IHT purposes; and
- the requirement that an individual must file a tax return where they are not entitled to the annual exempt amount for CGT under the FIG regime.
Where a PAYE notification is made to limit the amount of income subject to UK tax, there will be a maximum of 30% which can be excluded from the charge to tax, in light with the maximum overseas workday relief which is available.
The Government are also consulting on changing the way in which internationally mobile individuals are taxed, closing loopholes. No further details are available.
Temporary non residence
A change will be made so that all dividends received during a period of temporary non-residence will be subject to UK tax. Previously, if it could be shown that dividends were made out of post-departure profits, they were excluded from these provisions. This will apply from 6 April 2026.
There is also a targeted anti-avoidance provision to catch situations where value is routed via loans or payments to connected persons or entities to bypass a UK income tax charge.
ISAs
The overall ISA limit remains at £20,000 but a maximum of £12,000 can be held in a cash ISA. The exception is for savers over 65 who will be able to continue to contribute £20,000 into a cash ISA.
This change will apply from 6 April 2027.
Junior ISA limits remain at £9,000 and Lifetime ISA limits at £4,000. However, a new product will replace the LISA in due course to support first time buyers.
Capital Taxes
Capital gains tax rates
No changes are made to CGT rates
Share exchanges and reorganisations
There is to be modernisation of anti-avoidance provisions which apply to share exchanges and company reorganisations with immediate effect.
Previously, the share reorganisation provisions focussed on whether or not the main purpose or one of the main purposes of the arrangements was the avoidance of tax. So the focus of the current rule is on the reason for, or purpose of the overall reorganisation. The proposed revisions mean that the rule will now better target those cases where, as part of a commercial exchange or company reconstruction, additional arrangements have been put in place to obtain a tax advantage. It will not affect anyone who does not benefit from the arrangements.
Non-resident CGT
There is to an amendment to the legislation closing loopholes for protected cell companies and clarifying legislation for investors. Changes will have immediate effect.
A protected cell company is a type of company made up of a number of separate cells where the assets and liabilities of one cell are segregated and protected from those of other cells. Where there are indirect disposals of UK land by non-UK residents, a charge arises if the disposal is of a UK property rich entity. The definition of this is amended so it will be individual PCC cell that is looked at rather than the PCC itself. The same is true for the substantial indirect interest tests.
Additionally, an Extra-Statutory Concession that applies to non-UK resident individuals who have invested in Collective Investment Vehicles and exempts them from the requirement to make a double taxation treaty claim by return will be formalised.
Incorporation relief
For transfers to a company on or after 6 April 2026, incorporation relief under s162 TCGA 1992 will have to be claimed rather than applying automatically.
Claims will need to include details of the transaction, tax computations and details of the type of business transferred.
Employee Ownership Trusts
Disposals to Employee Ownership Trusts which qualify for relief will no longer get 100% relief, as it is reduced to 50% for transactions from 26 November 2026. BADR and investors relief will not be available on such gains.
The remaining 50% of the gain will not be chargeable at the time of the disposal but will be held over to come into charge on any future disposal of the shares by the trusts of the EOT. This is achieved by reducing the base cost for the trustees such that they will have a higher gain on a subsequent disposal. The gain will not be taxed on the original vendor.
IHT nil rate bands
The IHT nil rate band is currently frozen until 5 April 2030 at £325,000 with the residential nil rate band being £175,000. The level at which the residential nil rate band commences to waste away is set at £2m. Legislation will be introduced to maintain this freeze in rate bands until 5 April 2031.
The £1m allowance for 100% BPR and APR will also be frozen until 5 April 2031.
IHT and infected blood compensation payments
Payments made under the Infected Blood Compensation Scheme will not be subject to IHT where the original infected person or person eligible for compensation has died before it is paid. Living recipients will have two years to make gifts of the payment without an IHT charge arising.
Changes for previously non-domiciled individuals
A cap of £5m will be introduced on relevant property trust charges for pre-30 October 2024 excluded property trusts. This will be backdated to 6 April 2025.
From 6 April 2025, the government removed the outdated concept of domicile status from the tax system and implemented a new residence-based regime which is internationally competitive and focused on attracting the best talent and investment to the UK. Under the new rules, when an individual is a long-term UK resident (broadly, they have been resident 10 years out of the last 20) non-UK assets they own personally, or in a trust they created, are in scope for Inheritance Tax.
The reform included transitional protections for former non-domiciled individuals, so that non-UK property in former excluded property trusts is not brought into inheritance tax on their death. This additional measure provides a limit in respect of trust charges arising every 10 years, or on exits. The cap relates to each trust in scope. Trustees remain liable to pay tax up to the cap amount, making a significant contribution to the exchequer, in addition to tax impacted individuals are expected to pay by remaining in the UK, as well as their wider economic contribution. New trusts, or trusts created by individuals who were not formerly non-domiciled remain chargeable in full.
Agricultural property relief and business property relief
The £1m allowance for 100% APR and BPR will be transferrable between spouses and civil partners, including where the first death is before 6 April 2026.
BPR on shares which are quoted on a recognised stock exchange but treated as unquoted (such as AIM) will be 50% from this date and will not be able to benefit from 100% relief.
For both of these measures, anti-forestalling provisions mean that the new rules will apply for lifetime transfers on or after 30 October 2024 if the donor dies on or after 6 April 2026. This will limit planning before the new rules are introduced.
Pension funds
The provisions such that from 6 April 2027, unused pension funds and death benefits payable from a pension will fall within the estate of the pension holder for IHT purposes will go ahead.
PR will be able to direct pension scheme administrators to withhold 50% of taxable benefits for up to 15 months and pay IHT in certain circumstances.
PR will also be discharged from a liability for payment of IHT on pensions which are discovered after they have finalised the estate with HMRC.
IHT avoidance
Certain specific loopholes are to be closed including ensuring that UK agricultural property held via non-UK entities is treated as UK situs, changes in status of trust assets before an exit charges and restricting charity reliefs.
Stamp Duty Land Tax
A new relief will be introduced where property is transferred within Local Government Pension Schemes.
Stamp Duty and Stamp Duty Reserve Tax
The Finance Bill will introduce a power which will allow regulations to be published to allow testing of the new digital service for the Securities Transfer Charge which will replace Stamp Duty and Stamp Duty Reserve Tax.
With effect from 27 November 2025, any transfers of a company’s securities will not be subject to SDRT for three years from the point at which the company lists on a UK regulated market. It will only apply where the shares of the company are newly listed on or after 27 November 2025 and will apply to all securities, not just shares. This exemption will not apply where the transfer forms part of a merger or takeover and there is a change of control.
Business Taxes
Corporation tax
There is no increase in the main rate or small companies rate of corporation tax, so these remain at 25% and 19% respectively. The marginal rate fraction remains the same.
Late filing penalties
The penalties for late filing of corporation tax returns will double from 1 April 2026.
- £200 penalty if 1 day late (if late 3 times in a row, £1,000 penalty)
- After 3 months, another £200 penalty (if late 3 times in a row, £1,000 penalty)
- After 6 months, 20% of unpaid tax
- After 12 months, another 20% of unpaid tax
Capital allowances
A new 40% FYA will be introduced for any main rate expenditure including most expenditure on assets available for leasing (although not assets leased overseas) and for unincorporated businesses. Both of these are currently excluded from the 100% FYA (or full expensing as it is called). This will apply 1 January 2026. The first year allowance will still not be available for cars or second hand assets.
However, from 1 April 2026 for corporation tax purposes and 6 April 2026 for income tax purposes, the writing down allowance on the main pool with reduce from 18% to 14%.
The 100% FYA on zero emission cars and charging points is extended for a further year to 2027.
Construction Industry Scheme
There is to be a strengthening of powers to tackle fraud within the CIS. The administration of the scheme will also be simplified and improved.
These measures will take effect from 6 April 2026.
Transfer pricing
Legislation will be put in place requiring in-scope multinationals to submit an Internation Controlled Transaction Schedule (ICTS) which will report information annually on cross-border related party transactions. This is likely to take effect for accounting periods beginning on or after 1 January 2027 although this has yet to be confirmed.
A separate consultation had been undertaken on other reforms to transfer pricing and associated tax provisions and the following appears to have been confirmed:
- transfer pricing ― there will be a general exemption from UK-to-UK transfer pricing where both parties are subject to UK corporation tax at the same statutory rate; the participation condition will be revised to narrow the definition of ‘common management’, and the valuation standard for transactions involving intangible fixed assets will be simplified
- diverted profits tax (DPT) ― DPT as a standalone tax will be repealed. Instead, a new charge under UK corporation tax for ‘Unassessed Transfer Pricing Profits’ (UTPP) will be introduced; the Government will retain the existing Profit Diversion Compliance Facility (PDCF) and intends to update guidance on it when UTPP comes into force
- permanent establishment ― it was confirmed that the draft legislation will align the UK’s statutory definition of PE, particularly dependent agent PE, with the standard set out in the 2017 OECD Model Tax Convention and Commentary. In addition, the profit attribution to a PE will follow the ‘authorised OECD approach’, and the rules for the Investment Manager Exemption will be amended.
In general, these changes are due to take effect for chargeable periods beginning on or after 1 January 2026.
Advance Tax Certainty Service
HMRC have been consulting on introducing an advance tax certainty service for those who are thinking of undertaking major investment projects in the UK. This will be legislated in Finance Bill 2025/26 and launched in July 2026.
Non-derecognition liabilities
A new anti-avoidance provision will be introduced relating to certain arrangements where there is a non-derecognition liability. This will take effect from 26 November 2025.
This measure will introduce a new anti-avoidance provision in situations where there has been a non-derecognition of assets transferred to a securitisation vehicle and a liability is recognised in connection with the transfer. The new rule will deny tax relief for amounts arising from such arrangements that are attributable to a main purpose of securing a tax advantage.
In a securitisation, an ‘originator’ company transfers financial assets to the securitisation vehicle, which issues debt secured on the financial assets. The loan notes are split into tranches, offering varying risk and reward.
For accounting purposes, in certain cases an originator may be required to continue to recognise the transferred assets. This may be referred to as non-derecognition, failed derecognition or continuing recognition. This can happen in a retained securitisation, being a securitisation where all the loan notes issued are beneficially owned by the originator’s group.
An example of arrangements seeking to secure a tax advantage could involve an originator company selling some of the loan notes issued in a retained securitisation to an overseas subsidiary, with that sale funded by a low-interest loan from the originator to the overseas subsidiary. For accounting purposes, this could result in the recognition of a liability in the originator in connection with the original transfer of assets, and the originator recognising an expense in respect of this non-derecognition liability (which can be known as a failed derecognition liability or a continuing involvement liability).
In such a case, HMRC considers that existing legislation would also negate any UK tax advantage for such arrangements.
Close company participators
A consultation will be launched early in 20206 to consider the possibility of companies having to report transactions between close companies and their participators.
Oil and Gas Price Mechanism
The Government has confirmed that the Energy Profits Levy (which was supposed to be temporary) will be replaced by the Oil and Gas Profits Mechanism which will be triggered when there is a high price. It will apply from 2030. The rate will be 35% with thresholds being $90/barrel of oil and 90p/therm of gas.
Research and Development Expenditure Credit
A new pilot of targeted advance assurance will be launched in spring 2026 for small and medium sized enterprises who want certainty before submitting claims to HMRC.
Advanced Corporation Tax
The shadow ACT regime will be repealed from 1 April 2026 and the Government will consult on the future of the remaining parts of the ACT regime.
Corporate Interest Restriction
New rules will simplify the administration around reporting companies within the CIR for periods ending on or after 31 March 2026. The time limit for appointing a reporting company will be removed and the appointment will not have to be made by notice to HMRC. Groups will be responsible for ensuring a reporting company is appointed, with details disclosed in the interest restriction return. A new penalty of £1,000 will apply where a reporting company has not been appointed before a return is submitted.
There will also be technical amendments to the provisions for certain capital expenditure in the calculation of tax-EBITDA. Capital expenditure deducted by way of specific reliefs in respect of waste disposal site preparation and restoration, cemeteries and crematoria and flood and coastal erosion risk management projects will be excluded from the calculation of tax-EBITDA.
Tax credits for creative industries
Legislation will be introduced to set out the treatment for corporation tax purposes of intra-group payments made in return for surrendered RDEC, AVEC and VGEC. This will apply to payments made on or after 26 November 2026. Payments are normally ignored for CT purposes but legislation is amended so that they are only ignored if they do not exceed the amount of the credit surrendered.
Pillar 2 measures
Technical amendments are made to the Multinational Top-Up Tax and the Domestic Top-Up Tax.
The changes have been introduced to bring the UK legislation into line with administrative guidance published by the OECD in January 2025 and also following various stakeholder consultations.
Most of the changes will take effect for accounting periods beginning on or after 31 December 2025, although the majority will also be permitted to take effect from an earlier date via election. However, the changes to the treatment of pre-regime deferred tax assets will take effect for accounting periods ending on or after 21 July 2025.
CFC State Aid refunds
In 2019, the European Commission issued a decision which held that the one of the financial exemptions within the UK Controlled Foreign Company legislation constituted unlawful state aid for 2013–2018. The UK was required to recover that alleged aid from affected taxpayers and a recovery mechanism was brought into legislation. In September 2024, following legal challenges, the CJEU annulled the European Commission’s decision, finding that it had incorrectly assessed the UK’s corporation tax framework and therefore erred in concluding that the exemption granted a selective advantage.
As a result, the UK became obliged to unwind the recovery and restore taxpayers to their original position. Secondary legislation was introduced which required HMRC to cancel the recovery assessments, issue reversal notices and repay amounts collected. This included both tax and interest previously charged.
At this Budget, it was announced that a further change will be introduced, to provide for repayment interest on the interest previously paid, and not just on the principal tax amounts charged. This measure will take effect from 2 December 2025.
ATED
The time limit for claiming a relief from the ATED charge is removed. This allows those who have failed to make returns, in situations where they have no tax charge due to a relief, to claim the relevant relief.
VAT and other indirect taxes
Charity Tax Relief
A new VAT relief will be introduced from 1 April 2026 for business donations of goods to charity where those goods will be distributed to those in need or used in the delivery of charitable services.
Cross Border VAT grouping amendment
There will be clarification of the rules relating to operating cross border VAT groupings to apply from 26 November 2025. Effectively, they are reverting to their previous position on this point.
HMRC now considers that an overseas establishment of a business VAT group in the UK should be treated as part of that VAT group, even when located in an EU member state that does not operate whole entity VAT grouping.
E-invoicing
The Government will require all VAT invoices to be issued in a specified electronic format from April 2029.
Social housing
The Government will consult on reform of VAT rules to incentivise the development of land intended for social housing.
Private Hire Vehicle Services
Suppliers of private hire vehicles and taxi services will be excluded from the scope of the Tour Operators’ Margin Scheme from 2 January 2026, except where supplied in conjunction with certain other travel services.
Economic Crime Levy
From 1 April 2026, the Economic Crime Levy provisions will be tweaked. Payment of the levy has depended on the size of the business: small businesses (UK revenue of less than £10.2m do not have to pay), medium businesses (£10.2m to £36m pay levy of £10,000), large businesses (£36m to £1bn pay levy of £36,000) and very large businesses (over £1bn pay levy of £500,000).
The large band will be split into two, being £36m to £500,000 and £500,000 to £1bn. The levy will then be set at 0.1% of revenue for businesses at the bottom of the band so £10,200, £36,000, £500,000 and £1m.
Air Passenger Duty
Air Passenger Duty rates for 2027/28 will be increased in line with RPI, rounded to the nearest penny. They will also be proceeding with the change relating to private jets announced in last year’s Budget, following a consultation period.
Tobacco duty rates
Duty rates for all tobacco products will rise by 2% above inflation with effect from 6pm on 26 November 2025.
There will be a one-off increase of £2.20 per 100 cigarettes or 50g of other tobacco products as well as the annual uprating at 2% above inflation from 1 October 2026.
Vaping Products Duty will b introduced from 1 October 2026 and it was announced that the rate will be £2.20 per 10ml of vaping liquid. A one-off increase in tobacco duty in the same amount (per 100 cigarettes or 50g of tobacco) will come in at the same time.
Vaping Product Duty
The new Vaping Product Duty will be introduced from 1 October 2026 at a flat rate of £2.20 per 10ml applied to all vaping liquid. There will be a Vaping Duty Stamps scheme to support compliance.
Alcohol duty
Alcohol duty rates will increase in line with RPI with effect from 1 February 2026.
Soft Drinks Industry Levy
The threshold at which SDIL applies will be reduced from 5g to 4.5g sugar per 100ml. There will also be removal of exemptions for milk-based and milk substitute drinks with added sugar.
This will apply from 1 January 2028. Open cup beverages will remain unaffected.
Vehicle Excise Duty
An exemption will be introduced for VED from April 2027 for search and rescue vehicles.
A new electric VED will be introduced being a mileage charge for electric and plug-in hybrid cars. This will be 3ppm. Electric van, motorcycles, buses, coaches and HGVs will be exempt.
All other VED rates are increased in line with RPI. The Expensive Car Supplement threshold is increased to £50,000 for zero emission vehicles.
Fuel duty
The 5p cut in fuel duty is maintained until 31 August 2026 with fuel duty continuing to be frozen at its current levels. It will then increase by 1p on 1 September 2026, 2p on 1 December 2026 and 2p on 1 March 2027. This will return the rate to its pre-March 2022 levels. The automatic inflation increase for 2026/27 will not occur but it will increase by RPI from April 2027.
Motability Scheme
Changes are being made to the Motability Scheme which allows certain persons to lease vehicles at a competitive price. From July 2026, top-up payments will be subject to 20% VAT and IPT will be applied at the standard rate of 12% for insurance related to vehicles within the scheme. Tax changes will not apply to vehicles designed or adapted for wheelchair or stretcher users.
Climate Change Levy
Climate Change Levy will all increase in line with RPI from 1 April 2027 although the main rate for LPG will continue to be frozen.
Electricity used in electrolysis to produce hydrogen and natural gas used as a source of CO2 in the production of sodium bicarbonate will be made exempt from CCL.
Landfill Tax
The standard rate of Landfill Tax will also increase with RPI although the lower rate will increase by the cash amount of the increase in the main rate. The Government is not going to proceed with transition to a single rate of landfill tax following consultation.
Customs Duty
The customs duty relief on low value goods imported into the UK (valued at £135 or less) will be removed from March 2029 at the latest. These items will then become liable to Customs Duty.
Plastic Packaging Tax
The Plastic Packaging Tax rate will increase in line with CPI inflation. There are other technical changes on certification associated with this levy.
New legislation will be published to allow for a mass balance approach to be used to attribute chemically recycled plastic for the purposes of the PPT and remove pre-consumer waste as a source of recycled content. Both measure will apply from 1 April 2027.
Gaming Duty
The Government will not proceed with a single tax on remote betting and gambling.
Remote Gaming Duty will increase from 21% to 40% from 1 April 2026.
A new Remote Betting Rate will be introduced at 25% from 1 April 2027 but will not apply to self-service betting terminals, spread betting or pool betting. Remote bets on horseracing will be excluded and remain taxed at 15%.
Bingo Duty will be abolished from 1 April 2026.
The Gross Gaming Yield bandings for gaming duty will be frozen from 1 April 2026 to 31 March 2027.
Duty free allowances
A duty free allowance of 50ml per passenger for vaping products will be introduced in October 2026. Cider and sparkling wine will be moved into the beer and still wine duty free categories.
Administration
Closing the tax gap
As always, there are a number of announcement made designed to tackle tax avoidance and other compliance issues:
- HMRC is to go ahead with mandatory registration of tax advisers from May 2026, with a three-month transitional period
- Increasing rewards paid to informants who provide HMRC with ‘high value information’. Where tax recovered is over £1.5m, this could be an amount of up to 30% of the additional tax collected that would otherwise not have been collected.
- New powers will be introduced to ‘close in’ on promoters of tax avoidance schemes with more details to be published for consultation in early 2026.
- New powers will be introduced to tackle tax advisers who facilitate non-compliance to take effect from 1 April 2026.
- The Government will invest £25m over the next five years to recruit additional insolvency service staff to disqualify more rogue directors.
A new dedicated small business evasion and enforcement team will be established and there will be deployment of 350 HMC criminal investigators to carry out targeted criminal enquiries into small businesses. - Tax conditionality will be extended to waste and animal welfare sectors and additional transport licences. Draft legislation will be published for consultation in 2026.
- There will be a strengthening of the framework which governs how HMRC publishes the details of deliberate tax cheats.
- £64m will be spent in the next five years with private sector debt collection agencies with £89m being invested in the same period to fund additional HMRC staff to collect more of the tax debt internally.
- The Government is committed to ‘ambitious reform’ of Personal Tax Offshore Anti-avoidance provisions. The next stage will be a call for evidence.
Payment of tax
From April 2029, there will be a requirement for self assessment taxpayers with PAYE income to pay more of their SA liabilities in-year via PAYE. A consultation on this will be published in early 2026 as well as details on proposals for changes for those with self assessment income only.
Behavioural penalty reform
There is a publication of the summary of responses to the consultation on penalty reform and the Government have announced that they will modernise the inaccuracy and failure to notify chargeability penalties.
Ensure errors are amended
Draft legislation will be published in 2026 giving HMRC new powers to oblige taxpayers to correct inaccuracies in returns when identified.
Other relevant measures
High Value Council Tax surcharge
A new charge will apply to owners of properties worth £2m or more starting in 2028/29. This will be collected alongside Council Tax by local authorities.
The charge will be £2,500 for properties worth £2m - £2.5m, £3,500 for properties worth £2.5m - £3.5m, £5,000 for properties worth £3.5m - £5m and £7,500 for properties worth more than £5m.
Third party data
The Government will bring forward proposals discussed last year to get interest income and card sales data more frequently. This will take effect from April 2028.
Cryptoasset Reporting Framework
UK Cryptoasset Service Providers will be required to report on their UK resident customers from 1 January 2026 with reports being made from 2027.
ATED rates
The following ATED rates will apply for 2026/27, having not increased from 2025/26:
|
Value of property |
2026/27 |
|
£500,001 to £1m |
£4,450 |
|
£1,000,001 to £2m |
£9,150 |
|
£2,000,001 to £5m |
£31,050 |
|
£5,000,001 to £10m |
£72,700 |
|
£10,000,001 to £20m |
£145,950 |
|
Over £20m |
£292,350 |
National Living Wage
The National Living Wage (NLW) will increase to £12.71 per hour from April 2026 (it is currently £12.21). The National Minimum Wage for those who are aged 18 to 20 will go up to £10.85 per hour (from £10) as the first step in aligning the limits into a single adult wage rate.
Rates for 16/17 year olds and apprentices from £7.55 to £8.00.
The accommodation offset will increase to £11.10 per day.
Visitor Levy
Mayors in England will be given the power to raise a visitor levy for overnight accommodation and will explore the option to extend this power to leaders of other strategic authorities.
Consultations and other relevant points
The following announcements are made in the Budget papers:
- There is a call to evidence that seeks vies on the effectiveness of existing tax incentives and the wider tax system for business founders and ‘scaling’ firms. They are looking at how these businesses can be supported and encouraged to stay within the UK.
- The Government is approving the business cases for Flintshire & Wrexham Investment Zone, Anglesey Freeport and Fort Green Freeport and its support for the Northern Ireland Enhanced Investment Zone.
- A consultation will be launched in early 2026 on the introduction of a new ‘recklessness’ criminal offence for fraudulently evading direct taxes. This would align with existing indirect tax offences.
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