Legislation Day 2025

The UK government has published on Monday 21 July 2025 draft clauses for the 2025-26 Finance Bill for consultation, closing on 15 September, together with other tax related documents. The below includes a comprehensive list. 

Draft Legislation

Income tax: 

• Reform of the tax treatment of carried interest – draft legislation covering the new carried interest regime, reflecting announcements made last month on the introduction of three statutory exclusions to make the rules more workable for many short-term visitors to the UK. See Gemma Harris’s LinkedIn post and read more in our TaxScape alert. 

• Charity compliance measures – changes to the charity tax rules for tainted donations, approved charitable investments and attributable income for charities and community amateur sports clubs (CASCs). 

• Employee car ownership schemes – bringing employee car ownership schemes (ECOS) within the scope the benefit in kind rules as company cars from 6 October 2026. 

• Private Intermittent Securities and Capital Exchange System (PISCES) tax implications – draft legislation to allow employers, with their employee’s permission, to amend existing Enterprise Management Incentives (EMI) and Company Share Option Plan (CSOP) contracts to include a PISCES trading event as an exercisable event, without losing the tax advantages the schemes offer. The new legislation will apply to amendments made on or after 15 May 2025. Read more in Chris Booker’s LinkedIn post.

Inheritance tax: 

• Reforms to agricultural property relief and business property relief – restricts inheritance tax reliefs for business and agricultural property from 6 April 2026. The draft legislation includes a provision to increase the £1m allowance for the 100% rate of relief by CPI from April 2030.

• Unused pension funds and death benefits – brings unused pension savings into the scope of inheritance tax from 6 April 2027. A specific carve-out has been included for death in service benefits.

Business tax :

• R&D: clarifying the scope of the overseas restriction – technical updates to ensure that the overseas restriction operates in Northern Ireland as intended. 

• Multinational Top-up Tax and Domestic Top-up Tax: further amendments – covers a number of areas, designed to bring the UK legislation up to date with the latest OECD Inclusive Framework commentary. In addition, it corrects or clarifies some technical points within the existing UK legislation. Read more in Alison Lobb’s LinkedIn post.

Customs duties and levies: 

• Inland border facilities – amendments to existing legislation, to make sure all border locations are responsible for providing and funding their own customs infrastructure.

Anti-avoidance:

• Tackling non-compliance in the umbrella company market – makes recruitment agencies responsible for accounting for PAYE and Class 1 NIC on payments made to workers that are supplied via umbrella companies. Where there is no agency, this responsibility will fall to the end client business.

• Proposals to close in on promoters of marketed tax avoidance – draft legislation for a number of proposals to close in on promoters of marketed tax avoidance. 

• Tackling tax adviser facilitated non-compliance – draft legislation to improve the efficiency and effectiveness of powers that allow HMRC to tackle tax advisers facilitating non-compliance by their clients 

Administration:

• Better use of new and improved third-party data – draft legislation to improve the quality of data collected under HMRC’s bulk data gathering powers for tax administration. 

• Modernising and mandating tax adviser registration with HMRC – a requirement for tax advisers who interact with HMRC on behalf of clients to register with HMRC and meet minimum standards from 1 April 2026. 

• Making Tax Digital for Income Tax and penalty reform – a substantial rewrite of the current provisions, but the effects primarily relate to announcements made in the Spring Statement including the reduction in turnover threshold to £20,000 from April 2028.
  
  

Consultation and call for evidence updates

• New Land Remediation Relief – the government is seeking views on the design and impact of Land Remediation Relief as part of its support for brownfield development.
• Outcome Personal Tax Offshore Anti-Avoidance Legislation
• Outcome Reforms to Inheritance Tax agricultural property relief and business property relief: application in relation to trusts
• Outcome Inheritance Tax on pensions: liability, reporting and payment
• Outcome Enhancing HMRC's ability to tackle tax advisers facilitating non-compliance
• Outcome Closing in on promoters of marketed tax avoidance
• Outcome Better use of new and improved third-party data
  
  

Other policy announcements included in the Exchequer Secretary to the Treasury's L‑Day Written Ministerial Statement

• Technical amendments to residence-based tax regime – the government has announced that it will bring forward technical fixes to legislation on the residence-based tax regime. Further details are to be provided “in due course.”
• Benefit in kind tax for plug-in hybrid electric vehicles (PHEVs) – the government has announced that if a new emissions standard for PHEVs is introduced in Great Britain, it intends to legislate for an easement to help mitigate the benefit in kind tax impact.
  
  

Next steps

The final content of Finance Bill 2025-26 will be decided by the Chancellor and is expected at the Autumn Budget 2025.

Please speak with your usual Deloitte contact or any of the contacts below if you would like to discuss.