16 January 2026
Scottish Budget presented
On 13 January 2026, the Scottish government presented its proposed Budget for the 2026-27 tax year. On the devolved elements of Scottish income tax applicable to the non-savings, non-dividend income of Scottish-resident taxpayers, the same six rates of income tax as applicable in 2025-26 are proposed for 2026-27. The government proposes increases to the 19% Starter rate band and the Basic rate band, to increase the effective income thresholds for paying both the Basic (20%) and Intermediate (21%) rates of tax by 7.4% each, to £16,537 and £29,526 respectively. There were no proposals to change the current thresholds for paying the Higher (42%), Advanced (45%) and Top (48%) rates of £43,662, £75,000, and £125,140 respectively. A government factsheet on the 2026-27 income tax proposals is available here.
No changes are proposed to standard residential and non-residential land and buildings transaction tax (LBTT) rates or bands. Two new high value council tax bands, for properties valued between £1 million and £2 million, and for properties valued above £2 million, are proposed from 1 April 2028.
Finance Bill and National Insurance Contributions Bill: progress update
Finance Bill (No. 2) Bill 2024-26, the Finance Bill introduced to enact many of the Budget’s tax announcements, began its Committee Stages this week. Selected provisions of the Bill, largely related to income tax, inheritance tax, gambling taxes, and alcohol duties, were considered by MPs sitting in a Committee of the whole House in two sittings of the Commons held on 12 January and 13 January 2026. The only amendments that were approved were six government amendments relating to inheritance tax agricultural property relief and business property relief. The Bill’s other clauses and schedules will be considered by a smaller number of MPs sitting in a separate Public Bill Committee. Dates for the Public Bill Committee hearings are yet to be announced. However, the Committee is due to conclude by 26 February 2026 at the latest.
Separately, the Committee of the whole House stage for the National Insurance Contributions (Employer Pensions Contributions) Bill, which will create a power for the Treasury to apply NICs to salary-sacrificed pension contributions that exceed £2,000 per annum from April 2029, has been scheduled for 21 January 2026. The Bill’s remaining Commons stages (Report stage and Third Reading) have been scheduled for the same date.
UK tax treaty with Peru reportedly set to enter into force on 21 January 2026
It has been reported that the 2025 UK-Peru Double Taxation Convention and Protocol will enter into force on 21 January 2026. The provisions of the treaty will have effect in line with the provisions in its entry into force article. It is expected that HMRC will update their page Peru: tax treaties accordingly, once the treaty has entered into force.
Guatemala joins the OECD/G20 BEPS Inclusive Framework
The OECD has announced that Guatemala has become the 148th member to join the OECD/G20 Inclusive Framework on BEPS. The countries of the Inclusive Framework are, amongst other things, committed to implementing and maintaining BEPS minimum standards in the areas of dispute resolution, treaty abuse, country-by-country reporting to tax authorities, and harmful tax practices.
RCB 1 (2026): Removal of linked goods concession
HMRC have published Revenue and Customs Brief 1 (2026) (RCB) on the removal of the linked goods concession. Under the Extra Statutory Concession (ESC) in paragraph 3.7, VAT Notice 48, a supplier may account for VAT on minor promotional items at the same VAT rate as the main item, subject to certain conditions, including that the minor items are linked to the main supply and sold with it for a single price. The RCB states that “the supplies previously eligible to be treated as single supplies under the concession should be treated as single supplies under the legislation, as confirmed by existing case law”. Accordingly, HMRC have concluded that the ESC is no longer needed, and are withdrawing it. For HMRC’s policy on single and multiple supplies, businesses are referred to HMRC’s Supply and Consideration manual, VATSC11113 - Supply: Single and multiple supplies: HMRC’s approach: The general approach. The RCB confirms that HMRC’s policy has not changed, and that applying the tests set out in VATSC11113 will lead to the same outcome as would have been reached under the revoked concession. HMRC will treat most small value supplies, even if otherwise considered distinct and independent, as part of a single supply if they are ancillary to the main supply or so closely linked as to form a single, indivisible economic supply. (Contact: Donna Huggard)
EMEA Dbriefs webcasts
The next EMEA Dbriefs tax webcast will take place on Wednesday 11 February 2026 at 12.00 GMT/13.00 CET. In UK tax update – February, our panel will discuss topical tax developments of relevance to UK businesses in relation to corporate taxes, employment taxes and indirect taxes.