Finance (No. 2) Bill

A Bill to make provision in connection with finance.

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26 Nov 2025
Commons: Committee
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(23 amendments - 0 agreed)

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Page 1

Part 1

 

Income tax, capital gains tax and corporate taxes

 

Income tax charge, rates and allowances

 
1
Income tax charge for tax year 2026-27
 
 
Income tax is charged for the tax year 2026-27.
5
2
Main rates of income tax for tax year 2026-27
 
 
For the tax year 2026-27 the main rates of income tax are as follows—
 
 
(a)
the basic rate is 20%,
 
 
(b)
the higher rate is 40%, and
 
 
(c)
the additional rate is 45%.
10
3
Default and savings rates of income tax for tax year 2026-27
 
 
(1)
For the tax year 2026-27 the default rates of income tax are as follows—
 
 
(a)
the default basic rate is 20%,
 

Page 2

 
(b)
the default higher rate is 40%, and
 
 
(c)
the default additional rate is 45%.
 
 
(2)
For the tax year 2026-27 the savings rates of income tax are as follows—
 
 
(a)
the savings basic rate is 20%,
 
 
(b)
the savings higher rate is 40%, and
5
 
(c)
the savings additional rate is 45%.
 
4
Increase in dividend ordinary and upper rates
 
 
(1)
In section 8 of ITA 2007 (which provides, among other things, for the dividend
 
 
ordinary rate and dividend upper rate)—
 
 
(a)
in subsection (1) (the dividend ordinary rate), for “8.75%” substitute
10
 
“10.75%”, and
 
 
(b)
in subsection (2) (the dividend upper rate), for “33.75%” substitute
 
 
“35.75%”.
 
 
(2)
The amendments made by this section have effect for the tax year 2026-27
 
 
and subsequent tax years.
15
5
Savings rates of income tax for tax year 2027-28
 
 
For the tax year 2027-28 the savings rates of income tax are as follows—
 
 
(a)
the savings basic rate is 22%,
 
 
(b)
the savings higher rate is 42%, and
 
 
(c)
the savings additional rate is 47%.
20
6
New rates of income tax on property income
 
 
(1)
Part 1 of ITA 2007 (rates at which income tax is charged etc) is amended as
 
 
follows.
 
 
(2)
After section 6C insert—
 
“6D
The property basic, higher and additional rates
25
 
The property basic rate, the property higher rate and the property
 
 
additional rate for a tax year are the rates determined as such by
 
 
Parliament for the tax year.”
 
 
(3)
After section 11C insert—
 
 
“11CA
Income charged at the property basic, higher and additional rates:
30
 
individuals
 
 
(1)
Income tax is charged at the property basic rate on an individual’s
 
 
income which—
 
 
(a)
is property income, and
 
 
(b)
would otherwise be charged at the basic rate or the default
35
 
basic rate.
 

Page 3

 
(2)
Income tax is charged at the property higher rate on an individual’s
 
 
income which—
 
 
(a)
is property income, and
 
 
(b)
would otherwise be charged at the higher rate or the default
 
 
higher rate.
5
 
(3)
Income tax is charged at the property additional rate on an individual’s
 
 
income which—
 
 
(a)
is property income, and
 
 
(b)
would otherwise be charged at the additional rate or the default
 
 
additional rate.
10
 
(4)
Subsections (1) to (3) are subject to—
 
 
section 11A (income charged at Scottish rates),
 
 
section 11CB (income charged at the Welsh property basic,
 
 
higher and additional rates: individuals),
 
 
any other provisions of the Income Tax Acts which provide
15
 
for income to be charged at different rates of income tax in
 
 
some circumstances.
 
 
(5)
Sections 16 and 16A have effect for determining the extent to which
 
 
an individual’s property income would otherwise be charged at the
 
 
basic, higher or additional rate or the default basic, default higher or
20
 
default additional rate.”
 
 
(4)
After section 16 insert—
 
“16A
Treatment of property income in hierarchy of total income
 
 
(1)
This section has effect for determining—
 
 
(a)
which part of a Scottish taxpayer’s income consists of property
25
 
income,
 
 
(b)
the rate at which income tax would be charged on a person’s
 
 
property income apart from section 11CA , and
 
 
(c)
the rate at which income tax would be charged on the property
 
 
income of a Welsh taxpayer apart from section 11CB .
30
 
(2)
It also has effect for all other income tax purposes except for the
 
 
purposes of sections 535 to 537 of ITTOIA 2005 (gains from contracts
 
 
for life insurance etc: top slicing relief).
 
 
(3)
If a person has property income but no dividend income or savings
 
 
income, the property income is treated as the highest part of the
35
 
person’s total income.
 
 
(4)
If a person—
 
 
(a)
has property income, and
 
 
(b)
dividend income or savings income (or both dividend income
 
 
and savings income),
40

Page 4

 
the property income is treated as the part of the person’s total income
 
 
immediately before the savings income or, if the person does not have
 
 
savings income, immediately before the dividend income.”
 
 
(5)
After section 17 insert—
 
“17A
Meaning of “property income”
5
 
(1)
This section applies for the purposes of the Income Tax Acts.
 
 
(2)
“Property income” is income which is—
 
 
(a)
chargeable under Chapter 3 of Part 3 of ITTOIA 2005 (the
 
 
profits of a UK property business or an overseas property
 
 
business),
10
 
(b)
chargeable under Chapter 7 of that Part (amounts treated as
 
 
adjustment income under section 330),
 
 
(c)
chargeable under Chapter 8 of that Part (rent receivable in
 
 
connection with a UK section 12(4) concern),
 
 
(d)
chargeable under Chapter 9 of that Part (rent receivable for
15
 
UK electric-line wayleaves), and
 
 
(e)
chargeable under Chapter 10 of that Part (post-cessation receipts
 
 
arising from a UK property business).”
 
 
(6)
In section 25 (reliefs and allowances deductible at Steps 2 and 3:
 
 
supplementary), after subsection (3) insert—
20
 
“(3A)
Subsection (2) is also subject to a requirement that the reliefs and
 
 
allowances in Steps 2 and 3 must be deducted from components of
 
 
income other than property income, savings income or dividend income
 
 
(so far as it would otherwise be possible to do so) before they are
 
 
deducted from property income, savings income or dividend income.”
25
 
(7)
Schedule 1 makes amendments in connection with, or otherwise related to,
 
 
provision made by this section and section 5 (including amendments
 
 
concerning savings rates).
 
 
(8)
The amendments made by this section and that Schedule have effect for the
 
 
tax year 2027-28 and subsequent tax years.
30
7
Property rates of income tax for tax year 2027-28
 
 
For the tax year 2027-28 the property rates of income tax are as follows—
 
 
(a)
the property basic rate is 22%,
 
 
(b)
the property higher rate is 42%, and
 
 
(c)
the property additional rate is 47%.
35
8
Scottish and Welsh property rates set by Scottish Parliament and Senedd
 
 
(1)
Schedule 2 makes provision for Scottish and Welsh property rates to be set
 
 
by the Scottish Parliament and Senedd Cymru.
 

Page 5

 
(2)
This section and that Schedule come into force on such day as the Treasury
 
 
may by regulations appoint.
 
 
(3)
The amendments made by this section and that Schedule have effect in relation
 
 
to—
 
 
(a)
the tax year appointed by the Treasury by regulations, and
5
 
(b)
subsequent tax years.
 
 
(4)
The tax year appointed under subsection (3) —
 
 
(a)
must be a tax year after the tax year 2026-27, and
 
 
(b)
must begin on or after the day appointed under subsection (2) .
 
 
(5)
Regulations under this section may appoint different days for different
10
 
purposes.
 
 
(6)
For further provision about regulations under this section, see section 1014(1),
 
 
(3) and (6)(b) of ITA 2007.
 
9
Freezing starting rate limit for savings for tax years 2026-27 to 2030-31
 
 
(1)
For the tax years 2026-27, 2027-28, 2028-29, 2029-30 and 2030-31, the amount
15
 
specified in section 12 (3) of ITA 2007 (the starting rate limit for savings) is
 
 
“£5,000”.
 
 
(2)
Accordingly, section 21 of that Act (indexation) does not apply in relation to
 
 
the starting rate limit for savings for any of those tax years.
 
10
Basic rate limit and personal allowance for tax years 2028-29 to 2030-31
20
 
(1)
Section 5 of FA 2021 (basic rate limit and personal allowance for tax years
 
 
up to 2027-28) is amended as follows.
 
 
(2)
In subsection (1) (which specifies the basic rate limit in section 10(5) of ITA
 
 
2007 as £37,700 for tax years up to 2027-28), for “and 2027-28” substitute “,
 
 
2027-28, 2028-29, 2029-30 and 2030-31”.
25
 
(3)
In subsection (2) (which specifies the personal allowance in section 35(1) of
 
 
ITA 2007 as £12,570 for tax years up to 2027-28), for “and 2027-28” substitute
 
 
“, 2027-28, 2028-29, 2029-30 and 2030-31”.
 
 
(4)
In subsection (3) (which makes consequential provision preventing the uprating
 
 
of those amounts for the affected tax years), in the words after paragraph (b),
30
 
for “and 2027-28” substitute “, 2027-28, 2028-29, 2029-30 and 2030-31”.
 

Corporation tax charge and rates

 
11
Charge and main rate for financial year 2027
 
 
(1)
Corporation tax is charged for the financial year 2027.
 
 
(2)
The main rate of corporation tax for that year is 25%.
35

Page 6

12
Standard small profits rate and fraction for financial year 2027
 
 
For the purposes of Part 3A of CTA 2010, for the financial year 2027—
 
 
(a)
the standard small profits rate is 19%, and
 
 
(b)
the standard marginal relief fraction is 3/200ths.
 

Employee reliefs

5
13
Enterprise management incentives: thresholds and period for exercise
 
 
(1)
In section 529 of ITEPA 2003 (scope of tax advantages: option must be
 
 
exercised within 10 years)—
 
 
(a)
in the heading, for “within 10 years” substitute “by the specified
 
 
anniversary”;
10
 
(b)
in subsection (2), for “tenth” substitute “specified”;
 
 
(c)
after subsection (2) insert—
 
 
“(2A)
In this section, “specified anniversary” means—
 
 
(a)
in cases where the employer company is a specified
 
 
Northern Ireland company, the tenth anniversary, and
15
 
(b)
otherwise, the fifteenth anniversary.”.
 
 
(2)
Schedule 5 to ITEPA 2003 is amended as set out in subsections (3) to (7) .
 
 
(3)
In paragraph 7 (maximum value of options in respect of relevant company’s
 
 
shares)—
 
 
(a)
in sub-paragraph (1), after “exceed” insert—
20
 
“(a)
£6 million, or
 
 
(b)
where the employer company is a specified
 
 
Northern Ireland company,”;
 
 
(b)
in sub-paragraph (2), after “option if the” insert “applicable”;
 
 
(c)
in sub-paragraph (4), after “applies” insert “(but see sub-paragraph
25
 
(5A))”;
 
 
(d)
after sub-paragraph (5), insert—
 
 
“(5A)
If—
 
 
(a)
the grant of two or more share options at the same
 
 
time causes only the limit in paragraph 7(1)(b) to be
30
 
exceeded, and
 
 
(b)
the employer company in respect of some of the share
 
 
options is not a specified Northern Ireland company,
 
 
the share options in respect of which the employer company
 
 
is a specified Northern Ireland company are, for the purposes
35
 
of this paragraph, to be treated as having been granted before
 
 
the other share options.”.
 
 
(4)
In paragraph 12 (the gross assets requirement)—
 

Page 7

 
(a)
in sub-paragraph (1) after “exceed” insert—
 
 
“(a)
£120 million, or
 
 
(b)
where the company is a specified Northern Ireland
 
 
company,”.
 
 
(b)
in sub-paragraph (2) after “exceed” insert—
5
 
“(a)
£120 million, or
 
 
(b)
where the employer company is a specified
 
 
Northern Ireland company,”.
 
 
(5)
In paragraph 12A (the number of employees requirement)—
 
 
(a)
in sub-paragraph (1) after “less than” insert—
10
 
“(a)
500, or
 
 
(b)
where the company is a specified Northern Ireland
 
 
company,”;
 
 
(b)
in sub-paragraph (2) after “less than” insert “500 or, where the
 
 
employer company is a specified Northern Ireland company,”
15
 
(6)
In paragraph 36 (option to be capable of exercise within ten years)—
 
 
(a)
in the italic cross-heading, for “10 years” substitute “the specified
 
 
period”;
 
 
(b)
in sub-paragraph (1), for “the period of 10 years” substitute “the
 
 
specified period”;
20
 
(c)
in sub-paragraph (2), for “the period mentioned in sub-paragraph (1)”
 
 
substitute “the specified period”;
 
 
(d)
after sub-paragraph (2) insert—
 
 
“(3)
In this paragraph, the “specified period” means—
 
 
(a)
15 years, or
25
 
(b)
where the employer company is a specified Northern
 
 
Ireland company, 10 years.”.
 
 
(7)
After paragraph 57E, insert—
 
 
“Meaning of “specified Northern Ireland company”
 
 
57F
In the EMI code, a “specified Northern Ireland company” means a
30
 
company that—
 
 
(a)
has its registered office in Northern Ireland, and
 
 
(b)
carries on a trade involving—
 
 
(i)
a trade in goods, or
 
 
(ii)
the generation, transmission, distribution, supply,
35
 
wholesale trade or cross-border exchange of
 
 
electricity.”.
 
 
(8)
The amendments made by subsections (1) to (7) come into force on 6 April
 
 
2026.
 

Page 8

 
(9)
On and after 6 April 2026, Schedule 5 to ITEPA 2003 has effect in relation to
 
 
an option granted before 6 April 2026 as if the following paragraph were
 
 
inserted after paragraph 37—
 
 
“37A
(1)
Sub-paragraph (2) applies if—
 
 
(a)
on or after 26 November 2025, a fixed-date qualifying option
5
 
is varied so as to delay the date on which it can be exercised,
 
 
(b)
the variation takes place on or before the tenth anniversary
 
 
of the grant of the option, and
 
 
(c)
the variation results in an option that is capable of being
 
 
exercised on a single date falling on or before the fifteenth
10
 
anniversary of the grant of the option.
 
 
(2)
An option that is varied as described in sub-paragraph (1) —
 
 
(a)
continues to be a qualifying option for the purposes of the
 
 
EMI code, and
 
 
(b)
is to be treated for the purposes of the EMI code as having
15
 
been granted in its varied form.
 
 
(3)
In sub-paragraph (1) —
 
 
(a)
“fixed-date qualifying option” means a qualifying option
 
 
granted before 6 April 2026 that is capable of being exercised
 
 
on a single date set by reference to its date of grant, and
20
 
(b)
a reference to an option being varied is a reference to its
 
 
being varied by written agreement between the person who
 
 
granted the option and the person entitled to exercise it.
 
 
(4)
Sub-paragraph (2) does not apply in relation to an option if, at the
 
 
time of variation, the employer company is a specified Northern
25
 
Ireland company.”.
 
14
Enterprise investment scheme: increase in amounts and asset requirements
 
 
(1)
Part 5 of ITA 2007 is amended as follows.
 
 
(2)
In section 173A(1) (the maximum amount raised annually through risk finance
 
 
investments requirement), for paragraphs (a) and (b) substitute—
30
 
“(a)
if at that date the issuing company is a knowledge-intensive
 
 
company (see section 252A and subsection (5A)) and—
 
 
(i)
not a specified Northern Ireland company, £20 million;
 
 
(ii)
a specified Northern Ireland company, £10 million, and
 
 
(b)
if at that date the issuing company is not a knowledge-intensive
35
 
company and—
 
 
(i)
not a specified Northern Ireland company, £10 million;
 
 
(ii)
a specified Northern Ireland company, £5 million.”.
 

Page 9

 
(3)
In section 173AA(1) (maximum risk finance investments at the issue date
 
 
requirement), for paragraphs (a) and (b) substitute—
 
 
“(a)
if at the issue date the issuing company is a
 
 
knowledge-intensive company (see section 252A) and—
 
 
(i)
not a specified Northern Ireland company, £40 million;
5
 
(ii)
a specified Northern Ireland company, £20 million, and
 
 
(b)
if at the issue date the issuing company is not a
 
 
knowledge-intensive company and—
 
 
(i)
not a specified Northern Ireland company, £24 million;
 
 
(ii)
a specified Northern Ireland company, £12 million.”.
10
 
(4)
In section 173AB(4) (maximum risk finance investments during period B
 
 
requirement) for paragraphs (a) and (b) substitute—
 
 
“(a)
if at the issue date the issuing company is a
 
 
knowledge-intensive company (see section 252A) and—
 
 
(i)
not a specified Northern Ireland company, £40 million;
15
 
(ii)
a specified Northern Ireland company, £20 million, and
 
 
(b)
if at the issue date the issuing company is not a
 
 
knowledge-intensive company and—
 
 
(i)
not a specified Northern Ireland company, £24 million;
 
 
(ii)
a specified Northern Ireland company, £12 million.”.
20
 
(5)
In section 175 (the use of the money raised requirement)—
 
 
(a)
in subsection (1), for “The” substitute “A”;
 
 
(b)
after subsection (1A), insert—
 
 
“(1B)
Another requirement of this section is that, of the money raised
 
 
by the issue of the relevant shares (other than any of them
25
 
which are bonus shares), only such part of that money as could
 
 
have been raised by an issue of shares falling within subsection
 
 
(1C) is employed for the purposes of a qualifying business
 
 
activity that is carried on by one or more specified Northern
 
 
Ireland companies.
30
 
(1C)
Shares fall within this subsection if the general requirements
 
 
referred to in section 172 as they apply in relation to shares
 
 
issued by a specified Northern Ireland company are met in
 
 
respect of them.”.
 
 
(6)
In section 186 (the gross assets requirement)—
35
 
(a)
before subsection (1), insert—
 
 
“(A1)
In the case of relevant shares issued by a single company that
 
 
is not a specified Northern Ireland company, the value of the
 
 
company’s gross assets—
 
 
(a)
must not exceed £30 million immediately before the
40
 
relevant share issue, and
 
 
(b)
must not exceed £35 million immediately afterwards.
 

Page 10

 
(A2)
In the case of relevant shares issued by a parent company that
 
 
is not a specified Northern Ireland company, the value of the
 
 
group assets—
 
 
(a)
must not exceed £30 million immediately before the
 
 
relevant share issue, and
5
 
(b)
must not exceed £35 million immediately afterwards.”;
 
 
(b)
in subsection (1), after “single company” insert “that is a specified
 
 
Northern Ireland company”;
 
 
(c)
in subsection (2), after “parent company” insert “that is a specified
 
 
Northern Ireland company”.
10
 
(7)
After section 256A, insert—
 
“256B
Meaning of “specified Northern Ireland company”
 
 
For the purposes of this Part, a “specified Northern Ireland company”
 
 
means a company that—
 
 
(a)
has its registered office in Northern Ireland, and
15
 
(b)
carries on a trade involving—
 
 
(i)
a trade in goods, or
 
 
(ii)
the generation, transmission, distribution, supply,
 
 
wholesale trade or cross-border exchange of electricity.”.
 
 
(8)
The amendments made by this section come into force on 6 April 2026.
20
15
Venture capital trusts: rate of relief and amounts and asset requirements
 
 
(1)
Part 6 of ITA 2007 is amended as follows.
 
 
(2)
In section 263(2) (form and amount of relief), for “30%” substitute “20%”.
 
 
(3)
In section 292A(1) (the maximum amount raised annually through risk finance
 
 
investments requirement​ ), for paragraphs (a) and (b) substitute—
25
 
“(a)
if at that date the company is a knowledge-intensive company
 
 
(see section 331A and subsection (6A)) and—
 
 
(i)
not a specified Northern Ireland company, £20 million;
 
 
(ii)
a specified Northern Ireland company, £10 million, and
 
 
(b)
if at that date the company is not a knowledge-intensive
30
 
company and—
 
 
(i)
not a specified Northern Ireland company, £10 million;
 
 
(ii)
a specified Northern Ireland company, £5 million.”.
 
 
(4)
In section 292AA(1) (maximum risk finance investments when relevant holding
 
 
is issued requirement), for paragraphs (a) and (b) substitute—
35
 
“(a)
if at the investment date the relevant company is a
 
 
knowledge-intensive company (see section 331A) and—
 
 
(i)
not a specified Northern Ireland company, £40 million;
 
 
(ii)
a specified Northern Ireland company, £20 million, and
 

Page 11

 
(b)
if at the investment date the relevant company is not a
 
 
knowledge-intensive company and—
 
 
(i)
not a specified Northern Ireland company, £24 million;
 
 
(ii)
a specified Northern Ireland company, £12 million.”.
 
 
(5)
In section 292AB(4) (maximum risk finance investments during the 5-year
5
 
post-investment period requirement), for paragraphs (a) and (b) substitute—
 
 
“(a)
if at the investment date the relevant company is a
 
 
knowledge-intensive company (see section 331A) and—
 
 
(i)
not a specified Northern Ireland company, £40 million;
 
 
(ii)
a specified Northern Ireland company, £20 million, and
10
 
(b)
if at the investment date the relevant company is not a
 
 
knowledge-intensive company and—
 
 
(i)
not a specified Northern Ireland company, £24 million;
 
 
(ii)
a specified Northern Ireland company, £12 million.”.
 
 
(6)
In section 293 (the use of the money raised requirement)—
15
 
(a)
in subsection (1), for “The” substitute “A”;
 
 
(b)
after subsection (5A) insert—
 
 
“(5B)
Another requirement of this section is that, of the money raised
 
 
by the issue of the relevant holding, only such part of that
 
 
money as could have been raised by an issue of shares and
20
 
securities falling within subsection (5C) is employed for the
 
 
purposes of a qualifying business activity that is carried on by
 
 
one or more specified Northern Ireland companies.
 
 
(5C)
Shares and securities fall within this subsection if the
 
 
requirements in section 286(2) as they apply in relation to a
25
 
relevant company that is a specified Northern Ireland company
 
 
are met in respect of them.”.
 
 
(7)
In section 297 (the gross assets requirement)—
 
 
(a)
before subsection (1) insert—
 
 
“(A1)
The requirement of this section in the case of a relevant
30
 
company that is a single company and not a specified Northern
 
 
Ireland company is that the value of the company’s gross
 
 
assets—
 
 
(a)
did not exceed £30 million immediately before the issue
 
 
of the relevant holding, and
35
 
(b)
did not exceed £35 million immediately afterwards.
 
 
(A2)
The requirement of this section in the case of a relevant
 
 
company that is a parent company and not a specified Northern
 
 
Ireland company is that the value of the group assets—
 
 
(a)
did not exceed £30 million immediately before the issue
40
 
of the relevant holding, and
 
 
(b)
did not exceed £35 million immediately afterwards.”;
 

Page 12

 
(b)
in subsection (1), after “single company” insert “and a specified
 
 
Northern Ireland company”;
 
 
(c)
in subsection (2), after “parent company” insert “and a specified
 
 
Northern Ireland company”.
 
 
(8)
After section 331B, insert—
5
“331C
Meaning of “specified Northern Ireland company”
 
 
For the purposes of this Part, a “specified Northern Ireland company”
 
 
means a company that—
 
 
(a)
has its registered office in Northern Ireland, and
 
 
(b)
carries on a trade involving—
10
 
(i)
a trade in goods, or
 
 
(ii)
the generation, transmission, distribution, supply,
 
 
wholesale trade or cross-border exchange of electricity.”.
 
 
(9)
The amendments made by this section come into force on 6 April 2026.
 
16
CSOP schemes and EMI: PISCES shares
15
 
(1)
If—
 
 
(a)
a share option is granted under a CSOP scheme before 6 April 2028,
 
 
(b)
the terms of the option which are mentioned in paragraph 21A(1)(d)
 
 
of Schedule 4 to ITEPA 2003 are, at any time on or after 15 May 2025,
 
 
varied, and
20
 
(c)
the sole effect of the provision constituting the variation is that, in the
 
 
event that the shares are or become PISCES shares, the option may
 
 
be exercised (to any extent) but only if the shares acquired as a result
 
 
of its exercise are then sold on a PISCES as soon as is reasonably
 
 
practicable,
25
 
the provision mentioned in paragraph (c) is to be treated for the purposes of
 
 
the CSOP code as if it had been included in the share option at the time at
 
 
which the option was granted.
 
 
(2)
Subsection (1) is to have effect as if contained in Schedule 4 to ITEPA 2003.
 
 
(3)
If—
30
 
(a)
a share option which is a qualifying option for the purposes of the
 
 
EMI code is granted before 6 April 2028,
 
 
(b)
the terms of the option which are mentioned in paragraph 37(2)(e) of
 
 
Schedule 5 to ITEPA 2003 are, at any time on or after 15 May 2025,
 
 
varied, and
35
 
(c)
the sole effect of the provision constituting the variation is that, in the
 
 
event that the shares are or become PISCES shares, the option may
 
 
be exercised (to any extent) but only if the shares acquired as a result
 
 
of its exercise are then sold on a PISCES as soon as is reasonably
 
 
practicable,
40

Page 13

 
the provision mentioned in paragraph (c) is to be treated for the purposes of
 
 
the EMI code as if it had been included in the share option at the time at
 
 
which the option was granted.
 
 
(4)
Subsection (3) is to have effect as if contained in Schedule 5 to ITEPA 2003.
 
 
(5)
A variation of an option is not to count for the purposes of this section
5
 
unless—
 
 
(a)
the variation is effected by a written agreement to which the person
 
 
entitled to exercise the option is a party, or
 
 
(b)
the variation is otherwise notified in writing to that person.
 
 
(6)
For the purposes of this section, “PISCES shares” and “a PISCES” have the
10
 
same meaning as in the applicable PISCES regulations.
 
 
(7)
For this purpose, “the applicable PISCES regulations” means—
 
 
(a)
the Financial Services and Markets Act 2023 (Private Intermittent
 
 
Securities and Capital Exchange System Sandbox) Regulations 2025
 
 
(“the 2025 regulations”), or
15
 
(b)
if regulations are made under section 15 of the Financial Services and
 
 
Markets Act 2023 (“the 2023 Act”) in the case of a PISCES, regulations
 
 
under that section.
 
 
(8)
If—
 
 
(a)
regulations made under section 15 of the 2023 Act use expressions
20
 
other than PISCES shares or a PISCES, but
 
 
(b)
those other expressions are used in those regulations for the same or
 
 
similar purposes as the expressions PISCES and a PISCES are used in
 
 
the 2025 regulations,
 
 
this section has effect as if the references to PISCES shares or a PISCES are
25
 
to those other expressions.
 

Employment income relating to cars etc

 
17
Employee car and van ownership schemes
 
 
(1)
Chapter 6 of Part 3 of ITEPA 2003 (taxable benefits: cars, vans and related
 
 
benefits) is amended in accordance with subsections (2) to (4) .
30
 
(2)
In section 114(1)(a) (cars, vans and related benefits)—
 
 
(a)
omit “(without any transfer of the property in it)”;
 
 
(b)
after “household” insert “—
 
 
“(i)
without any transfer of the property in it, or
 
 
(ii)
in circumstances falling within section 116A (car
35
 
or van made available with transfer of
 
 
ownership),”.
 
 
(3)
In section 116(1) (meaning of when car or van is available to employee)—
 
 
(a)
omit “and without any transfer of the property in it”;
 

Page 14

 
(b)
after “household” insert “—
 
 
“(a)
without any transfer of the property in it, or
 
 
(b)
in circumstances falling within section 116A .”
 
 
(4)
After section 116 insert—
 
“116A
Car or van made available with transfer of ownership
5
 
(1)
A car or van is made available to an employee or a member of the
 
 
employee’s family or household in circumstances falling within this
 
 
section if the car or van is made available—
 
 
(a)
with a transfer of the property in it to the employee or member,
 
 
and
10
 
(b)
pursuant to qualifying arrangements.
 
 
(2)
For the purposes of this section, arrangements are “qualifying
 
 
arrangements” if any of the following applies in relation to them—
 
 
(a)
they include restrictions on the private use of the car or van
 
 
by the employee or member;
15
 
(b)
they provide for a person other than the employee or member
 
 
to be the registered keeper of the car or van;
 
 
(c)
they provide for the employee or member, after a certain period
 
 
of time or in certain circumstances, to transfer the property in
 
 
the car or van to another person for an amount determined in
20
 
accordance with the arrangements;
 
 
(d)
they are of a description specified in regulations made by the
 
 
Treasury.
 
 
(3)
For the purposes of this Chapter, a car or van made available as
 
 
mentioned in subsection (1) is to be treated as being so made available
25
 
until the arrangements cease to have effect (but see sections 132A, 143
 
 
and 156 for provision about the days on which a car or van is
 
 
unavailable).
 
 
(4)
In subsection (2) (a) the reference to restrictions does not include a
 
 
restriction that—
30
 
(a)
is included in a motor insurance policy held in respect of the
 
 
car or van, and
 
 
(b)
might reasonably be expected to be so included.
 
 
(5)
In this section—
 
 
“arrangements” includes any scheme, agreement or understanding,
35
 
whether or not legally enforceable;
 
 
“motor insurance policy” means a policy of insurance that
 
 
complies with the requirements of Part 6 of the Road Traffic
 
 
Act 1988 or, in relation to Northern Ireland, Part 8 of the Road
 
 
Traffic (Northern Ireland) Order 1981 (S.I. 1981/154 (N.I. 1));
40
 
“registered keeper” means the person in whose name a vehicle
 
 
is registered under VERA 1994.”
 

Page 15

 
(5)
The amendments made by subsections (2) to (4) have effect for the tax year
 
 
2030-31 and subsequent tax years.
 
 
(6)
But in relation to a car or van made available to an employee or a member
 
 
of the employee’s family or household pursuant to pre-6 April 2030
 
 
arrangements, the amendments made by subsections (2) to (4) have effect for
5
 
the tax year 2032-33 and subsequent tax years.
 
 
(7)
If pre-6 April 2030 arrangements are varied or renewed on or after 6 April
 
 
2030, the car or van is treated, with effect from the beginning of the day on
 
 
which the variation or renewal takes effect, as not being made available
 
 
pursuant to pre-6 April 2030 arrangements.
10
 
(8)
In subsection (7) the reference to arrangements being varied does not include
 
 
any variation which is required for reasons beyond the control of the parties
 
 
to the arrangements.
 
 
(9)
In this section “pre-6 April 2030 arrangements” means arrangements which
 
 
are entered into before 6 April 2030.
15
18
Car or van made available on arm’s length terms
 
 
(1)
In section 117 of ITEPA 2003 (meaning of car or van made available by reason
 
 
of employment)—
 
 
(a)
in subsection (1), for “or (3)” substitute “, (3) or (4) ”;
 
 
(b)
after subsection (3) insert—
20
 
“(4)
Subsection (1) does not apply where—
 
 
(a)
the employer carries on a business under which cars or
 
 
vans of the same kind are made available to members
 
 
of the public for sale or lease,
 
 
(b)
the car or van in question is sold or leased to the
25
 
employee or member in the normal course of that
 
 
business, and
 
 
(c)
the terms on which the car or van is sold or leased to
 
 
the employee or member might reasonably be expected
 
 
to be agreed between the employer and a member of
30
 
the public with whom the employer deals at arm’s
 
 
length.”
 
 
(2)
The amendments made by subsection (1) have effect for the tax year 2026-27
 
 
and subsequent tax years.
 
19
CO
35
 
(1)
Chapter 6 of Part 3 of ITEPA 2003 (taxable benefits: cars etc) is amended in
 
 
accordance with subsections (2) and (3) .
 

Page 16

 
(2)
In section 136A (cars with a CO 2 emissions figure: registration on or after IP
 
 
completion day), after subsection (4) insert—
 
 
“(5)
Subsection (2) is also subject to section 138A (certain cars with a CO 2
 
 
emissions figure and an electric range figure).”
 
 
(3)
After section 138 insert—
5
“138A
Certain cars with a CO
 
 
(1)
This section applies to a car if—
 
 
(a)
the car was first registered under VERA 1994 on or after 1
 
 
January 2025 and before 6 April 2028,
 
 
(b)
the car’s CO 2 emissions figure (as determined under section
10
 
136A) is 51 or more,
 
 
(c)
the CO 2 emissions figure or (as the case may be) the CO 2
 
 
emissions (combined) figure specified in the car’s qualifying
 
 
emissions certificate was calculated in accordance with an
 
 
emission standard other than the Euro 6d-ISC-FCM emission
15
 
standard or the Euro 6e emission standard, and
 
 
(d)
the car’s electric range figure is 1 or more.
 
 
(2)
For the purposes of this Chapter, the car is to be treated as having a
 
 
CO 2 emissions figure of 1.
 
 
(3)
In this section—
20
 
“electric range figure” is the number of miles which is the
 
 
equivalent of the number of kilometres specified in an EC
 
 
certificate of conformity, an EC type-approval certificate or a
 
 
UK approval certificate on the basis of which a car is registered,
 
 
as being the maximum distance for which the car can be driven
25
 
in electric mode without recharging the battery;
 
 
“Euro 6d-ISC-FCM emission standard” and “Euro 6e emission standard” have the same meaning as in Schedule 3A to the
 
 
Vehicle Emissions Trading Schemes Order 2023 (alternative
 
 
specific emissions of CO 2 : OVC hybrid electric vehicles) (S.I.
30
 
2023/1394) (see paragraph 1 of that Schedule).
 
 
(4)
For the purposes of this section, in determining the electric range
 
 
figure for a car, ignore any values specified in an EC certificate of
 
 
conformity, an EC type-approval certificate or a UK approval certificate
 
 
that are not WLTP (worldwide harmonised light vehicle test
35
 
procedures) values.”
 
 
(4)
The amendments made by subsections (2) and (3) have effect—
 
 
(a)
for the tax years 2024-25 to 2027-28, and
 
 
(b)
in relation to a car to which subsection (5) applies, for the tax years
 
 
2028-29 to 2030-31.
40

Page 17

 
(5)
This subsection applies to a car made available to an employee or a member
 
 
of the employee’s family or household pursuant to pre-6 April 2028
 
 
arrangements.
 
 
(6)
Where—
 
 
(a)
a car is made available by an employer to an employee or a member
5
 
of the employee’s family or household pursuant to pre-6 April 2028
 
 
arrangements, and
 
 
(b)
the arrangements are varied on or after 6 April 2028 only so far as is
 
 
necessary to ensure that the car is made available by the employer to
 
 
another employee or a member of the other employee’s family or
10
 
household pursuant to the arrangements,
 
 
the car is treated as being made available by the employer to the other
 
 
employee or member pursuant to pre-6 April 2028 arrangements.
 
 
(7)
If pre-6 April 2028 arrangements are otherwise varied or renewed on or after
 
 
6 April 2028, the car is treated, with effect from the beginning of the day on
15
 
which the variation or renewal takes effect, as not being made available
 
 
pursuant to pre-6 April 2028 arrangements.
 
 
(8)
In subsection (7) the reference to arrangements being varied does not include
 
 
a variation which is required for reasons beyond the control of the parties to
 
 
the arrangements.
20
 
(9)
In this section “pre-6 April 2028 arrangements” means arrangements which
 
 
are entered into before 6 April 2028.
 
 
(10)
Sections 136A (5) and 138A of ITEPA 2003, and subsections (1) to (3) of this
 
 
section, are repealed.
 
 
(11)
Subsection (10) comes into force on 6 April 2031.
25

Other employment income

 
20
Employment income: miscellaneous exemptions
 
 
(1)
Chapter 11 of Part 4 of ITEPA 2003 (employment income: miscellaneous
 
 
exemptions) is amended in accordance with subsections (2) to (4) .
 
 
(2)
After section 316 insert—
30
 
“316ZA
Accommodation, supplies and services used in employment duties:
 
 
payment or reimbursement of expenses
 
 
(1)
No liability to income tax arises in respect of the payment or
 
 
reimbursement of expenses incurred by an employee on behalf of the
 
 
employer in respect of the provision for the employee of
35
 
accommodation, supplies or services if conditions A and B are met.
 
 
(2)
Condition A is that, at the time the accommodation, supplies or
 
 
services are first provided, the intention of the employer is that—
 

Page 18

 
(a)
they will be used by the employee in performing duties of the
 
 
employment, and
 
 
(b)
any use of them for private purposes by the employee or
 
 
members of the employee’s family or household will not be
 
 
significant.
5
 
(3)
Condition B is that where the provision is otherwise than on premises
 
 
occupied by the employer—
 
 
(a)
its sole purpose is to enable the employee to perform the duties
 
 
of the employee’s employment, and
 
 
(b)
what is provided is not an excluded benefit.
10
 
(4)
In this section “for private purposes” and “excluded benefit” have the
 
 
same meaning as in section 316.”
 
 
(3)
In section 320A (eye tests and special corrective appliances)—
 
 
(a)
after subsection (1) insert—
 
 
“(1A)
No liability to income tax arises in respect of the payment or
15
 
reimbursement of expenses incurred by an employee in respect
 
 
of the provision for the employee of a test or appliances of the
 
 
kind mentioned in subsection (1) if conditions A and B are
 
 
met.”;
 
 
(b)
in subsection (3), after “regulations” insert “, whether by way of
20
 
provision under subsection (1) or payment or reimbursement under
 
 
subsection (1A) ”.
 
 
(4)
After section 320C insert—
 
 
“Flu vaccinations
 
320D
Flu vaccinations
25
 
(1)
No liability to income tax arises in respect of the provision for an
 
 
employee of an influenza vaccination if the provision is not made
 
 
pursuant to relevant salary sacrifice arrangements.
 
 
(2)
No liability to income tax arises in respect of the payment or
 
 
reimbursement of expenses incurred by an employee in respect of the
30
 
provision for the employee of an influenza vaccination if the payment
 
 
or reimbursement is not made pursuant to relevant salary sacrifice
 
 
arrangements.
 
 
(3)
In this section “relevant salary sacrifice arrangements” means
 
 
arrangements (whenever made, whether before or after the employment
35
 
began) under which the employee gives up the right to receive an
 
 
amount of general earnings or specific employment income in return
 
 
for the provision of an influenza vaccination or the payment or
 
 
reimbursement of the cost of such a vaccination.”
 
 
(5)
In section 266(3) of ITEPA 2003 (exemption of non-cash vouchers for exempt
40
 
benefits)—
 

Page 19

 
(a)
omit the “or” after paragraph (f);
 
 
(b)
after paragraph (g) insert “, or
 
 
“(h)
section 320D (flu vaccinations).”
 
 
(6)
In section 267(2) of ITEPA 2003 (exemption of credit-tokens used for exempt
 
 
benefits)—
5
 
(a)
omit the “and” after paragraph (h);
 
 
(b)
after paragraph (i) insert “, and
 
 
“(j)
section 320D (flu vaccinations).”
 
 
(7)
The amendments made by this section have effect in relation to the tax year
 
 
2026-2027 and subsequent tax years.
10
21
Disallowing deduction from earnings for additional household expenses
 
 
(1)
After section 360A of ITEPA 2003 (no deduction from earnings for social
 
 
security contributions) insert—
 
“360B
Additional household expenses
 
 
(1)
No deduction from earnings is allowed under this Chapter for
15
 
additional household expenses which the employee incurs in the
 
 
performance of the duties of the employment at home.
 
 
(2)
In this section, “householder expenses” has the same meaning as in
 
 
section 316A.”
 
 
(2)
The amendment made by this section has effect for the tax year 2026-27 and
20
 
subsequent tax years.
 
22
Payment for cancelled shifts etc.
 
 
(1)
After section 221 of ITEPA 2003 (payments where employee absent because
 
 
of sickness or disability) insert—
 
“221A
Payment for cancelled, moved or curtailed shift
25
 
(1)
This section applies to a payment made to an employee under section
 
 
27BP of the Employment Rights Act 1996 (right to payment for a
 
 
cancelled, moved or curtailed shift) by reason of the employee’s
 
 
employment.
 
 
(2)
The payment—
30
 
(a)
is to be treated as earnings from the employment for the
 
 
relevant tax year, and
 
 
(b)
does not constitute earnings from the employment by virtue
 
 
of any other provision.
 
 
(3)
For the purposes of this section and the application of Part 2 of this
35
 
Act (charge to tax) to amounts treated as earnings under this section—
 

Page 20

 
(a)
“employee” includes a former employee or individual who was
 
 
a prospective employee immediately before the shift was
 
 
cancelled, moved or curtailed, and
 
 
(b)
employment is to be construed accordingly.
 
 
(4)
Accordingly, for the purposes of applying this section and Part 2 of
5
 
this Act (charge to tax) to a payment made to a prospective employee
 
 
by reason of a prospective employment it does not matter whether
 
 
the prospective employee ever holds the employment.
 
 
(5)
Sections 17 and 30 (treatment of earnings for year in which
 
 
employment not held) do not apply in connection with determining
10
 
the year for which amounts are to be treated as earnings under this
 
 
section.
 
 
(6)
In this section “relevant tax year” means the tax year in which the
 
 
duties of the shift in respect of which the payment under subsection
 
 
(1) was made that were not performed would have been performed
15
 
if the shift had not been cancelled, moved or curtailed.”
 
 
(2)
The amendment made by this section comes into force on the first day on
 
 
which the duty in section 27BP(1) of the Employment Rights Act 1996 has
 
 
effect.
 
23
Location of duties of employment where duties not performed
20
 
(1)
ITEPA 2003 is amended as follows.
 
 
(2)
In section 27 (UK-based earnings for year when employee not resident in
 
 
UK)—
 
 
(a)
in subsection (1)—
 
 
(i)
at the end of paragraph (a) insert “that do not fall within
25
 
paragraph (c)”;
 
 
(ii)
at the end of paragraph (b) insert “that do not fall within
 
 
paragraph (c)”;
 
 
(iii)
at the end of paragraph (c) insert “and which have been
 
 
reduced by a claim for relief under section 414 (reduction in
30
 
other cases of foreign service)”;
 
 
(b)
in subsection (2), for “(1)(a) or (b)” substitute “(1)”;
 
 
(c)
omit subsection (2A);
 
 
(d)
in subsection (3), for “Subsections (2) and (2A) apply” substitute
 
 
“Subsection (2) applies”.
35
 
(3)
In section 38 (earnings for period of absence from employment)—
 
 
(a)
in subsection (1), for “This section” substitute “Subsection (2)”;
 
 
(b)
after subsection (2) insert—
 
 
“(3)
If and to the extent that general earnings for a period of absence
 
 
from an employment are not treated for the purposes of this
40
 
Chapter as general earnings in respect of duties performed in
 

Page 21

 
the United Kingdom, the general earnings are to be treated for
 
 
the purposes of this Chapter as general earnings in respect of
 
 
duties performed outside the United Kingdom.
 
 
(4)
For the purposes of this section references to “general earnings
 
 
for a period of absence” do not include any general earnings
5
 
to which section 221A (cancelled, moved or curtailed shift)
 
 
applies (see section 38A ).”
 
 
(4)
After section 38 (earnings for period of absence from employment) insert—
 
“38A
Earnings relating to duties not performed
 
 
(1)
This section applies for determining the extent to which general
10
 
earnings that relate to duties that were not performed are to be treated
 
 
for the purposes of this Chapter as general earnings in respect of duties
 
 
performed in the United Kingdom.
 
 
(2)
For the purposes of this section—
 
 
(a)
“general earnings” means an amount of general earnings
15
 
specified in the first column of the table, and
 
 
(b)
the “duties that were not performed”, in relation to general
 
 
earnings, means the duties specified in the corresponding entry
 
 
in the second column of the table.
 
 
General earnings
20
 
Duties that were not performed
20
 
General earnings to which
 
 
The duties that it is reasonable
 
 
section 221A (cancelled,
 
 
to assume would have been
 
 
moved or curtailed shift)
 
 
performed during the shift but
 
 
applies
 
 
were not performed because of
 
 
the shift’s cancellation,
25
 
movement or curtailment
 
 
General earnings to which
 
 
The duties that it is reasonable
 
 
section 402B (termination
 
 
to assume would have been
 
 
payments etc) applies
 
 
performed during the
 
 
post-employment notice period
30
 
as defined by section 402E if the
 
 
employee’s employment had not
 
 
been terminated until the end of
 
 
that period
 
 
General earnings which
35
 
The duties that it is reasonable
35
 
consist of a payment in lieu
 
 
to assume would have been
 
 
of notice to which Part 6 of
 
 
performed during the notice
 
 
Chapter 3 (termination
 
 
period if the employee’s
 
 
payments etc). does not
 
 
employment had not been
 
 
apply
40
 
terminated until the end of that
40
 
period
 
 
Any other general earnings
 
 
The duties that the employee
 
 
in respect of duties that an
 
 
does not perform
 
 
employee does not perform
 
 
other than any general
5
 
earnings for a period of
 
 
absence from employment
 
 
(3)
Subsection (4) applies to the general earnings from an employment
 
 
for a tax year if—
 
 
(a)
it is reasonable to assume that some or all of the duties that
10
 
were not performed would have been performed in the United
 
 
Kingdom, or
 
 
(b)
any duties of the employment performed during that tax year
 
 
are performed wholly or partly in the United Kingdom.
 
 
(4)
The general earnings are to be treated for the purposes of this Chapter
15
 
as general earnings in respect of duties performed in the United
 
 
Kingdom except in so far as, had the duties that were not performed
 
 
been performed, general earnings in respect of those duties would
 
 
have been general earnings for duties performed outside the United
 
 
Kingdom.
20
 
(5)
If and to the extent that the general earnings are not treated for the
 
 
purposes of this Chapter as general earnings in respect of duties
 
 
performed in the United Kingdom, the general earnings are to be
 
 
treated for the purposes of this Chapter as general earnings in respect
 
 
of duties performed outside the United Kingdom.”
25
 
(5)
In section 41Y (location of employment duties), in subsection (1), for “applies”
 
 
substitute “and section 38A (earnings in respect of duties not performed)
 
 
apply”.
 
 
(6)
In section 402B (termination awards not benefiting from threshold to be treated
 
 
as earnings), omit subsection (1)(b) (and the “but” before it).
30
 
(7)
The amendments made by this section have effect in relation to general
 
 
earnings that are—
 
 
(a)
for tax years 2026-27 and subsequent tax years, and
 
 
(b)
paid on or after 6 April 2026.
 
24
Umbrella companies
35
 
(1)
ITEPA 2003 is amended as follows.
 

Page 23

 
(2)
In Part 2 (employment income: charge to tax), after Chapter 10 insert—
 

Chapter 11

 
 
Umbrella companies
 
61Y
Umbrella companies: joint and several liability
 
 
(1)
Subsection (2) applies if—
5
 
(a)
an individual (“the worker”) personally provides services, or
 
 
enters into arrangements with a view to personally providing
 
 
services, to another person (“the client”),
 
 
(b)
the worker is employed by a third person (“the umbrella
 
 
company”)—
10
 
(i)
that carries on a business (whether or not with a view
 
 
to profit and whether or not in conjunction with any
 
 
other business) of supplying labour, and
 
 
(ii)
that is not a company in which the worker has a
 
 
material interest, and
15
 
(c)
the umbrella company arrangements conditions are met.
 
 
(2)
Each relevant party (see section 61Z ) is, along with the umbrella
 
 
company, jointly and severally liable to pay any amount payable, in
 
 
accordance with the PAYE provisions, by the umbrella company in
 
 
relation to a qualifying umbrella company payment.
20
 
(3)
A “qualifying umbrella company payment” means a payment made
 
 
in respect of the employment of the worker to the extent that it is not
 
 
in respect of the provision of services to a person other than the client.
 
 
(4)
The umbrella company arrangements conditions are that—
 
 
(a)
there is a contract between the umbrella company and—
25
 
(i)
the client, or
 
 
(ii)
another person,
 
 
(b)
under or in consequence of the contract—
 
 
(i)
the services are provided, or
 
 
(ii)
the umbrella company is paid, or otherwise provided
30
 
with consideration, for the services, and
 
 
(c)
if the contract is not between the umbrella company and the
 
 
client—
 
 
(i)
there is a contract between the client and another
 
 
person,
35
 
(ii)
the provision of the services or of payment or other
 
 
consideration for the services is also a consequence of
 
 
that other contract (whether directly or as a result of a
 
 
series of contracts involving other persons).
 
 
(5)
For the purposes of subsection (1) (b) (ii) —
40
 
(a)
“material interest” , in relation to a company, means—
 

Page 24

 
(i)
beneficial ownership of, or the ability to control, directly
 
 
or through the medium of other companies or by any
 
 
other indirect means, more than 5% of the ordinary
 
 
share capital of the company,
 
 
(ii)
possession of, or entitlement to acquire, rights entitling
5
 
the holder to receive more than 5% of any distributions
 
 
that may be made by the company, or
 
 
(iii)
where the company is a close company, possession of,
 
 
or entitlement to acquire, rights that would in the event
 
 
of the winding up of the company, or in any other
10
 
circumstances, entitle the holder to receive more than
 
 
5% of the assets that would then be available for
 
 
distribution among the participators, but
 
 
(b)
the worker is to be regarded as not having a material interest
 
 
in a company if that interest is a result, to any extent, of any
15
 
arrangements the main purpose, or one of the main purposes,
 
 
of which is to secure that subsection (2) does not apply.
 
 
(6)
And for the purposes of subsection (5) (a) “participator” has the
 
 
meaning given by section 454 of CTA 2010.
 
 
(7)
In this Chapter—
20
 
“arrangements” include any agreement, understanding, scheme
 
 
transaction or series of transactions (whether or not legally
 
 
enforceable);
 
 
“the client” , “the umbrella company” and “the worker” are to be
 
 
construed in accordance with subsection (1) ;
25
 
“employed” , in relation to an individual, does not include the
 
 
individual being treated as employed as a result of any of—
 
 
(a)
Chapters 7 to 10 of this Part (deemed employment by
 
 
intermediaries), or
 
 
(b)
section 863A of ITTOIA 2005 (deemed employment of
30
 
partners in limited liability partnerships),
 
 
and “employer” is to be construed accordingly;
 
 
“PAYE provisions” means the provisions of Part 11 or PAYE
 
 
regulations;
 
 
“the umbrella company arrangements conditions” means the
35
 
conditions set out in subsection (4) .
 
61Z
Relevant parties
 
 
(1)
If the contract referred to in subsection (4) (a) of section 61Y is between
 
 
the umbrella company and a person other than the client, the person
 
 
referred to in subsection (4) (c) (i) of that section is a relevant party.
40
 
(2)
The client is a relevant party if—
 
 
(a)
the contract referred to in subsection (4) (a) of that section is
 
 
between the umbrella company and the client, or
 

Page 25

 
(b)
the person referred to in subsection (4) (c) (i) of that section—
 
 
(i)
is connected with the umbrella company, or
 
 
(ii)
is non-UK resident.
 
 
(3)
In a case where—
 
 
(a)
both the client and the person referred to in subsection (4) (c) (i)
5
 
of section 61Y are non-UK resident,
 
 
(b)
the provision of the services or payment or other consideration
 
 
for the services is a consequence of a series of contracts
 
 
involving other persons (other than the worker), and
 
 
(c)
at least one of those persons is UK resident,
10
 
the person who is UK resident and is closest, by reference to that
 
 
series of contracts, to the client is a relevant party.
 
61Z1
Purported umbrella companies
 
 
(1)
Subsection (5) applies if any of the following cases applies.
 
 
(2)
Case 1 is that—
15
 
(a)
a person (“the purported umbrella company”) participates in
 
 
arrangements that would, if an individual were employed by
 
 
the purported umbrella company, result in the umbrella
 
 
company arrangements conditions being met in relation to
 
 
services the individual provides to the client,
20
 
(b)
either—
 
 
(i)
it is reasonable to suppose that one or more participants
 
 
in the arrangements, other than the purported umbrella
 
 
company or the individual, would assume that the
 
 
purported umbrella company is the employer of that
25
 
individual, or
 
 
(ii)
the purported umbrella company has taken any step
 
 
that it is reasonable to suppose was intended to give
 
 
the impression to any person (whether or not that
 
 
impression is given) that the purported umbrella
30
 
company is the employer of the individual,
 
 
(c)
the individual is not employed by the purported umbrella
 
 
company, and
 
 
(d)
if the individual were employed by the purported umbrella
 
 
company subsection (2) of section 61Y would apply.
35
 
(3)
Case 2 is that—
 
 
(a)
a person (“the purported umbrella company”) participates in
 
 
arrangements that would, if an individual were employed by
 
 
the purported umbrella company, result in the umbrella
 
 
company arrangements conditions being met in relation to
40
 
services the individual provides to the client,
 

Page 26

 
(b)
the individual would, ignoring this section, be treated as
 
 
employed by the purported umbrella company as a result of
 
 
Chapter 7 of this Part,
 
 
(c)
if the individual were employed by the purported umbrella
 
 
company subsection (2) of section 61Y would apply,
5
 
(d)
if it did apply accordingly, the contract referred to in subsection
 
 
(4) (a) of that section would be between the umbrella company
 
 
and the client, and
 
 
(e)
the provision of the services by the individual to the client was
 
 
not as a result of the purported umbrella company having
10
 
provided services to the individual in connection with finding
 
 
the client with a view to the individual personally providing
 
 
services to the client.
 
 
(4)
Case 3 is that—
 
 
(a)
a company (“the purported umbrella company”) in which an
15
 
individual has a material interest, within the meaning given
 
 
by subsection (5) (a) of section 61Y , participates in arrangements
 
 
that would, if the company were the umbrella company, result
 
 
in the umbrella company arrangements conditions being met
 
 
in relation to services the individual provides to the client,
20
 
(b)
either—
 
 
(i)
it is reasonable to suppose that one or more participants
 
 
in the arrangements, other than the purported umbrella
 
 
company or the individual, would assume that a
 
 
substantial proportion of amounts provided to the
25
 
purported umbrella company in respect of the services
 
 
will be paid to the individual as earnings, or
 
 
(ii)
the purported umbrella company has taken any step
 
 
that it is reasonable to suppose was intended to give
 
 
the impression to any person (whether or not that
30
 
impression is given) that a substantial proportion of
 
 
amounts provided to the purported umbrella company
 
 
in respect of the services will be paid to the individual
 
 
as earnings,
 
 
(c)
it is not the case that a substantial proportion of amounts
35
 
provided to the purported umbrella company in respect of the
 
 
services is paid to the individual as earnings, and
 
 
(d)
subsection (2) of section 61Y would apply if subsection (1) (b) (ii)
 
 
of that section (requirement that the umbrella company is not
 
 
a company in which the worker has a material interest) were
40
 
omitted.
 
 
(5)
If this subsection applies—
 
 
(a)
the individual is to be treated for income tax purposes as
 
 
holding an employment with the purported umbrella company,
 
 
the duties of which consist of the services the individual
45
 
provides to the client,
 

Page 27

 
(b)
all relevant remuneration is to be treated for income tax
 
 
purposes as earnings from that employment,
 
 
(c)
where there is any provision of relevant remuneration (by any
 
 
person and to any person) that does not result (whether as a
 
 
direct result of that provision, as a result of the onward
5
 
provision of that remuneration or otherwise) in the payment
 
 
of PAYE income of that remuneration, or any part of it, to the
 
 
individual, the purported umbrella company is treated as
 
 
making, and the individual is treated as receiving—
 
 
(i)
a payment of PAYE income in the relevant amount
10
 
made at the time it was provided for the purposes of
 
 
the PAYE provisions, and
 
 
(ii)
a qualifying umbrella company payment made in the
 
 
relevant amount at that time for the purposes of section
 
 
61Y (3) ,
15
 
(d)
Chapters 7 to 10 of this Part (deemed employment by
 
 
intermediaries) do not apply in relation to the provision of
 
 
those services,
 
 
(e)
section 863A (deemed employment of partners in limited
 
 
liability partnerships) of ITTOIA 2005 does not apply so far as
20
 
it otherwise would apply in relation to the provision of those
 
 
services, and
 
 
(f)
accordingly, section 61Y (2) will apply in relation to the
 
 
purported umbrella company.
 
 
(6)
For the purposes of subsection (5) —
25
 
(a)
in paragraph (c) the relevant amount means so much of the
 
 
remuneration provided as does not result in the payment of
 
 
PAYE income to the individual, and
 
 
(b)
that paragraph only applies in relation to the initial provision
 
 
of an amount of relevant remuneration (and not to any
30
 
subsequent onward provision of that same amount).
 
 
(7)
If subsection (5) would, ignoring this subsection, apply in relation to
 
 
more than one purported umbrella company in relation to services
 
 
the individual provides to the client, that subsection only applies in
 
 
relation to the purported umbrella company that—
35
 
(a)
is a person to whom PAYE regulations apply and is closest to
 
 
the individual, by reference to the contract or series of contracts
 
 
resulting in the provision of those services, or
 
 
(b)
if none of the purported umbrella companies is a person to
 
 
whom PAYE regulations apply, is closest to the individual by
40
 
reference to that contract or those contracts.
 
 
(8)
Where subsection (5) applies and there is a person who is an umbrella
 
 
company in relation to the services the individual provides to the
 
 
client, that subsection has effect as if—
 
 
(a)
paragraph (a) were omitted,
45

Page 28

 
(b)
in paragraph (b), the reference to that employment were to the
 
 
employment of the individual by the umbrella company,
 
 
(c)
in paragraph (c), the reference to the purported umbrella
 
 
company were to the umbrella company, and
 
 
(d)
paragraph (f) were omitted.
5
 
(9)
Subsection (10) applies where subsection (5) applies and there is more
 
 
than one person who—
 
 
(a)
is an umbrella company in relation to services the individual
 
 
provides to the client, or
 
 
(b)
is a purported umbrella company in relation to those services
10
 
(including a purported umbrella company in relation to which
 
 
subsection (5) does not apply as a result of subsection (7) ) .
 
 
(10)
Where this subsection applies, each of the persons falling within
 
 
paragraphs (a) or (b) of subsection (9) is (to the extent this would not
 
 
otherwise be the case) jointly and severally liable to pay any amount
15
 
payable, in accordance with the PAYE provisions, in relation to the
 
 
relevant remuneration.
 
 
(11)
For the purposes of this section “relevant remuneration” means—
 
 
(a)
all remuneration receivable by the individual (from any person)
 
 
in consequence of providing the services, and
20
 
(b)
any other amount that it is just and reasonable to attribute to
 
 
provision of the services by the individual (for example, any
 
 
amounts that would form part of any deemed direct
 
 
employment payment or deemed direct payment if any of
 
 
Chapters 8, 9 or 10 of this Part applied).”
25
 
(3)
In section 7 (meaning of employment income etc), in subsection (5)(a)—
 
 
(a)
for “10” substitute “11”, and
 
 
(b)
omit “and”, and
 
 
(c)
after “companies” insert “and purported umbrella companies”.
 
 
(4)
In section 44 (treatment of workers supplied by agencies)—
30
 
(a)
in subsection (4) , omit paragraph (b) (and the “or” before it),
 
 
(b)
in subsection (5) (b) , omit “or (as the case may be) with the relevant
 
 
person”, and
 
 
(c)
omit subsection (6) .
 
 
(5)
In section 61V (consequences of providing fraudulent information), after
35
 
subsection (4) insert—
 
 
“(4A)
But where the fraudulent documentation condition would (ignoring
 
 
this subsection) be met as a result of the provision of a fraudulent
 
 
document intended to constitute evidence that section 61Y (umbrella
 
 
companies) applies in relation to the services provided by the worker,
40
 
that condition is to be treated as not met.”
 

Page 29

 
(6)
In section 684 (2) (PAYE regulations), in the list of provisions, after item 7
 
 
insert—
 
 
“7ZA. Provision in connection with the recovery of amounts to which
 
 
a person is jointly and severally liable as a result of Chapter 11 of Part
 
 
2 (umbrella companies).”
5
 
(7)
In section 689(4) (employee of non-UK employer), after “sections” insert
 
 
“ 61Z1 (5) (c) (i) , ”.
 
 
(8)
In section 716B (employment intermediaries to keep, preserve and provide
 
 
information etc)—
 
 
(a)
in subsection (1) —
10
 
(i)
omit “of Part 2”, and
 
 
(ii)
after “agencies)” insert “or 11 (umbrella companies) of Part 2”,
 
 
and
 
 
(b)
in subsection (2), in the words before paragraph (a)—
 
 
(i)
after “person” insert “(other than an individual mentioned in
15
 
paragraph (a) or (b))”, and
 
 
(ii)
after “makes” insert “or participates in”.
 
 
(9)
In regulation 69 of the Income Tax (Pay As You Earn) Regulations 2003 , in
 
 
paragraph (1A)—
 
 
(a)
the words from “any amount” to the end become sub-paragraph (a),
20
 
(b)
in that sub-paragraph, omit the words from “whether” to the end, and
 
 
(c)
after that sub-paragraph insert “, and
 
 
“(b)
any amount the employer must account for under regulation
 
 
62(5) (notional payments) in respect of notional payments
 
 
made by the employer during the tax period,
25
 
“whether or not those amounts were included in any return under
 
 
regulation 67B (real time returns of information about relevant
 
 
payments) or 67D (exceptions to regulation 67B).”
 
 
(10)
In regulation 80 of those Regulations (determination of unpaid tax and appeal
 
 
against determination), after paragraph (5) insert—
30
 
“(5A)
Where a person is a “relevant party” for the purposes of Chapter 11
 
 
of Part 2 of ITEPA (joint and several liability of relevant parties to umbrella
 
 
company arrangements)—
 
 
(a)
this regulation applies to any amount the person is liable to pay as
 
 
a result of that Chapter as it applies to an amount of tax payable by
35
 
an employer (and the references to “the employer” in paragraphs (2)
 
 
and (5)(b) are to be read accordingly),
 
 
(b)
in cases that operate by reference to a determination made, or that
 
 
may be made, under this regulation in relation to the person, the
 
 
references to “the employer” in the following provisions are to be
40
 
treated as references to the person—
 

Page 30

 
(i)
regulation 81(4) (employee liability if tax unpaid after regulation
 
 
80 determination), and
 
 
(ii)
regulation 97P(1) (persons from whom security for PAYE can be
 
 
required), and
 
 
(c)
the references to “the employer” in regulation 72E(6) and regulation
5
 
72F (recovery from employee of tax that has been self-assessed etc.)
 
 
are to be treated as references to the person for the purposes of
 
 
making a direction under section 72F in relation to the person.”
 
 
(11)
The amendments made by this section have effect in relation to payments
 
 
made on or after 6 April 2026.
10
25
Loan charge settlement scheme
 
 
(1)
The Treasury must by regulations provide for a scheme under which persons
 
 
who are liable to pay loan charge amounts may enter into an agreement (“a
 
 
settlement agreement”) with the Commissioners as regards those amounts.
 
 
(2)
The scheme must provide that the Commissioners must, in accordance with
15
 
the scheme, make an offer to enter into a settlement agreement (“a settlement
 
 
offer”) to every person who—
 
 
(a)
they believe is liable to pay loan charge amounts, and
 
 
(b)
is not a person who the Commissioners reasonably suspect is, or has
 
 
at any time been, a promoter or introducer for the purposes of Part 7
20
 
of FA 2004 (disclosure of tax avoidance schemes).
 
 
(3)
The scheme must provide that a settlement offer made to a person (P) must—
 
 
(a)
set out the terms of the proposed settlement agreement, including—
 
 
(i)
the loan charge amounts to which it would apply (“relevant
 
 
loan charge amounts”), and
25
 
(ii)
the amount P would instead be required to pay under it
 
 
(“settlement amount”), and
 
 
(b)
remain open to P for such reasonable period as may be specified by
 
 
the scheme.
 
 
(4)
The scheme must provide that the relevant loan charge amounts must not
30
 
include loan charge amounts which are the subject of, or under, a contract
 
 
settlement entered into before 1 June 2021.
 
 
(5)
The scheme must provide that if P enters into the proposed settlement
 
 
agreement with the Commissioners—
 
 
(a)
every relevant loan charge amount ceases to be, or will no longer
35
 
become, payable by P, but
 
 
(b)
P is instead liable to pay the settlement amount.
 
 
(6)
The scheme must provide for the calculation of P’s settlement amount and
 
 
must secure—
 
 
(a)
that amounts are arrived at by—
40

Page 31

 
(i)
determining the value of the Schedule 11 or 12 to F(No. 2)A
 
 
2017 loans and quasi-loans to which the relevant loan charge
 
 
amounts are connected,
 
 
(ii)
determining the other amounts paid to P under the
 
 
arrangements under which those loans or quasi-loans were
5
 
made,
 
 
(iii)
determining the amounts charged to P (as deductions, fees or
 
 
otherwise) under those arrangements,
 
 
(iv)
attributing the amounts determined as mentioned in
 
 
sub-paragraphs (i) to (iii) to tax years in accordance with the
10
 
scheme and assuming that income tax and national insurance
 
 
contributions were payable as regards those tax years in relation
 
 
to those amounts, and
 
 
(v)
on that assumption, determining the total amount for each of
 
 
those tax years of the additional income tax and national
15
 
insurance contributions which would have been payable by P
 
 
as regards the tax year (“starting amount”),
 
 
(b)
that the starting amount for each tax year is lowered (but not below
 
 
nil) by the amount that results from adding together—
 
 
(i)
the amount of reduction given by reducing by 10% the first
20
 
£50,000 of the total amount attributed to the tax year under
 
 
paragraph (a) (iv) , and
 
 
(ii)
the amount of reduction given by reducing by 5% the next
 
 
£100,000 of that total,
 
 
(c)
that the amounts produced by this are added together and the resulting
25
 
amount is lowered by £5,000 (but not below nil),
 
 
(d)
that this lowered amount is the settlement amount, unless it is more
 
 
than £70,000 lower than P’s loan charge gross liability, and
 
 
(e)
that, if that lowered amount is more than £70,000 lower than P’s loan
 
 
charge gross liability, the settlement amount is instead P’s loan charge
30
 
gross liability minus £70,000.
 
 
(7)
In this section —
 
 
“loan charge amount” means an amount which—
 
 
(a)
arises in connection with a Schedule 11 or 12 to F(No. 2)A 2017
 
 
loan or quasi-loan,
35
 
(b)
is not an amount of inheritance tax,
 
 
(c)
is payable, or becomes payable in the future, to the
 
 
Commissioners under or by virtue of any enactment or under
 
 
a contract settlement, and
 
 
(d)
has not yet been paid;
40
 
“loan charge gross liability” , in relation to a person, means the total of
 
 
the loan charge amounts the person was liable to pay before any
 
 
payment of those amounts.
 
 
(8)
A reference in this section to a Schedule 11 or 12 to F(No. 2)A 2017 loan or
 
 
quasi-loan is to—
45

Page 32

 
(a)
a loan or quasi-loan (within the meaning of paragraph 2 of Schedule
 
 
11 to F(No. 2)A 2017) by reason of which a person is treated, under
 
 
paragraph 1 of Schedule 11 to F(No. 2)A 2017, as taking a relevant
 
 
step for the purposes of Part 7A of ITEPA 2003 , or
 
 
(b)
a loan or quasi-loan (within the meaning of paragraph 2 of Schedule
5
 
12 to F(No. 2)A 2017) which is treated for the purposes of sections
 
 
23A to 23H of ITTOIA 2005 as a relevant benefit by reason of
 
 
paragraph 1 of Schedule 12 to F(No. 2)A 2017.
 
 
(9)
In this section —
 
 
“the Commissioners” means the Commissioners for His Majesty’s Revenue
10
 
and Customs;
 
 
“contract settlement” has the meaning given by section 25 of CRCA 2005.
 
26
Loan charge settlement scheme: inheritance tax
 
 
(1)
The scheme may provide that, if a person enters into a settlement agreement,
 
 
amounts of inheritance tax payable by the person which—
15
 
(a)
arise as a result of transfers of value and other occasions of charge
 
 
occurring—
 
 
(i)
in connection with a settlement (within the meaning of section
 
 
43 of IHTA 1984) used as part of arrangements under which
 
 
the relevant Schedule 11 or 12 to F(No. 2)A 2017 loans and
20
 
quasi-loans were made, and
 
 
(ii)
before the end of 3 months after the date on which the
 
 
settlement offer, in relation to the settlement agreement, was
 
 
made to the person, and
 
 
(b)
have not yet been paid,
25
 
cease to payable by the person.
 
 
(2)
The scheme may provide, if a person enters into a settlement agreement, for
 
 
adjustments in amounts of inheritance tax payable by other persons which—
 
 
(a)
arise as mentioned in subsection (1) (a) ,
 
 
(b)
are attributable to property used for making the relevant Schedule 11
30
 
or 12 to F(No. 2)A 2017 loans and quasi-loans, and
 
 
(c)
have not yet been paid.
 
 
(3)
The scheme must provide that, if a person enters into a settlement agreement,
 
 
no relevant Schedule 11 or 12 to F(No. 2)A 2017 loan or quasi-loan is to be
 
 
treated as a liability for the purposes of section 5(3) of IHTA 1984.
35
 
(4)
In this section, references to relevant Schedule 11 or 12 to F(No. 2)A 2017
 
 
loans and quasi-loans are to the Schedule 11 or 12 to F(No. 2)A 2017 loans
 
 
and quasi-loans to which the loan charge amounts to which the settlement
 
 
agreement applies are connected.
 
 
(5)
Expressions used in this section and section 25 have the same meaning in
40
 
this section as they have in section 25.
 

Page 33

 
(6)
In this section, “transfer of value” has the same meaning as in IHTA 1984
 
 
(see, in particular, section 3 of that Act).
 
27
Loan charge settlement scheme: supplementary
 
 
(1)
The scheme may make provision—
 
 
(a)
about the process of making settlement offers and entering into
5
 
settlement agreements;
 
 
(b)
for settlement offers to be conditional upon the persons to whom they
 
 
are made doing specified things;
 
 
(c)
about the terms which may, must or may not be included in settlement
 
 
agreements;
10
 
(d)
supplementing—
 
 
(i)
provision made under section 25 (6) about the calculation of
 
 
settlement amounts, and
 
 
(ii)
the definitions in section 25 (7) of “loan charge amount” and
 
 
“loan charge gross liability”;
15
 
(e)
for the use of estimates in relation to any amount;
 
 
(f)
about liabilities which are incidental to, or otherwise connected with,
 
 
loan charge amounts;
 
 
(g)
for amounts paid by a person towards the person’s loan charge gross
 
 
liability to be credited against a liability of the person to pay a
20
 
settlement amount (but to no greater extent than discharging that
 
 
liability);
 
 
(h)
for anything else the Treasury consider appropriate for the purpose
 
 
of the scheme.
 
 
(2)
The things specified under subsection (1) (b) may include, for example, a
25
 
person to whom a settlement offer is made entering into a contract settlement
 
 
in relation to amounts specified in the settlement offer which—
 
 
(a)
are not loan charge amounts,
 
 
(b)
are payable, or become payable in the future, to the Commissioners
 
 
by the person under or by virtue of any enactment, and
30
 
(c)
have not yet been paid.
 
 
(3)
The provision which may be made under subsection (1) (d) (ii) includes
 
 
provision setting out the descriptions of amounts which arise in connection
 
 
with a Schedule 11 or 12 to F(No. 2)A 2017 loan or quasi-loan.
 
 
(4)
The provision which may be made under subsection (1) (f) includes provision—
35
 
(a)
treating penalties, or other amounts which are not loan charge amounts
 
 
but are connected with them, as never having arisen or ceasing to be
 
 
payable, and
 
 
(b)
crediting amounts paid towards such liabilities against other liabilities
 
 
to pay a settlement or other amount to the Commissioners or for the
40
 
Commissioners to repay those paid amounts.
 
 
(5)
The scheme may make—
 

Page 34

 
(a)
different provision for different purposes or cases;
 
 
(b)
provision generally or for specified cases;
 
 
(c)
provision subject to exceptions;
 
 
(d)
incidental, supplementary, consequential or transitional provision.
 
 
(6)
Regulations providing for the scheme are to be made by statutory instrument
5
 
and are subject to annulment in pursuance of a resolution of the House of
 
 
Commons.
 
 
(7)
A settlement agreement is a contract settlement for the purposes of sections
 
 
25 and 25A of CRCA 2005.
 
 
(8)
Expressions used in this section and section 25 or 26 have the same meaning
10
 
in this section as they have in section 25 or 26.
 

Capital allowances and other reliefs for businesses

 
28
Main rate of writing-down allowances for expenditure on plant or machinery
 
 
(1)
In section 56 of CAA 2001 (amount of plant and machinery allowances), in
 
 
subsection (1) (which specifies the main rate of writing-down allowances),
15
 
for “18%” substitute “14%”.
 
 
(2)
The amendment made by subsection (1) has effect in relation to chargeable
 
 
periods beginning on or after the relevant day, that is to say—
 
 
(a)
for corporation tax purposes, 1 April 2026, and
 
 
(b)
for income tax purposes, 6 April 2026.
20
 
(3)
The amendment made by subsection (1) also has effect in relation to chargeable
 
 
periods beginning before and ending on or after the relevant day but as if
 
 
the reference to 14% were a reference instead to X%.
 
 
(4)
For this purpose X is found by adding (18 x BRD/CP) to (14 x ARD/CP).
 
 
(5)
Where X would be a figure with more than 2 decimal places, it is to be
25
 
rounded up to the nearest second decimal place.
 
 
(6)
In subsection (4) —
 
 
“BRD” means the number of days in the chargeable period before the
 
 
relevant day,
 
 
“ARD” means the number of days in the chargeable period on and after
30
 
the relevant day, and
 
 
“CP” means the number of days in the chargeable period.
 
29
First-year allowance for main rate expenditure on plant or machinery
 
 
(1)
Part 2 of CAA 2001 (plant and machinery allowances) is amended as follows.
 

Page 35

 
(2)
In section 39 (first-year allowances available for certain types of qualifying
 
 
expenditure only), after the entry relating to section 45S insert—
 
 
“section 45U
 
 
expenditure on plant or machinery in cases not falling
 
 
within section 45S etc”.
 
 
(3)
After section 45T insert—
5
 
“45U
Expenditure on plant or machinery in cases not falling with section
 
 
45S etc
 
 
Expenditure is first-year qualifying expenditure if—
 
 
(a)
it is incurred on or after 1 January 2026,
 
 
(b)
it is not special rate expenditure,
10
 
(c)
it is expenditure on plant or machinery which is unused and
 
 
not second-hand, and
 
 
(d)
it is not excluded by section 45V (exclusion of expenditure
 
 
under disqualifying arrangements) or 46 (general exclusions).
 
45V
Exclusion of expenditure incurred under disqualifying arrangements
15
 
(1)
Expenditure is not first-year qualifying expenditure under section 45U
 
 
if the expenditure is incurred directly or indirectly in consequence of,
 
 
or otherwise in connection with, disqualifying arrangements.
 
 
(2)
Arrangements are “disqualifying arrangements” for the purposes of
 
 
this section if—
20
 
(a)
the main purpose, or one of the main purposes, of the
 
 
arrangements is to secure a tax advantage connected with
 
 
expenditure being first-year qualifying expenditure under
 
 
section 45U, and
 
 
(b)
it is reasonable, taking account of all the relevant
25
 
circumstances—
 
 
(i)
to conclude that the arrangements are, or include steps
 
 
that are, contrived, abnormal or lacking a genuine
 
 
commercial purpose, or
 
 
(ii)
to regard the arrangements as circumventing the
30
 
intended limits of relief under this Act or otherwise
 
 
exploiting shortcomings in this Act.
 
 
(3)
In this section “arrangements” include any agreement, understanding,
 
 
scheme, transaction or series of transactions (whether or not legally
 
 
enforceable).”
35
 
(4)
In section 46 (general exclusions)—
 
 
(a)
in subsection (1), after the entry relating to section 45S insert—
 
 
“section 45U
 
 
(expenditure on plant or machinery in cases not
 
 
falling within section 45S etc)”, and
 

Page 36

 
(b)
after subsection (4A) insert—
 
 
“(4B)
General exclusion 6 does not prevent expenditure being
 
 
first-year qualifying expenditure under section 45U if—
 
 
(a)
the plant or machinery is provided for leasing to a
 
 
lessee for use by the lessee wholly, or almost wholly,
5
 
for the purpose of earning income which is within the
 
 
charge to tax, or
 
 
(b)
the plant or machinery is provided for leasing to a
 
 
lessee who is resident in the United Kingdom where
 
 
the circumstances are such that the plant or machinery
10
 
is not for use (to a significant extent) by the lessee for
 
 
the purpose of earning income which is from a source
 
 
outside the United Kingdom and which is outside the
 
 
charge to tax.
 
 
(4C)
For the purposes of subsection (4B) income is to be regarded
15
 
as being outside the charge to tax if the income arises to a
 
 
person who under—
 
 
(a)
double taxation arrangements, or
 
 
(b)
unilateral relief arrangements,
 
 
is afforded or is entitled to claim any relief from the tax
20
 
chargeable on the income.
 
 
(4D)
For this purpose “double taxation arrangements” and “unilateral
 
 
relief arrangements” have the same meaning as they have in
 
 
Part 2 of the Taxation (International and Other Provisions) Act
 
 
2010 (see sections 2(4) and 8(1) respectively).
25
 
(4E)
For the purposes of subsection (4B) it is to be presumed that,
 
 
unless the contrary is shown, a lessee has made every claim
 
 
or election for relief from tax, and every claim or election for
 
 
an exemption from tax, which the lessee is entitled to make.
 
 
(4F)
For the purposes of subsection (4B), if there is more than one
30
 
lessee, references to the lessee are to each of the lessees.
 
 
(4G)
For the purposes of subsections (4B) to (4F), any reference to
 
 
leasing or a lessee includes sub-leasing and a sub-lessee.”
 
 
(5)
In section 52 (first-year allowances), in subsection (3), in the table, at the end
 
 
insert—
35
 
“Expenditure qualifying under section 45U (expenditure
 
 
40%”.
 
 
on plant or machinery in cases not falling within section
 
 
45S etc)
 
30
Expenditure on zero-emission cars and electric vehicle charging points
 
 
In—
40

Page 37

 
(a)
section 45D of CAA 2001 (expenditure on zero-emission cars), in
 
 
subsection (1B)(a) and (b) (which specify the date on or before which
 
 
expenditure must be incurred to qualify for a first-year allowance),
 
 
and
 
 
(b)
section 45EA of that Act (expenditure on plant or machinery for electric
5
 
vehicle charging point), in subsection (3)(a) and (b) (which specify the
 
 
date on or before which expenditure must be incurred to qualify for
 
 
a first-year allowance),
 
 
for “2026” substitute “2027”.
 
31
Payments for surrender of expenditure credits
10
 
(1)
In section 1042N of CTA 2009 (amounts surrendered to other group
 
 
companies), after subsection (4) insert—
 
 
“(5)
Subsection (6) applies (in addition to subsection (3)) if—
 
 
(a)
the qualifying company and the other group member have an
 
 
agreement between them in relation to the surrendering of
15
 
amounts of expenditure credit, and
 
 
(b)
as a result of the agreement the other group member makes a
 
 
payment to the qualifying company that does not exceed the
 
 
total amount of expenditure credit surrendered to the other
 
 
group member.
20
 
(6)
The payment is not to be—
 
 
(a)
taken into account in determining, for corporation tax purposes,
 
 
the profits of the qualifying company or the other group
 
 
member, or
 
 
(b)
regarded for corporation tax purposes as a distribution.”
25
 
(2)
In section 1179CE of CTA 2009 (amounts surrendered to other group
 
 
companies), after subsection (4) insert—
 
 
“(5)
Subsection (6) applies (in addition to subsection (3)) if—
 
 
(a)
the qualifying company and the other group member have an
 
 
agreement between them in relation to the surrendering of
30
 
amounts of expenditure credit, and
 
 
(b)
as a result of the agreement the other group member makes a
 
 
payment to the qualifying company that does not exceed the
 
 
total amount of expenditure credit surrendered to the other
 
 
group member.
35
 
(6)
The payment is not to be—
 
 
(a)
taken into account in determining, for corporation tax purposes,
 
 
the profits of the qualifying company or the other group
 
 
member, or
 
 
(b)
regarded for corporation tax purposes as a distribution.”
40
 
(3)
The amendments made by this section have effect in relation to payments
 
 
made on or after 26 November 2025.
 

Page 38

32
Transition from video games tax relief
 
 
(1)
Schedule 2 to FA 2024 (expenditure credits for films, television programmes
 
 
and video games) is amended as follows.
 
 
(2)
After paragraph 24 insert—
 
 
“Calculation of expenditure credit where company previously benefiting from video
5
 
games tax relief
 
 
24A
(1)
Sub-paragraph (2) applies if—
 
 
(a)
a company makes an election under section 1179B(1) of CTA
 
 
2009 in relation to a video game in its company tax return
 
 
for an accounting period, and
10
 
(b)
in an earlier accounting period, the company was entitled
 
 
to, and claimed, special video games relief (within the
 
 
meaning of section 1217E(1) of CTA 2009) in respect of that
 
 
video game.
 
 
(2)
Section 1179CA(1) of CTA 2009 (amount of expenditure credit) has
15
 
effect as if for Step 2 there were substituted—
 
 
“Deduct from that total the sum of—
 
 
(a)
so much of that expenditure as was incurred in accounting
 
 
periods before the opt-in period and that is not European
20
 
expenditure (within the meaning of section 1217AE), and
 
 
(b)
so much of that expenditure as was incurred in the opt-in
 
 
period or any later accounting period and that is not UK
 
 
expenditure (see section 1179AB).”
 
 
(3)
In paragraph 18 (opting into new regime during transitional period), in
25
 
sub-paragraph (5)(b), for “24” substitute “ 24A ”.
 
 
(4)
The amendments made by this section have effect in relation to elections
 
 
made under section 1179B(1) of CTA 2009 in relation to any opt-in period
 
 
commencing on or after 26 November 2025.
 
33
Special credit for visual effects
30
 
(1)
Section 1179EC of CTA 2009 (special credit for visual effects) is amended as
 
 
follows.
 
 
(2)
In subsection (2)—
 
 
(a)
omit the “and” after paragraph (a),
 
 
(b)
after that paragraph insert—
35
 
“(aa)
a claim for Chapter 3 credit has been made for the last
 
 
accounting period in the AVEC period (which may be
 
 
the claim period) in which the company incurred
 
 
relevant global expenditure (see section 1179CA(2)) that
 
 
is UK expenditure (see section 1179AB), and”, and
40

Page 39

 
(c)
in paragraph (b)—
 
 
(i)
omit “where a claim has been made for Chapter 3 credit
 
 
(whether for the claim period or earlier),”, and
 
 
(ii)
for “such claims” substitute “Chapter 3 credit claims in respect
 
 
of the film or television programme”.
5
 
(3)
In subsection (3)(b) for paragraph (i) substitute—
 
 
“(i)
the adjusted VFX portion of Chapter 3 credits claimed
 
 
in respect of the film or television programme, and”.
 
 
(4)
In subsection (4)—
 
 
(a)
in the words before Step 1, for “previously claimed Chapter 3 credits”
10
 
substitute “Chapter 3 credits claimed in respect of the film or television
 
 
programme”, and
 
 
(b)
in Step 1—
 
 
(i)
in the words before paragraph (a) omit “(see section
 
 
1179CA(2))”, and
15
 
(ii)
in that paragraph omit “(see section 1179AB)”.
 
 
(5)
After subsection (6) insert—
 
 
“(6A)
Where a production company has claimed an additional amount of
 
 
audiovisual expenditure credit for an accounting period and makes a
 
 
claim for Chapter 3 credit for a subsequent accounting period—
20
 
(a)
the additional amount is to be calculated for that subsequent
 
 
accounting period, and
 
 
(b)
if that additional amount is negative, the amount of Chapter
 
 
3 credit to which the company is entitled for that period is to
 
 
be reduced by the additional amount.
25
 
(6B)
Where Chapter 3 credit claimed by a company for an accounting
 
 
period is reduced as a result of subsection (6A) (b) , for the purposes
 
 
of the application of subsections (3) and (4) in relation to the company
 
 
for any subsequent accounting period—
 
 
(a)
the sum of the additional amounts of audiovisual expenditure
30
 
credit previously claimed (as referred to in subsection (3)(b)(ii))
 
 
is to be reduced by the additional amount referred to in
 
 
subsection (6A) (b) , and
 
 
(b)
in determining the sum of Chapter 3 credits claimed by the
 
 
production company for the purposes of Step 4 in subsection
35
 
(4), ignore the reduction of any Chapter 3 credit resulting from
 
 
the application of subsection (6A) (b) .”
 
 
(6)
The amendments made by this section have effect in relation to any claim
 
 
made for Chapter 3 credit, or an additional amount of audiovisual expenditure
 
 
credit, for accounting periods beginning on or after 26 November 2025.
40

Page 40

34
R&D undertaken abroad: Chapter 2 relief only
 
 
(1)
In section 1138A(1)(b) of CTA 2009, at beginning insert “for the purposes of
 
 
relief under Chapter 2”.
 
 
(2)
The amendment made by subsection (1) has effect in relation to claims made
 
 
on or after 30 October 2024.
5

Chargeable gains

 
35
Restriction of relief on disposals to employee-ownership trusts
 
 
(1)
Section 236H of TCGA 1992 (disposals to employee-ownership trusts) is
 
 
amended as follows.
 
 
(2)
For subsection (2) substitute—
10
 
“(2)
Where this section applies, section 17(1) (disposals and acquisitions
 
 
treated as made at market value) does not apply to the disposal and,
 
 
taking account of that disapplication—
 
 
(a)
if a gain accrues, subsection (2A) applies, or
 
 
(b)
if no gain accrues, subsection (3) applies.
15
 
(2A)
Where this subsection applies—
 
 
(a)
only 50% of the gain is a chargeable gain,
 
 
(b)
the disposal is not to be regarded as a qualifying business
 
 
disposal for the purposes of Chapter 3 of Part 5 (business asset
 
 
disposal relief),
20
 
(c)
the ordinary share capital disposed of is to be regarded,
 
 
immediately before the disposal, as comprised wholly of
 
 
excluded shares for the purposes of Chapter 5 of that Part
 
 
(investors’ relief), and
 
 
(d)
the acquisition by the trustees is to be treated for the purposes
25
 
of this Act as made for the consideration for the disposal less
 
 
an amount equal to so much of the gain as is not a chargeable
 
 
gain as a result of paragraph (a) .”
 
 
(3)
In subsection (3) , for “The”, in the first place it occurs, substitute “Where this
 
 
subsection applies, the”.
30
 
(4)
The amendments made by this section have effect in relation to disposals
 
 
made on or after 26 November 2025.
 
36
Anti-avoidance: collective investment scheme reconstructions
 
 
(1)
TCGA 1992 is amended as follows.
 
 
(2)
In section 103G (exchange of units for those in another collective investment
35
 
scheme), in subsection (4), for “section 103K(1)” to the end of the subsection
 
 
substitute “section 103K (anti-avoidance)”.
 

Page 41

 
(3)
In section 103H (scheme of reconstruction involving issue of units), in
 
 
subsection (5), for “section 103K(1)” to the end of the subsection substitute
 
 
“section 103K (anti-avoidance)”.
 
 
(4)
In section 103I (scheme of reconstruction involving conversion scheme), in
 
 
subsection (4), for “section 103K(1)” to the end of the subsection substitute
5
 
“section 103K (anti-avoidance)”.
 
 
(5)
In section 103K (restriction on application of sections 103G, 103H and 103I)—
 
 
(a)
at the end of the heading insert “: anti-avoidance”;
 
 
(b)
for subsection (1) substitute—
 
 
“(1)
This section applies in respect of arrangements relating to an
10
 
exchange or scheme of reconstruction as regards which section
 
 
103G, 103H or 103I applies if the main purpose, or one of the
 
 
main purposes, of the arrangements is to reduce or avoid
 
 
liability to capital gains tax, corporation tax or income tax.
 
 
(1A)
Any such reduction or avoidance that would (in the absence
15
 
of this section) arise from such arrangements is to be
 
 
counteracted by the making of such adjustments as are just
 
 
and reasonable (in light of the reduction or avoidance).
 
 
(1B)
This includes, in an appropriate case, disapplying section 103G,
 
 
103H or 103I insofar as is required to counteract the reduction
20
 
or avoidance.
 
 
(1C)
Any adjustments required to be made under this section
 
 
(whether or not by an officer of Revenue and Customs) may
 
 
be made by way of—
 
 
(a)
an assessment, or
25
 
(b)
the modification of an assessment.”;
 
 
(c)
omit subsections (2) and (3);
 
 
(d)
in subsection (4)—
 
 
(i)
for “subsection (1) above” substitute “this section”;
 
 
(ii)
in paragraph (a), after “chargeable person” insert “as part of
30
 
the exchange or scheme of reconstruction”;
 
 
(e)
after subsection (6) insert—
 
 
“(7)
In this section, “arrangements” includes any agreement,
 
 
understanding, scheme, transaction or series of transactions
 
 
(whether or not legally enforceable).”
35
 
(6)
The amendments made by this section have effect in relation to arrangements
 
 
involving an issue of units in a collective investment scheme on or after 26
 
 
November 2025.
 
 
(7)
But those amendments do not have effect in a case where—
 
 
(a)
a participant in a collective investment scheme has made an application
40
 
under section 138(1) of TCGA 1992 (as applied by section 103K(6) of
 
 
that Act) before 26 November 2025,
 

Page 42

 
(b)
the Commissioners for His Majesty’s Revenue and Customs have
 
 
notified the participant of their satisfaction, or the tribunal has notified
 
 
the participant of its satisfaction, in relation to the application under
 
 
section 138 (1) or (4) of TCGA 1992 , and
 
 
(c)
the issue of units in a collective investment scheme in respect of which
5
 
the application was made occurs before 26 January 2026 or, if later,
 
 
before the end of the period of 60 days beginning with the day on
 
 
which the notification mentioned in paragraph (b) was made.
 
37
Anti-avoidance: company reconstructions
 
 
(1)
TCGA 1992 is amended as follows.
10
 
(2)
In section 135 (exchange of securities for those in another company), in
 
 
subsection (6), for “section 137(1)” to the end of the subsection substitute
 
 
“section 137 (anti-avoidance)”.
 
 
(3)
In section 136 (scheme of reconstruction involving issue of securities), in
 
 
subsection (6), for “section 137(1)” to the end of the subsection substitute
15
 
“section 137 (anti-avoidance)”.
 
 
(4)
In section 137 (restriction on company reconstruction provisions)—
 
 
(a)
at the end of the heading insert “: anti-avoidance”;
 
 
(b)
for subsection (1) substitute—
 
 
“(1)
This section applies in respect of arrangements relating to an
20
 
exchange or scheme of reconstruction as regards which section
 
 
135 or 136 applies if the main purpose, or one of the main
 
 
purposes, of the arrangements is to reduce or avoid liability
 
 
to capital gains tax or corporation tax.
 
 
(1A)
Any such reduction or avoidance that would (in the absence
25
 
of this section) arise from such arrangements is to be
 
 
counteracted by the making of such adjustments as are just
 
 
and reasonable (in light of the reduction or avoidance).
 
 
(1B)
This includes, in an appropriate case, disapplying section 135
 
 
or 136 insofar as is required to counteract the reduction or
30
 
avoidance.
 
 
(1C)
Any adjustments required to be made under this section
 
 
(whether or not by an officer of Revenue and Customs) may
 
 
be made by way of—
 
 
(a)
an assessment, or
35
 
(b)
the modification of an assessment.”;
 
 
(c)
omit subsections (2) and (3);
 
 
(d)
in subsection (4)—
 
 
(i)
for “subsection (1) above” substitute “this section”;
 
 
(ii)
in paragraph (a), after “chargeable person” insert “as part of
40
 
the exchange or scheme of reconstruction”;
 

Page 43

 
(e)
after subsection (6) insert—
 
 
“(7)
In this section, “arrangements” includes any agreement,
 
 
understanding, scheme, transaction or series of transactions
 
 
(whether or not legally enforceable).”
 
 
(5)
In section 138 (procedure for clearance in advance)—
5
 
(a)
in subsection (1)—
 
 
(i)
for “shall not affect the operation of section 135 or 136”
 
 
substitute “does not apply”;
 
 
(ii)
after “the issue” insert “of shares or debentures mentioned in
 
 
section 135(1) or 136(1)”;
10
 
(iii)
for “section 137(1)”, in the first place it appears, substitute
 
 
“section 135(1) or 136(1)”;
 
 
(iv)
for “for bona fide” to the end of the subsection substitute
 
 
“without arrangements in respect of which section 137 applies.”;
 
 
(b)
after subsection (5) insert—
15
 
“(6)
In this section, references to shares or debentures include
 
 
references to any interests or options to which this Chapter
 
 
applies by virtue of section 135(5), 136(5) or 147.”
 
 
(6)
The amendments made by this section have effect in relation to arrangements
 
 
involving an issue of shares in, or debentures of, a company on or after 26
20
 
November 2025.
 
 
(7)
But those do not have effect in a case where—
 
 
(a)
a company has made an application under section 138(1) of TCGA
 
 
1992 before 26 November 2025,
 
 
(b)
the Commissioners for His Majesty’s Revenue and Customs have
25
 
notified the company of their satisfaction, or the tribunal has notified
 
 
the company of its satisfaction, in relation to the application under
 
 
section 138 (1) or (4) of TCGA 1992 , and
 
 
(c)
the issue of shares or debentures in respect of which the application
 
 
was made occurs before 26 January 2026 or, if later, before the end of
30
 
the period of 60 days beginning with the day on which notification
 
 
mentioned in paragraph (b) was made.
 
38
Anti-avoidance: reconstructions involving transfer of business
 
 
(1)
In section 139 (reconstruction involving transfer of business)—
 
 
(a)
after subsection (4) insert—
35
 
“(4A)
Subsection (4B) applies in respect of arrangements relating to
 
 
a reconstruction as regards which this section applies if the
 
 
main purpose, or one of the main purposes, of the arrangements
 
 
is to reduce or avoid liability to capital gains tax, corporation
 
 
tax or income tax.
40

Page 44

 
(4B)
Any such reduction or avoidance that would (in the absence
 
 
of this subsection) arise from such arrangements is to be
 
 
counteracted by the making of such adjustments as are just
 
 
and reasonable (in light of the reduction or avoidance).
 
 
(4C)
This includes, in an appropriate case, disapplying this section
5
 
insofar as is required to counteract the reduction or avoidance.
 
 
(4D)
Any adjustments required to be made under subsection (4B)
 
 
(whether or not by an officer of Revenue and Customs) may
 
 
be made by way of—
 
 
(a)
an assessment, or
10
 
(b)
the modification of an assessment.”
 
 
(b)
in subsection (5)—
 
 
(i)
for the words from the beginning of the subsection to
 
 
“operation of this section” substitute “Subsections (4A) to (4D)
 
 
do not apply”;
15
 
(ii)
for “for bona fide” to the end of the first sentence substitute
 
 
“without arrangements in respect of which subsection (4B)
 
 
applies.”;
 
 
(c)
in subsections (6) and (7), for “subsection (5)” substitute “ subsection
 
 
(4B) ”;
20
 
(d)
after subsection (9) insert—
 
 
“(10)
In this section, “arrangements” includes any agreement,
 
 
understanding, scheme, transaction or series of transactions
 
 
(whether or not legally enforceable).”
 
 
(2)
The amendments made by this section have effect in relation to arrangements
25
 
involving the transfer of assets of a business on or after 26 November 2025.
 
 
(3)
But this section does not have effect in relation to a case where—
 
 
(a)
a company has made an application under section 139(5) of TCGA
 
 
1992 before 26 November 2025,
 
 
(b)
the Commissioners for His Majesty’s Revenue and Customs have
30
 
notified the company of their satisfaction under that subsection, or
 
 
the tribunal has notified the company of its satisfaction under section
 
 
138(4) of TCGA 1992 (as applied by section 139(5) of that Act), in
 
 
relation to the application, and
 
 
(c)
the transfer of assets in respect of which the application was made
35
 
occurs before 26 January 2026 or, if later, before the end of the period
 
 
of 60 days beginning with the day on which notification mentioned
 
 
in paragraph (b) was made.
 
39
Incorporation relief: requirement to claim
 
 
(1)
Section 162 of TCGA 1992 (roll-over relief on transfer of business) is amended
40
 
as follows.
 

Page 45

 
(2)
In subsection (1) —
 
 
(a)
the words from “a person who is not a company” to the end of the
 
 
first sentence of the subsection become paragraph (a) ;
 
 
(b)
after that paragraph insert “, and
 
 
“(b)
the person makes a claim in respect of the transfer,
5
 
including such information as the Commissioners may
 
 
require, on or before the first anniversary of the 31
 
 
January following the tax year in which the transfer of
 
 
the business took place.”
 
 
(3)
After subsection (5) insert—
10
 
“(6)
In this section, “the Commissioners” means the Commissioners for
 
 
His Majesty’s Revenue and Customs.”
 
 
(4)
Omit section 162A of TCGA 1992 (election for section 162 not to apply).
 
 
(5)
The amendments made by this section have effect in relation to transfers of
 
 
businesses made on or after 6 April 2026.
15
40
Non-residents: cell companies
 
 
(1)
Part 4 of Schedule 1A to TCGA 1992 (anti-avoidance relating to assets deriving
 
 
75% of value from UK land) is amended as follows.
 
 
(2)
For the heading of the Part substitute “Cell companies and anti-avoidance”.
 
 
(3)
Before paragraph 11 insert—
20
 
“Cell companies
 
 
10A
(1)
In the application of this Schedule in relation to the disposal of an
 
 
asset consisting of a right or an interest in a cell company, each cell
 
 
of the company is to be treated as if it were an individual company.
 
 
(2)
For the purposes of this paragraph—
25
 
(a)
a company is a “cell company” if under the law under which
 
 
the company is formed, under the company’s articles of
 
 
association or other document regulating the company or
 
 
under arrangements entered into by or in relation to the
 
 
company—
30
 
(i)
some or all of the assets of the company are available
 
 
primarily, or only, to meet particular liabilities of the
 
 
company, and
 
 
(ii)
some or all of the members of the company, and
 
 
some or all of its creditors, have rights primarily, or
35
 
only, in relation to particular assets of the company;
 
 
(b)
“cell”, in relation a cell company, means an identifiable part
 
 
of the company that carries on distinct business activities
 
 
and to which particular assets and liabilities of the company
 
 
are primarily or wholly attributable.
40

Page 46

 
Anti-avoidance
 
 
(4)
The amendments made by this section have effect in relation to disposals
 
 
made on or after 26 November 2025.
 
41
Non-residents: double taxation relief relating to collective investment vehicles
 
 
(1)
In paragraph 2 of Schedule 18 to FA 1998 (duty to give notice of chargeability
5
 
to corporation tax), after sub-paragraph (2) insert—
 
 
“(2A)
Where sub-paragraph (1A) would apply as regards a company if
 
 
the company were to make a claim to obtain relief under section
 
 
6(2)(a) or (3)(a) of TIOPA 2010 in respect of a disposal that has an
 
 
appropriate connection to a collective investment vehicle for the
10
 
purposes of paragraph 6 of Schedule 5AAA to TCGA 1992, the
 
 
company is not required to make such a claim in order to obtain
 
 
relief in respect of the disposal (despite section 6(6) of TIOPA 2010).”
 
 
(2)
In section 55A of FA 2004 (exception to duty to give notice to coming within
 
 
charge to corporation tax), after subsection (4) insert—
15
 
“(5)
Where subsection (1) would apply as regards a company if the
 
 
company were to make a claim to obtain relief under section 6(2)(a)
 
 
or (3)(a) of TIOPA 2010 in respect of a disposal that has an appropriate
 
 
connection to a collective investment vehicle for the purposes of
 
 
paragraph 6 of Schedule 5AAA to TCGA 1992, the company is not
20
 
required to make such a claim in order to obtain relief in respect of
 
 
the disposal (despite section 6(6) of TIOPA 2010).”
 
 
(3)
In Schedule 2 to FA 2019—
 
 
(a)
in the heading before paragraph 10 (no return required in respect of
 
 
disposal connected to CIS), for “schemes” substitute “vehicles”;
25
 
(b)
in paragraphs 10—
 
 
(i)
for “scheme” substitute “vehicle”;
 
 
(ii)
after sub-paragraph (2) insert—
 
 
“(3)
If, by virtue of sub-paragraph (1), a person is not
 
 
required to make or deliver a return under this
30
 
Schedule in respect of a disposal, the person is not
 
 
required to make a claim to obtain relief under
 
 
section 6(2)(a) or (3)(a) of TIOPA 2010 in respect of
 
 
the disposal (despite subsection (6) of that section).”;
 
 
(c)
in paragraph 11(1)(a)—
35
 
(i)
for “CIS” substitute “CIV”;
 
 
(ii)
for “scheme” substitute “vehicle”;
 
 
(d)
in paragraph 11(1)(b), for “subject of the scheme” substitute “subject
 
 
of or held by the vehicle”;
 
 
(e)
in paragraph 12(1)(a), for “CIS” substitute “CIV”.
40

Page 47

 
(4)
The amendments made by subsections (1) and (2) have effect in relation to
 
 
disposals made on or after 1 April 2026.
 
 
(5)
The amendments made by subsection (3) have effect in relation to disposals
 
 
made on or after 6 April 2026.
 

Non-UK residents etc

5
42
Abolition of notional tax credit on distributions received by non-UK residents
 
 
(1)
Omit section 399 of ITTOIA 2005 (tax treated as paid on distributions received
 
 
by non-UK resident persons).
 
 
(2)
In ITA 2007—
 
 
(a)
in section 425 (total amount of income tax to which individual charged
10
 
for a tax year), in subsection (5)(a), omit sub-paragraph (i);
 
 
(b)
in section 1026 (meaning of “non-qualifying income”), omit paragraph
 
 
(a).
 
 
(3)
In TMA 1970—
 
 
(a)
in section 9 (returns to include self-assessment), in subsection (1), in
15
 
the closing words, omit “or section 399(2)”;
 
 
(b)
in section 59B (payment of income tax and capital gains tax), in
 
 
subsection (1), in the closing words, omit “or section 399(2)”.
 
 
(4)
In the Unauthorised Unit Trusts (Tax) Regulations 2013 (S.I.‌ 2013/2819), in
 
 
regulation 12 (treatment of income of an exempt unauthorised unit trust),
20
 
omit paragraph (3)(b).
 
 
(5)
The amendments made by this section have effect for the tax year 2026-27
 
 
and subsequent tax years.
 
43
Non-resident, and previously non-domiciled individuals
 
 
(1)
Part 1 of Schedule 3 makes provision about income tax and capital gains tax
25
 
in connection with whether an individual has been non-UK resident or
 
 
domiciled outside the United Kingdom, including—
 
 
(a)
provision about the reliefs for qualifying new residents,
 
 
(b)
provision about the residency of personal representatives, and
 
 
(c)
provision about former users of the remittance basis.
30
 
(2)
Part 2 of that Schedule makes provision amending Schedule 10 to FA 2025
 
 
(temporary repatriation facility).
 
 
(3)
Part 3 of that Schedule makes provision about individuals who have been
 
 
temporarily non-resident.
 

Page 48

44
Trust protections etc: minor amendments and transitional protection
 
 
(1)
In Chapter 5 of Part 5 of ITTOIA 2005 (settlements), in section 643C (meaning
 
 
of “available protected income”)—
 
 
(a)
in subsection (1), in Step 5, after “within” insert “Step 2 or”;
 
 
(b)
in subsection (3)(b), at the end insert “and not exempt from income
5
 
tax by virtue of any of sections 737 to 742A of that Act”.
 
 
(2)
In Chapter 2 of Part 13 of ITA 2007 (transfer of assets abroad), in section 733
 
 
(benefits charge: amount of deemed income), in subsection (2B)—
 
 
(a)
in paragraph (a), for “732(2)” substitute “721, 728 or 732”;
 
 
(b)
in the words after paragraph (b), omit “under section 731”.
10
 
(3)
In section 87HA of TCGA 1992 (onward gifts from non-residents or qualifying
 
 
new residents), in subsections (2) and (3), omit “capital”.
 
 
(4)
In FA 2025, in Schedule 12 (trust protections), in Part 4 (commencement and
 
 
transitional provision), after paragraph 70 insert—
 
 
“Settlements: transitional protection where available protected income is increased
15
 
by this Schedule
 
 
70A
(1)
This paragraph applies for the purposes of section 643A of ITTOIA
 
 
2005 if an individual’s untaxed benefits total in relation to a
 
 
settlement for the tax year 2024-25 exceeded the available protected
 
 
income up to the end of that tax year.
20
 
(2)
In determining under section 643B of that Act the individual’s
 
 
untaxed benefits total for the tax year 2025-26 or a later tax year,
 
 
any benefit provided to the individual in the tax year 2024-25 or an
 
 
earlier tax year is to be disregarded at Step 1 in subsection (1).
 
 
(3)
In this paragraph “untaxed benefits total” and “available protected
25
 
income”, in relation to an individual, a settlement and a tax year,
 
 
are to be construed in accordance with sections 643B and 643C of
 
 
ITTOIA 2005 (as they have or had effect for the tax year in
 
 
question).”
 
 
(5)
The amendments made by subsection (1) come into force on 6 April 2026.
30
 
(6)
The amendments made by subsections (2) to (4) are treated as having come
 
 
into force on 6 April 2025.
 
45
PAYE for treaty non-residents etc.
 
 
(1)
Schedule 4 —
 
 
(a)
makes provision for employer PAYE notifications in respect of treaty
35
 
non-resident employees, and
 
 
(b)
makes other amendments to sections 690 to 690E of ITEPA 2003 in
 
 
relation to the making of employer PAYE notifications and HMRC
 
 
PAYE directions.
 

Page 49

 
(2)
The amendments made by Schedule 4 have effect for the tax year 2026-27
 
 
and subsequent tax years (but see paragraph 8 (2) of that Schedule).
 

Other international matters

 
46
Unassessed transfer pricing profits
 
 
(1)
Schedule 5 provides—
5
 
(a)
for a power of His Majesty’s Revenue and Customs to assess
 
 
“unassessed transfer pricing profits”,
 
 
(b)
for those profits to be subject to a higher rate of corporation tax (rather
 
 
than the main or any other rate), and
 
 
(c)
for the abolition of diverted profits tax (which is superseded).
10
 
(2)
The amendments made by that Schedule have effect in relation to accounting
 
 
periods beginning on or after 1 January 2026.
 
47
Transfer pricing reform
 
 
Schedule 6 makes provision about, and in connection with, transfer pricing.
 
48
International controlled transactions
15
 
(1)
The Commissioners for His Majesty's Revenue and Customs may by
 
 
regulations make provision—
 
 
(a)
requiring persons specified for the purposes of this paragraph
 
 
(“reporting entities”) to provide an officer of Revenue and Customs
 
 
with information of specified descriptions in connection with specified
20
 
international controlled transactions;
 
 
(b)
requiring reporting entities to provide the information—
 
 
(i)
at specified times,
 
 
(ii)
in relation to specified periods of time, and
 
 
(iii)
in a specified form and manner;
25
 
(c)
imposing obligations on reporting entities (including obligations to
 
 
obtain information from specified persons for the purposes of
 
 
complying with requirements imposed by virtue of paragraph (a) );
 
 
(d)
about contravention of, or non-compliance with, the regulations
 
 
(including provision imposing penalties);
30
 
(e)
about appeals in relation to the imposition of any penalty.
 
 
(2)
The regulations may—
 
 
(a)
make different provision for different purposes;
 
 
(b)
make provision by reference to things specified in a notice published
 
 
by the Commissioners (as revised or replaced from time to time) in
35
 
accordance with the regulations;
 

Page 50

 
(c)
allow any requirement, obligation or other provision that may be
 
 
imposed or made by reference to subsection (1) (a) to (c) to be made
 
 
by specific or general direction given by the Commissioners;
 
 
(d)
make provision under which the Commissioners or other persons may
 
 
exercise discretions.
5
 
(3)
For the purposes of subsection (1) —
 
 
(a)
“specified” means specified in the regulations, and
 
 
(b)
a transaction is an international controlled transaction if the transfer
 
 
pricing condition or the permanent establishment condition is met in
 
 
relation to it.
10
 
(4)
The transfer pricing condition is that—
 
 
(a)
the transaction, or a series of transactions of which the transaction
 
 
forms part, is the means by which provision (within the meaning of
 
 
Part 4 of TIOPA 2010 ) has been made or imposed between two persons,
 
 
(b)
the participation condition (within the meaning of that Part ) is met in
15
 
relation to that provision,
 
 
(c)
one of those persons is—
 
 
(i)
a UK resident company,
 
 
(ii)
a non-UK resident company within the charge to corporation
 
 
tax as a result of it falling within paragraph (a), (c) or (d) of
20
 
section 5(2) of CTA 2009 (deals in or develops UK land, carries
 
 
on a UK property business or has other UK property income),
 
 
or
 
 
(iii)
a partnership whose members include a company within the
 
 
charge to corporation tax, and
25
 
(d)
the other person is a non-UK resident person or is a partnership whose
 
 
members include a non-UK resident person.
 
 
(5)
The permanent establishment condition is that the transaction is relevant to
 
 
the determination of—
 
 
(a)
exemption adjustments made under section 18A of CTA 2009 , or
30
 
(b)
the profits of a non-UK resident company that are (for the purposes
 
 
of the Corporation Tax Acts) attributable to a permanent establishment
 
 
of the company in the United Kingdom.
 
 
(6)
References in this section to a transaction includes any transaction that may
 
 
be treated to have occurred for the purposes of applying Chapter 3A or 4 of
35
 
Part 2 of CTA 2009 (profits of permanent establishments).
 
49
Permanent establishments
 
 
Schedule 7 makes provision about permanent establishments, including for
 
 
the purposes of giving effect to certain provisions of the Model Tax Convention
 
 
on Income and on Capital published by the Organisation for Economic
40
 
Co-operation and Development in 2017.
 

Page 51

50
Pillar two
 
 
Schedule 8 contains amendments to F(No.2)A 2023, and other connected
 
 
provision, relating to multinational top-up tax and domestic top-up tax.
 
51
Controlled foreign companies: interest on reversal of state aid recovery
 
 
(1)
This section applies if a repayment of interest (“the relevant repayment”) is,
5
 
or has been at any time, made to a company in consequence of the cancellation
 
 
of an interest charging notice given to the company under Schedule 7ZA to
 
 
TIOPA 2010 (recovery of unlawful state aid).
 
 
(2)
Interest must be paid to the company in respect of the relevant repayment.
 
 
(3)
The amount of interest payable under this section is the amount that would
10
 
have been payable by virtue of section 826 of the Income and Corporation
 
 
Taxes Act 1988 (interest on tax overpaid) in respect of the relevant repayment
 
 
if, at the time of the relevant repayment—
 
 
(a)
the relevant repayment had been among the repayments and payments
 
 
listed in subsection (1) of that section , and
15
 
(b)
the material date for the purposes of that section , in relation to the
 
 
relevant repayment, had been the date on which the interest mentioned
 
 
in subsection (1) above was paid by the company.
 
 
(4)
Interest payable under this section must be paid—
 
 
(a)
in respect of a relevant repayment made before 2 December 2025, as
20
 
soon as reasonably practicable;
 
 
(b)
in respect of a relevant repayment made on or after that day, at the
 
 
same time as the relevant repayment.
 
 
(5)
Nothing in paragraph 10(1) of Schedule 7ZA to TIOPA 2010 (Treasury duty
 
 
to make regulations where Commission Decision is revoked or annulled)
25
 
requires the Treasury to make any further provision in relation to the
 
 
repayment of interest paid by virtue of that Schedule.
 
 
(6)
References in this section to Schedule 7ZA to TIOPA 2010 are to the Schedule
 
 
treated as inserted in that Act by paragraph (b) of Schedule 4 to the Taxation
 
 
(Post-transition Period) Act 2020 .
30
 
(7)
This section is treated as having come into force on 2 December 2025.
 

Charities

 
52
Legacies to charities to be within scope of tax
 
 
(1)
Part 10 of ITA 2007 (special rules about charitable trusts etc) is amended in
 
 
accordance with subsections (2) to (4) .
35
 
(2)
In section 518 (overview), in subsection (1), for “523” substitute “523A”.
 

Page 52

 
(3)
After section 523 (but beneath the same italic heading) insert—
 
“523A
Legacies: income tax liability and exemption
 
 
(1)
This section applies to a gift of property—
 
 
(a)
that is made by will to a charitable trust, and
 
 
(b)
that is not charged to income tax, apart from this section.
5
 
(2)
Income tax is charged on the gift.
 
 
(3)
It is charged on the total value of the property so received in the tax
 
 
year; and for that purpose the value of any property other than money
 
 
is its market value as at the time of the death of the person by whose
 
 
will the gift of the property is made.
10
 
(4)
But property is not taken into account in calculating total income so
 
 
far as it is applied to charitable purposes only.
 
 
(5)
The trustees of the charitable trust are liable for any tax charged under
 
 
this section.
 
 
(6)
A gift of property made to a charitable trust is treated for the purposes
15
 
of this section as made by will if—
 
 
(a)
the gift is made to the trust by virtue of the variation, after a
 
 
person’s death, of a disposition of property effected by the
 
 
person’s will, and
 
 
(b)
the variation is treated under section 142 of IHTA 1984
20
 
(alteration of dispositions taking effect on death) as having
 
 
been effected by the deceased.
 
 
(7)
In this section—
 
 
“property” includes rights and interests of any description;
 
 
“will” includes a testament, a codicil and any testamentary
25
 
disposition of property.”
 
 
(4)
In section 562 (excess expenditure), in subsection (5) (definition of “non-taxable
 
 
sums”), omit “, legacies”.
 
 
(5)
In ITTOIA 2005, in section 636 (settlements: calculation of undistributed
 
 
income), in subsection (7), at the appropriate place insert—
30
 
“section 523A (legacies)”.
 
 
(6)
Part 11 of CTA 2010 (charitable companies etc) is amended in accordance
 
 
with subsections (7) to (9) .
 
 
(7)
In section 466 (overview), in subsection (1), for “474” substitute “474A”.
 
 
(8)
After section 474 (but beneath the same italic heading) insert—
35
“474A
Legacies: corporation tax liability and exemption
 
 
(1)
This section applies to a gift of property—
 
 
(a)
that is made by will to a charitable company, and
 

Page 53

 
(b)
that is not chargeable to corporation tax apart from this section.
 
 
(2)
The value of the property that is the subject of the gift is treated as
 
 
an amount in respect of which the charitable company is chargeable
 
 
to corporation tax, under the charge to corporation tax on income.
 
 
(3)
For that purpose the value of any property other than money is its
5
 
market value as at the time of the death of the person by whose will
 
 
the gift of the property is made.
 
 
(4)
But the value attributable to property is not taken into account in
 
 
calculating total profits so far as the property is applied to charitable
 
 
purposes only.
10
 
(5)
A gift of property made to a charitable company is treated for the
 
 
purposes of this section as made by will if—
 
 
(a)
the gift is made to the company by virtue of the variation, after
 
 
a person’s death, of a disposition of property effected by the
 
 
person’s will, and
15
 
(b)
the variation is treated under section 142 of the Inheritance
 
 
Tax Act 1984 (alteration of dispositions taking effect on death)
 
 
has having been effected by the deceased.
 
 
(6)
The exemption under subsection (4) requires a claim.
 
 
(7)
In this section—
20
 
“property” includes rights and interests of any description;
 
 
“will” includes a testament, a codicil and any testamentary
 
 
disposition of property.”
 
 
(9)
In section 515 (excess expenditure), in subsection (5) (definition of “non-taxable
 
 
sums”), omit “, legacies”.
25
 
(10)
The amendments made by this section have effect in relation to gifts received
 
 
on or after 6 April 2026.
 
53
Approved charitable investments: purpose test
 
 
(1)
Section 558 of ITA 2007 (approved charitable investments) is amended in
 
 
accordance with subsections (2) to (5) .
30
 
(2)
The existing text becomes subsection (2).
 
 
(3)
Before that subsection insert—
 
 
“(1)
For the purposes of section 543 “approved charitable investment”
 
 
means an investment—
 
 
(a)
that is of a type listed in subsection (2) and is made for an
35
 
allowable purpose, or
 
 
(b)
that is not of a type listed in subsection (2) but that is approved
 
 
under subsection (3) .”
 

Page 54

 
(4)
In subsection (2)—
 
 
(a)
for the words before Type 1 substitute “The following are the types
 
 
of investment mentioned in subsection (1)(a)—”;
 
 
(b)
omit Type 12.
 
 
(5)
At the end insert—
5
 
“(3)
An officer of Revenue and Customs may approve a loan or other
 
 
investment under this subsection if satisfied, on a claim, that it is made
 
 
for an allowable purpose.
 
 
(4)
For the purposes of this section an investment is made “for an
 
 
allowable purpose” if it is reasonable to draw the conclusion, from all
10
 
the circumstances of the case, that the investment is made—
 
 
(a)
for the sole purpose of benefiting the charitable trust, or
 
 
(b)
for that purpose and one or more ancillary or incidental
 
 
purposes,
 
 
and is not made for the avoidance of tax (whether by the trust or any
15
 
other person).”
 
 
(6)
Section 511 of CTA 2010 (approved charitable investments) is amended in
 
 
accordance with subsections (7) to (10) .
 
 
(7)
The existing text becomes subsection (2).
 
 
(8)
Before that subsection insert—
20
 
“(1)
For the purposes of section 496 “approved charitable investment”
 
 
means an investment—
 
 
(a)
that is of a type listed in subsection (2) and is made for an
 
 
allowable purpose, or
 
 
(b)
that is not of a type listed in subsection (2) but that is approved
25
 
under subsection (3).”
 
 
(9)
In subsection (2)—
 
 
(a)
for the words before Type 1 substitute “The following are the types
 
 
of investment mentioned in subsection (1)(a)—”;
 
 
(b)
omit Type 12.
30
 
(10)
At the end insert—
 
 
“(3)
An officer of Revenue and Customs may approve a loan or other
 
 
investment under this subsection if satisfied, on a claim, that it is made
 
 
for an allowable purpose.
 
 
(4)
For the purposes of this section an investment is made “for an
35
 
allowable purpose” if it is reasonable to draw the conclusion, from all
 
 
the circumstances of the case, that the investment is made—
 
 
(a)
for the sole purpose of benefiting the charitable company, or
 
 
(b)
for that purpose and one or more ancillary or incidental
 
 
purposes,
40

Page 55

 
and is not made for the avoidance of tax (whether by the company
 
 
or any other person).”
 
 
(11)
The amendments made by this section have effect in relation to investments
 
 
made on or after 6 April 2026.
 
54
Tainted charity donations: replacement of purpose test with outcome test
5
 
(1)
Section 809ZJ of ITA 2007 (tainted donations) is amended in accordance with
 
 
subsections (2) and (3) .
 
 
(2)
For subsection (5) substitute—
 
 
“(5)
Condition B is that a linked person who is not a charity receives
 
 
financial assistance—
10
 
(a)
under or in connection with the arrangements, and
 
 
(b)
directly or indirectly from the charity to which the donation
 
 
is made or from a connected charity.”
 
 
(3)
In subsection (8), at the appropriate place insert—
 
 
““financial assistance” includes a loan, a guarantee, an indemnity or any
15
 
form of investment (in each case, whether or not on arm’s length
 
 
terms).”
 
 
(4)
Section 939C of CTA 2010 (tainted donations) is amended in accordance with
 
 
subsections (5) and (6).
 
 
(5)
For subsection (5) substitute—
20
 
“(5)
Condition B is that a linked person who is not a charity receives
 
 
financial assistance—
 
 
(a)
under or in connection with the arrangements, and
 
 
(b)
directly or indirectly from the charity to which the donation
 
 
is made or from a connected charity.”
25
 
(6)
In subsection (8), at the appropriate place insert—
 
 
““financial assistance” includes a loan, a guarantee, an indemnity or any
 
 
form of investment (in each case, whether or not on arm’s length
 
 
terms).”
 
 
(7)
Schedule 9 contains amendments connected with those made by this section
30
 
in relation to tainted charity donations.
 
 
(8)
The amendments made by this section and by Schedule 9 have effect in
 
 
relation to relievable charitable donations made on or after 6 April 2026.
 
 
(9)
In a case where an associated donation is made on or after 6 April 2026 in
 
 
relation to a tainted donation made before that date, the tainted donation is
35
 
regarded for the purposes of sections 809ZMB of ITA 2007, section 939FB of
 
 
CTA 2010 and section 257B of TCGA 1992 as having “become” a tainted
 
 
donation at the time when it was made.
 

Page 56

 
(10)
In subsections (8) and (9) —
 
 
“associated donation” means an associated donation within the meaning
 
 
of section 809ZMB of ITA 2007 or section 939FB of CTA 2010 (as
 
 
inserted, in each case, by Schedule 9 );
 
 
“relievable charitable donation” means a relievable charity donation
5
 
within the meaning of Chapter 8 of Part 13 of ITA 2007 or Part 21C
 
 
of CTA 2010;
 
 
“tainted donation” means a tainted donation within the meaning of
 
 
Chapter 8 of Part 13 of ITA 2007 or Part 21C of CTA 2010.
 

Miscellaneous

10
55
Winter fuel payment charge
 
 
Schedule 10 contains provision for and in connection with a winter fuel
 
 
payment charge.
 
56
Carried interest
 
 
(1)
ITTOIA 2005 is amended in accordance with subsections (2) to (4) .
15
 
(2)
After section 23H (double taxation) insert—
 
 
“Carried interest
 
23I
Tax treatment of carried interest
 
 
(1)
This section applies where—
 
 
(a)
an individual performs investment management services in
20
 
any tax year directly or indirectly in respect of an investment
 
 
scheme under any arrangements, and
 
 
(b)
under the arrangements, one or more sums of carried interest
 
 
arise to the individual from an investment scheme in a tax
 
 
year.
25
 
(2)
For income tax purposes—
 
 
(a)
the individual is treated as carrying on a trade, by virtue of
 
 
the arrangements, for the tax year referred to in subsection
 
 
(1) (b) ,
 
 
(b)
the amount to be treated as the profits of the trade for that tax
30
 
year is the sum of the non-qualifying profits of the trade and
 
 
72.5% of the qualifying profits of the trade (see subsection (3) ),
 
 
and
 
 
(c)
the individual is treated as the person receiving or entitled to
 
 
those profits.
35
 
(3)
In subsection (2) (b) —
 
 
(a)
the amount of the non-qualifying profits of the trade is—
 

Page 57

 
(i)
the total amount of carried interest arising to the
 
 
individual from any investment scheme in the tax year
 
 
under the arrangements that is not qualifying carried
 
 
interest, minus
 
 
(ii)
the proportion of any permitted deduction for the tax
5
 
year (see section 23N ) that is the same as the proportion
 
 
of the total amount of carried interest that is not
 
 
qualifying carried interest;
 
 
(b)
the amount of the qualifying profits of the trade is—
 
 
(i)
the total amount of qualifying carried interest arising
10
 
to the individual from any investment scheme in the
 
 
tax year under the arrangements, minus
 
 
(ii)
the proportion of any permitted deduction for the tax
 
 
year that is the same as the proportion of the total
 
 
amount of carried interest that is qualifying carried
15
 
interest.
 
 
(4)
In Schedule A1 —
 
 
(a)
Part 1 explains what it means for a sum arising to an individual
 
 
from an investment scheme under arrangements to be “carried
 
 
interest” for the purposes of this group of sections and that
20
 
Schedule;
 
 
(b)
Part 2 sets out certain circumstances in which a sum arising
 
 
to another person is treated as arising to the individual;
 
 
(c)
Part 3 sets out how to determine the extent to which carried
 
 
interest arising to an individual from an investment scheme is
25
 
qualifying carried interest;
 
 
(d)
Part 4 allows for an election to be made to treat carried interest
 
 
as arising at an earlier time.
 
 
(5)
A sum of carried interest arising to an individual from an investment
 
 
scheme in a tax year is to be treated for the purposes of this section
30
 
as not being a sum of carried interest to the extent that—
 
 
(a)
it is chargeable to income tax on the individual by virtue of
 
 
section 62 (earnings) or Part 7 of ITEPA 2003 (employment
 
 
income relating to securities) in the tax year, or
 
 
(b)
an election made under section 23J that has effect for the tax
35
 
year applies in relation to the sum.
 
23J
Election to disapply section 23I
 
 
(1)
An individual who performs investment management services directly
 
 
or indirectly in respect of an investment scheme under arrangements
 
 
mentioned in section 23I (1) (a) may make an election under this section.
40
 
(2)
Where an election made under this section has effect for a tax year,
 
 
the election applies in relation to a sum of carried interest arising to
 
 
the individual under the arrangements in the tax year to the extent
 

Page 58

 
that the carried interest would, ignoring this group of sections, be
 
 
brought into account in calculating the profits of a trade of the
 
 
individual for the purposes of income tax for any tax year.
 
 
(3)
An election made under this section—
 
 
(a)
must be made by notice given to an officer of Revenue and
5
 
Customs, and
 
 
(b)
may not be revoked.
 
 
(4)
A notice making an election—
 
 
(a)
must state the tax year for which it is to have effect, and
 
 
(b)
may not be given after 31 January following the end of that
10
 
tax year.
 
23K
Location of trade treated as carried on under
 
 
(1)
An individual who is treated as carrying on a trade for a tax year
 
 
under section 23I is treated as carrying on the trade—
 
 
(a)
wholly in the United Kingdom, if all of the applicable workdays
15
 
are UK workdays;
 
 
(b)
wholly outside the United Kingdom, if all of the applicable
 
 
workdays are not UK workdays;
 
 
(c)
otherwise, partly in the United Kingdom and partly outside
 
 
the United Kingdom.
20
 
(2)
Where the trade is treated as carried on partly in the United Kingdom
 
 
and partly outside the United Kingdom, the amount to be treated as
 
 
the profits arising from the part of the trade treated as carried on in
 
 
the United Kingdom is the sum of the non-qualifying profits of that
 
 
part of the trade and 72.5% of the qualifying profits of that part of the
25
 
trade.
 
 
(3)
In subsection (2) —
 
 
(a)
the amount of the non-qualifying profits of the part of the trade
 
 
treated as carried on in the United Kingdom is the proportion
 
 
of the non-qualifying profits of the trade (determined in
30
 
accordance with section 23I (3) (a) ) that is the same as the
 
 
proportion of the applicable workdays that are UK workdays
 
 
(but see subsection (4) );
 
 
(b)
the amount of the qualifying profits of the part of the trade
 
 
treated as carried on in the United Kingdom is the proportion
35
 
of the qualifying profits of the trade (determined in accordance
 
 
with section 23I (3) (b) ) that is the same as the proportion of the
 
 
applicable workdays that are UK workdays (but see subsection
 
 
(5) ).
 
 
(4)
For the purposes of subsection (3) (a) in a case where—
40
 
(a)
the individual is a non-UK resident for the tax year, and
 

Page 59

 
(b)
any of the non-qualifying profits of the trade are anticipated
 
 
qualifying profits,
 
 
any UK workday in a non-UK tax year is not to be treated as a UK
 
 
workday (but remains an applicable workday) for the purposes of
 
 
determining the proportion of the anticipated qualifying profits that
5
 
is an amount of non-qualifying profits of the part of the trade treated
 
 
as carried on in the United Kingdom.
 
 
(5)
For the purposes of subsection (3) (b) in a case where the individual
 
 
is a non-UK resident for the tax year, the following days are not to
 
 
be treated as UK workdays (but remain applicable workdays)—
10
 
(a)
any UK workday prior to 30 October 2024;
 
 
(b)
any UK workday in a non-UK tax year;
 
 
(c)
any UK workday prior to a period of 3 or more non-UK tax
 
 
years.
 
 
(6)
For the purposes of this section—
15
 
(a)
a day is an “applicable workday” if it is a day in the relevant
 
 
period on which the individual performs any investment
 
 
management services directly or indirectly in respect of an
 
 
investment scheme (whether or not under the arrangements
 
 
mentioned in section 23I (1) (a) );
20
 
(b)
a day is a “UK workday” if it is a day in the relevant period
 
 
on which the individual spends more than 3 hours performing
 
 
any investment management services directly or indirectly in
 
 
respect of an investment scheme (whether or not under those
 
 
arrangements) in the United Kingdom;
25
 
(c)
a year is a “non-UK tax year” if the individual is a non-UK
 
 
resident for the tax year and there are fewer than 60 UK
 
 
workdays in the year;
 
 
(d)
non-qualifying profits are “anticipated qualifying profits” if,
 
 
on the first UK workday in the relevant period, it was
30
 
reasonable to assume that they would be qualifying profits.
 
 
(7)
For the purposes of subsection (6) the “relevant period” is the period—
 
 
(a)
beginning with the later of—
 
 
(i)
the day on which the first external investor was
 
 
admitted to any scheme from which the individual is
35
 
entitled to carried interest under the arrangements
 
 
mentioned in section 23I (1) (a) , and
 
 
(ii)
the first day on which the individual performs any
 
 
investment management services directly or indirectly
 
 
in respect of an investment scheme under the
40
 
arrangements;
 
 
(b)
ending with the earlier of—
 
 
(i)
the last day in the tax year for which the individual
 
 
was treated as carrying on the trade under section 23I
 
 
on which a sum of carried interest arose to the
45

Page 60

 
individual from an investment scheme under the
 
 
arrangements for the purposes of that section, and
 
 
(ii)
the last day on which the individual performed any
 
 
investment management services directly or indirectly
 
 
in respect of an investment scheme under the
5
 
arrangements.
 
 
(8)
For the purposes of subsection (6) —
 
 
(a)
investment management services performed by an individual
 
 
in the course of travelling to or from the United Kingdom by
 
 
air or sea or via a tunnel under the sea are assumed to be
10
 
performed overseas even during the part of the journey in or
 
 
over the United Kingdom, and
 
 
(b)
travelling to or from the United Kingdom is taken to—
 
 
(i)
begin when the individual boards the aircraft, ship or
 
 
train that is bound for a destination in the United
15
 
Kingdom or (as the case may be) overseas, and
 
 
(ii)
end when the individual disembarks from that aircraft,
 
 
ship or train.
 
23L
Carried interest arising where individual deceased
 
 
(1)
This section applies where—
20
 
(a)
the individual referred to in section 23I (1) (a) has died, and
 
 
(b)
as a result, one or more sums that would have been sums of
 
 
carried interest arising to the individual from an investment
 
 
scheme under the arrangements arise instead to another person
 
 
in a tax year.
25
 
(2)
For the purposes of sections 23I and 23K —
 
 
(a)
the sums are treated as if they had arisen to the individual in
 
 
the tax year in which they arose to the other person,
 
 
(b)
the other person is treated as carrying on the trade under
 
 
section 23I for that tax year (instead of the individual), and
30
 
(c)
the other person is treated as the person receiving or entitled
 
 
to the profits of that trade.
 
 
23M
Temporary non-UK residents: tax treatment of accrued carried interest
 
 
gains
 
 
(1)
This section applies where, on the disposal of an asset by an individual
35
 
who was temporarily non-resident in tax year 2025-26 or earlier, a
 
 
gain accrued to the individual in the temporary period of non-residence
 
 
under section 103KA(2) or (3) of TCGA 1992 (as it then had effect).
 
 
(2)
For income tax purposes—
 
 
(a)
the individual is treated as carrying on a trade for the period
40
 
of return,
 

Page 61

 
(b)
the amount to be treated as the profits of the trade for the
 
 
period of return is 72.5% of the amount of the gain which
 
 
accrued to the individual in the temporary period of
 
 
non-residence, and
 
 
(c)
the individual is treated as the person receiving or entitled to
5
 
those profits.
 
 
(3)
For the purposes of this section, “the period of return”, “temporarily
 
 
non-resident” and “the temporary period of non-residence” have the
 
 
meanings given by Part 4 of Schedule 45 to FA 2013 (statutory
 
 
residence test: anti-avoidance).
10
23N
Permitted deduction etc
 
 
(1)
For the purpose of section 23I the amount of any “permitted deduction”
 
 
for a tax year is—
 
 
(a)
the amount of any consideration given by or on behalf of the
 
 
individual wholly and exclusively for the entitlement to carried
15
 
interest under the arrangements referred to in section 23I (1) (a)
 
 
, minus
 
 
(b)
the amount of any such consideration deducted in calculating
 
 
the profits of a trade that the individual is treated as carrying
 
 
on under section 23I for an earlier tax year by virtue of those
20
 
arrangements.
 
 
(2)
In subsection (1) , “consideration” means consideration in money or
 
 
money’s worth but does not include the performance of any investment
 
 
management services directly or indirectly in respect of an investment
 
 
scheme.
25
 
(3)
For the purposes of this Act no other deduction may be made from
 
 
the amount treated as the profits of the trade under section 23I .
 
23P
Carried interest: anti-avoidance
 
 
(1)
In determining whether section 23I applies in relation to an individual,
 
 
no regard is to be had to any arrangements the main purpose, or one
30
 
of the main purposes, of which is to secure that that section does not
 
 
to any extent apply in relation to—
 
 
(a)
the individual, or
 
 
(b)
the individual and one or more other individuals.
 
 
(2)
In determining whether an individual falls within paragraph (a) of
35
 
section 23I (1) , no regard is to be had to any arrangements the main
 
 
purpose, or one of the main purposes, of which is to secure that the
 
 
individual falls within that paragraph.
 

Page 62

23Q
Carried interest: avoidance of double taxation
 
 
(1)
Subsection (2) applies where—
 
 
(a)
an individual performs investment management services
 
 
directly or indirectly in respect of an investment scheme under
 
 
arrangements mentioned in section 23I (1) (a) , and
5
 
(b)
the individual is entitled to carried interest under the
 
 
arrangements.
 
 
(2)
No income tax is chargeable on the individual by virtue of the
 
 
individual’s entitlement to carried interest other than—
 
 
(a)
income tax chargeable in respect of carried interest arising to
10
 
the individual under the arrangements—
 
 
(i)
by virtue of section 23I or 23M ,
 
 
(ii)
by virtue of section 62 (earnings) or Part 7 of ITEPA
 
 
2003 (employment income relating to securities), or
 
 
(iii)
where an election made under section 23J has effect for
15
 
a tax year, otherwise under this Part, or
 
 
(b)
income tax chargeable in respect of—
 
 
(i)
the award of the entitlement to carried interest to the
 
 
individual, or
 
 
(ii)
the individual’s acquisition of the entitlement to carried
20
 
interest,
 
 
whether by virtue of section 62 (earnings) or Part 7 of ITEPA
 
 
2003 (employment income relating to securities) or otherwise.
 
 
(3)
Subsection (4) applies where—
 
 
(a)
an individual is chargeable to income tax and national insurance
25
 
contributions by virtue of section 23I or 23M in respect of a
 
 
sum of carried interest arising to the individual from an
 
 
investment scheme, and
 
 
(b)
at any time any other UK tax or national insurance
 
 
contributions charged on any person—
30
 
(i)
in relation to the sum mentioned in paragraph (a) , or
 
 
(ii)
or in respect of any person’s entitlement to that sum,
 
 
has or have been paid and not repaid.
 
 
(4)
The individual may make a claim for one or more consequential
 
 
adjustments to be made in respect of the profits chargeable by virtue
35
 
of section 23I or 23M to take account of the amounts paid as mentioned
 
 
in subsection (3) (b) .
 
 
(5)
On a claim under this section an officer of Revenue and Customs must
 
 
make such of the consequential adjustments claimed (if any) as are
 
 
just and reasonable.
40
 
(6)
Consequential adjustments in respect of the profits chargeable by
 
 
virtue of section 23I or 23M must not have the effect that—
 

Page 63

 
(a)
the total of—
 
 
(i)
the amount of income tax and national insurance
 
 
contributions charged on the adjusted profits by virtue
 
 
of section 23I or 23M , and
 
 
(ii)
any amounts paid as mentioned in subsection (3) (b) , is
5
 
less than
 
 
(b)
the amount of income tax and national insurance contributions
 
 
to which the individual was chargeable by virtue of section
 
 
23I or 23M in respect of the sum of carried interest before the
 
 
making of any consequential adjustments.
10
 
(7)
Consequential adjustments may be made—
 
 
(a)
in respect of any period,
 
 
(b)
by way of an assessment, the modification of an assessment,
 
 
the amendment of a claim, or otherwise, and
 
 
(c)
despite any time limit imposed by or under an enactment.
15
 
(8)
In this section “UK tax” means income tax, corporation tax, capital
 
 
gains tax or inheritance tax.
 
 
(9)
For the purposes of section 9(2) of TIOPA 2010 (unilateral entitlement
 
 
to credit for non-UK tax corresponding to capital gains tax), in a case
 
 
where the capital gain mentioned in subsection (2)(b) of that section
20
 
accrued on a sum of carried interest arising to an individual, the
 
 
reference to capital gains tax calculated by reference to that gain is to
 
 
be read as if it were a reference to income tax chargeable under section
 
 
23I in respect of the sum of carried interest.
 
23R
Definitions
25
 
(1)
In this section, this group of sections and Schedule A1 —
 
 
“AIF” has the meaning given by regulation 3 of the Alternative
 
 
Investment Fund Managers Regulations 2013 and includes—
 
 
(a)
arrangements which permit an external investor to
 
 
participate in investments acquired by the AIF without
30
 
participating in the AIF itself, and
 
 
(b)
arrangements under which sums arise to an individual
 
 
performing investment management services in respect
 
 
of the AIF without those sums arising from the AIF
 
 
itself;
35
 
“ “arrangements” ” includes any agreement, understanding, scheme,
 
 
transaction or series of transactions (whether or not legally
 
 
enforceable);
 
 
“ “collective investment scheme” ” has the meaning given by section
 
 
235 of FISMA 2000 and includes—
40
 
(a)
arrangements which permit an external investor to
 
 
participate in investments acquired by the collective
 

Page 64

 
investment scheme without participating in the scheme
 
 
itself, and
 
 
(b)
arrangements under which sums arise to an individual
 
 
performing investment management services in respect
 
 
of the collective investment scheme without those sums
5
 
arising from the scheme itself;
 
 
“ “external investor” ”, in relation to an investment scheme and any
 
 
arrangements, means a participant in the scheme other than—
 
 
(a)
an individual who at any time performs or is to perform
 
 
investment management services directly or indirectly
10
 
in respect of the scheme, or
 
 
(b)
a person through whom sums are to, or may, arise
 
 
directly or indirectly to such an individual from the
 
 
scheme under the arrangements;
 
 
“ “investment management services” ”, in relation to an investment
15
 
scheme, includes—
 
 
(a)
the provision of investment advice,
 
 
(b)
seeking funds for the purposes of the scheme from
 
 
participants or potential participants,
 
 
(c)
researching potential investments to be made for the
20
 
purposes of the scheme,
 
 
(d)
acquiring, managing or disposing of property for the
 
 
purposes of the scheme,
 
 
(e)
acting for the purposes of the scheme with a view to
 
 
assisting a body in which the scheme has made an
25
 
investment to raise funds, and
 
 
(f)
any activity incidental or ancillary to any activity
 
 
mentioned in paragraphs (a) to (e) ;
 
 
“investment scheme” means—
 
 
(a)
a collective investment scheme, or
30
 
(b)
an AIF, or any part of an AIF, that is not a collective
 
 
investment scheme;
 
 
“participant” , in relation to an investment scheme, means a person
 
 
taking part in the scheme, whether by becoming the owner of,
 
 
or of any part of, the property that is the subject of the scheme
35
 
or otherwise;
 
 
“sum” includes any money or money's worth (and other
 
 
expressions are to be construed accordingly);
 
 
“this group of sections” means sections 23I to 23Q .
 
 
(2)
For the purposes of section 23K and Schedule A1 , in determining what
40
 
it is reasonable to assume in relation to an investment scheme, regard
 
 
is to be had to all the circumstances including in particular any
 
 
prospectus or other document which—
 
 
(a)
is made available to external investors in the investment
 
 
scheme, and
45

Page 65

 
(b)
on which external investors may reasonably be supposed to
 
 
have relied or been able to rely.”
 
 
(3)
In section 7 (income charged), in subsection (1), after “section 23E(1)” insert
 
 
“, section 23I or section 23M ”.
 
 
(4)
In section 845H (qualifying foreign income)—
5
 
(a)
in row 1 of the table at the end insert “other than profits of such a
 
 
trade treated as carried on under section 23I ”;
 
 
(b)
after row 1 of the table insert—
 
 
“1A
 
 
72.5% of the amount of the qualifying profits (within the
 
 
meaning of section 23I ) of a trade treated as carried on under
10
 
section 23I that do not arise from the part of a trade treated
 
 
as carried on in the United Kingdom (see section 23K ).
 
 
1B
 
 
The foreign pre-arrival proportion of the non-qualifying profits
 
 
(within the meaning of section 23I) of a trade treated as carried
 
 
on under section 23I .
15
 
The foreign pre-arrival proportion is the proportion of the
 
 
applicable workdays (within the meaning of section 23K ) that
 
 
fall within the pre-arrival period and are not UK workdays
 
 
(within the meaning of section 23K ).
 
 
The pre-arrival period is the period ending immediately before
20
 
the individual became a qualifying new resident that consists
 
 
only of tax years for which the individual was non-UK
 
 
resident.”
 
 
(5)
In Schedule 11 —
 
 
(a)
Part 1 inserts Schedule A1 to ITTOIA 2005 (Carried interest:
25
 
interpretation etc.);
 
 
(b)
Part 2 contains consequential and connected amendments.
 
 
(6)
The amendments made by this section and that Schedule have effect for the
 
 
tax year 2026-27 and subsequent tax years (but in relation to investment
 
 
management services whenever performed).
30
57
Collective money purchase schemes and Master Trust schemes
 
 
(1)
Part 4 of FA 2004 (pension schemes) is amended in accordance with
 
 
subsections (2) to (9) .
 
 
(2)
In section 153 (registration of pension schemes), in subsection (5) —
 
 
(a)
omit the “or” at the end each of paragraphs (f), (g) and (h);
35
 
(b)
at the end of paragraph (i) insert “, or
 
 
“(j)
the pension scheme is an unauthorised collective money
 
 
purchase scheme.”
 
 
(3)
In section 158 (grounds for de-registration), in subsection (1) —
 

Page 66

 
(a)
omit the “or” at the end of each of paragraphs (ea), (f) and (g);
 
 
(b)
in paragraph (h), after “that the” insert “pension”;
 
 
(c)
at the end of paragraph (h) insert “, or
 
 
“(i)
that the pension scheme is an unauthorised collective
 
 
money purchase scheme.”
5
 
(4)
For the italic heading before section 274ZA substitute “Master Trust schemes,
 
 
collective money purchase schemes etc”.
 
 
(5)
Before section 274ZA (but after the italic heading) insert—
 
“274ZZA
Master Trust schemes
 
 
(1)
In this Part “Master Trust scheme” means (subject to subsections (2)
10
 
to (4) ) a Master Trust scheme within the meaning of PSA 2017 or
 
 
PSA(NI) 2021.
 
 
(2)
Any provision of PSA 2017 or PSA(NI) 2021 under which a reference
 
 
to a Master Trust scheme does not include a section of it that is a
 
 
collective money purchase scheme (within the meaning of that Act)
15
 
does not apply for the purposes of subsection (1).
 
 
(3)
Section 1(2) of PSA 2017 and section 1(2) of PSA(NI) 2021 (which
 
 
restrict the meaning of “Master Trust scheme” in the case of schemes
 
 
that provide benefits other than money purchase benefits) do not apply
 
 
for the purposes of subsection (1).
20
 
(4)
Where, by virtue of section 40(2) of PSA 2017 or section 40(2) of
 
 
PSA(NI) 2021, more than one pension scheme is treated as a single
 
 
Master Trust scheme for the purposes of that Act, each of those pension
 
 
schemes is a Master Trust scheme for the purposes of this Part.
 
 
(5)
For the purposes of this Part a pension scheme is an “unauthorised
25
 
Master Trust scheme” if—
 
 
(a)
it is a Master Trust scheme the lawful operation of which, or
 
 
of any section or part of which, requires authorisation under
 
 
PSA 2017 or PSA(NI) 2021, or
 
 
(b)
it is not a Master Trust scheme but, by virtue of section 40(1)(a)
30
 
of PSA 2017 or section 40(1)(a) of PSA(NI) 2021, the lawful
 
 
operation of the pension scheme, or of any section or part of
 
 
it, requires authorisation under that Act,
 
 
and such authorisation has not been granted, or has been granted but
 
 
has been withdrawn.
35
 
(6)
In this section—
 
 
“PSA 2017” means the Pension Schemes Act 2017;
 
 
“PSA(NI) 2021” means the Pension Schemes Act (Northern Ireland)
 
 
2021.
 

Page 67

274ZZB
Collective money purchase schemes
 
 
(1)
In this Part “collective money purchase scheme” means (subject to
 
 
subsection (2) ) a collective money purchase scheme within the meaning
 
 
of Part 1 or 2 of the Pension Schemes Act 2021.
 
 
(2)
A reference in this Part to a collective money purchase scheme is, in
5
 
relation to a relevant divided pension scheme, a reference to the
 
 
pension scheme as a whole (and is not a reference to any of its sections
 
 
considered separately).
 
 
(3)
In this section “relevant divided pension scheme” means a pension
 
 
scheme which is divided into sections at least one of which is a
10
 
collective money purchase scheme under subsection (1) .
 
 
(4)
For the purposes of this Part a pension scheme is an “unauthorised
 
 
collective money purchase scheme” if—
 
 
(a)
the lawful operation of the pension scheme, or (in the case of
 
 
a relevant divided pension scheme) of any section of it, requires
15
 
authorisation under Part 1 or 2 of the Pension Schemes Act
 
 
2021 , and
 
 
(b)
such authorisation has not been granted, or has been granted
 
 
but has been withdrawn.
 
274ZZC
Power to make provision about collective money purchase schemes
20
 
(1)
The Commissioners for His Majesty’s Revenue and Customs may by
 
 
regulations amend or otherwise modify any provision of this Part in
 
 
its application in relation to—
 
 
(a)
a collective money purchase scheme, or
 
 
(b)
any benefits payable, or arrangements, under such a pension
25
 
scheme.
 
 
(2)
Regulations under this section—
 
 
(a)
may make different provision for different cases;
 
 
(b)
may include transitional or saving provision.”
 
 
(6)
Section 274ZA (National Employment Savings Trust and Master Trust schemes)
30
 
is amended as follows—
 
 
(a)
for the heading substitute “Schemes treated as occupational pension
 
 
schemes”;
 
 
(b)
after subsection (2) insert—
 
 
“(3)
This Part applies in relation to a pension scheme that—
35
 
(a)
is a collective money purchase scheme, and
 
 
(b)
is not an occupational pension scheme,
 
 
as it applies in relation to an occupational pension scheme.”
 
 
(7)
In section 279 (other definitions), omit subsections (1B) to (1D) .
 

Page 68

 
(8)
In section 280 (2) (general index), in the table—
 
 
(a)
in the definition of “Master Trust scheme”, for the entry in the second
 
 
column substitute “ section 274ZZA ”;
 
 
(b)
omit the definition of “unauthorised (in relation to a Master Trust
 
 
scheme)”;
5
 
(c)
at the appropriate places insert—
 
 
“collective money purchase scheme
 
 
section 274ZZB
 
 
unauthorised collective money purchase scheme
 
 
section 274ZZB (4)
 
 
unauthorised Master Trust scheme
 
 
section 274ZZA (5)”
 
 
(9)
In section 282 (orders and regulations), after subsection (1A) insert—
10
 
“(1B)
No regulations may be made under section 274ZZC (power to make
 
 
provision about collective money purchase schemes) that increase any
 
 
person’s liability to tax unless a draft of the statutory instrument
 
 
containing them has been laid before, and approved by a resolution
 
 
of, the House of Commons.”
15
 
(10)
In FA 2018 , in Schedule 3 (pension schemes), in paragraph 4 (Master Trust
 
 
schemes registered before passing of FA 2018), in sub-paragraph (2) , for
 
 
“Section 274B(2) of FA 2004 (as inserted by paragraph 1(5))” substitute “Section
 
 
274ZA(2) of FA 2004”.
 
58
Corporate interest restriction: reporting companies
20
 
(1)
Schedule 7A to TIOPA 2010 (interest restriction returns) is amended as follows.
 
 
(2)
For paragraph 1 (appointment by a worldwide group of a reporting company)
 
 
substitute—
 
 
“1
(1)
An interest restriction return for a period of account of a worldwide
 
 
group is of no effect unless it is submitted to an officer of Revenue
25
 
and Customs by the reporting company of the group for that period.
 
 
(2)
A member of a worldwide group may appoint a company to be the
 
 
group’s reporting company for a period of account.
 
 
(3)
The appointment is of no effect for the period of account unless—
 
 
(a)
the company to be appointed as the group’s reporting
30
 
company for the period is an eligible company for that
 
 
period, and
 
 
(b)
the appointment is authorised by more than half of the
 
 
eligible companies for that period.
 
 
(4)
For this purpose a company is “eligible” if and only if the
35
 
company—
 
 
(a)
was a UK group company at a time during the period of
 
 
account, and
 

Page 69

 
(b)
was not dormant throughout that period.”
 
 
(3)
After that paragraph insert—
 
 
“Appointment of company where purported return submitted
 
 
1A
(1)
This paragraph applies where a company has purported to submit
 
 
to an officer of Revenue and Customs a return for a period of
5
 
account of a worldwide group despite the fact it had not been
 
 
appointed for the period of account at the time at which it purported
 
 
to submit the return.
 
 
(2)
A member of the group may, in accordance with paragraph 1,
 
 
appoint the company as the group’s reporting company for the
10
 
period of account.
 
 
(3)
If an appointment is made as mentioned in sub-paragraph (2)—
 
 
(a)
the company is to be treated for the purposes of this Part of
 
 
this Act as if it had been appointed under paragraph 1, and
 
 
(b)
the appointment is to be treated for the purposes of this Part
15
 
of this Act as if it had been made at the time immediately
 
 
before the return (or, if more than one, the first return) for
 
 
the period of account was submitted.
 
 
(4)
But—
 
 
(a)
sub-paragraph (3) does not apply for the purposes of
20
 
paragraph 11A , and
 
 
(b)
for the purposes of paragraph 6(2), the time of the
 
 
appointment is taken to be the actual time at which the
 
 
company was appointed as the group’s reporting company
 
 
(rather than the time provided for by sub-paragraph (3)(b)).”
25
 
(4)
For paragraph 2 (revocation by worldwide group of appointment under
 
 
paragraph 1), substitute—
 
 
“2
(1)
A member of a worldwide group may revoke an appointment
 
 
previously made under paragraph 1 in relation to a period of
 
 
account.
30
 
(2)
The revocation is of no effect for the period of account unless it is
 
 
authorised by more than half of the eligible companies for that
 
 
period.
 
 
(3)
For this purpose a company is “eligible” if and only if the
 
 
company—
35
 
(a)
was a UK group company at a time during the period of
 
 
account, and
 
 
(b)
was not dormant throughout that period.
 
 
(4)
The revocation of an appointment does not prevent the making of
 
 
a further appointment under paragraph 1 (whether at the same time
40
 
as the revocation, or later).”
 

Page 70

 
(5)
In paragraph 4 (appointment of reporting company by Revenue and
 
 
Customs)—
 
 
(a)
for sub-paragraph (1) substitute—
 
 
“(1)
This paragraph applies where no interest restriction return
 
 
in relation to a period of account of a worldwide group (“the
5
 
relevant period of account”) has been submitted to an officer
 
 
of Revenue and Customs before the end of the period of 18
 
 
months beginning with the end of the relevant period of
 
 
account.”,
 
 
(b)
in sub-paragraph (4), at the end insert “and supersedes any
10
 
appointment of a reporting company in relation to that period made
 
 
under paragraph 1”,
 
 
(c)
in sub-paragraph (5), after paragraph (b) insert—
 
 
“But the time limits provided by paragraph (a) or (b) do not apply
 
 
where sub-paragraph (6A) applies.”, and
15
 
(d)
after sub-paragraph (6) insert—
 
 
“(6A)
If—
 
 
(a)
a company has purported to submit to an officer of
 
 
Revenue and Customs a return for the relevant period
 
 
of account despite the fact it had not been appointed
20
 
for that period at the time at which it purported to
 
 
submit the return, and
 
 
(b)
no appointment of the company as the group’s
 
 
reporting company for that period has been made by
 
 
a member of the group in reliance on paragraph 1A ,
25
 
an officer of Revenue and Customs may, by notice to the
 
 
company, appoint it to be the group’s reporting company
 
 
for that period, and sub-paragraphs (3) and (4) apply in
 
 
relation to that notice and appointment.
 
 
(6B)
The company is to be treated for the purposes of this Part
30
 
of this Act as if it had been appointed immediately before
 
 
it submitted the return (or, if more than one, the first return)
 
 
for the relevant period of account.
 
 
(6C)
But—
 
 
(a)
sub-paragraph (6B) does not apply for the purposes
35
 
of paragraph 11A , and
 
 
(b)
for the purposes of paragraph 6(2), the time of the
 
 
appointment is taken to be the actual time at which
 
 
the company was appointed as the group’s reporting
 
 
company (rather than the time provided for by
40
 
sub-paragraph (6B)).”
 
 
(6)
In paragraph 5 (appointment by officer of Revenue and Customs of
 
 
replacement reporting company), in sub-paragraph (6)(a), omit sub-paragraph
 
 
(ii) and the “and” before that sub-paragraph.
 

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(7)
In paragraph 6 (obligation of reporting company to notify group members
 
 
of its status)—
 
 
(a)
in sub-paragraph (2), for “the relevant time” substitute “the
 
 
appointment is made”, and
 
 
(b)
omit sub-paragraphs (3) and (4).
5
 
(8)
In paragraph 7 (obligation of reporting company to submit interest restriction
 
 
return)—
 
 
(a)
for sub-paragraphs (1) to (3) substitute—
 
 
“(1)
A reporting company appointed under paragraph 1 in
 
 
relation to a period of account may submit a return for that
10
 
period to an officer of Revenue and Customs.
 
 
(2)
A reporting company appointed under paragraph 4 in
 
 
relation to a period of account must submit a return for that
 
 
period to an officer of Revenue and Customs.
 
 
(3)
A reporting company appointed under paragraph 5 in
15
 
relation to a period of account must submit a return for that
 
 
period to an officer of Revenue and Customs unless a return
 
 
for the period has already been submitted under
 
 
sub-paragraph (1) or (2) or this sub-paragraph.”, and
 
 
(b)
in sub-paragraph (6), for paragraph (b) substitute—
20
 
“(b)
if the reporting company was appointed under
 
 
paragraph 4 or 5, the later of—
 
 
(i)
the period mentioned in paragraph (a), and
 
 
(ii)
the end of the period of 3 months beginning
 
 
with the day on which it was appointed.”
25
 
(9)
Consequently, the italic heading before that paragraph becomes “ Submission
 
 
of interest restriction returns by reporting companies ”.
 
 
(10)
In paragraph 8 (revised interest restriction return), in sub-paragraph (3), for
 
 
paragraph (b) substitute—
 
 
“(b)
if the reporting company was appointed under paragraph 4 or
30
 
5, the later of—
 
 
(i)
the period mentioned in paragraph (a), and
 
 
(ii)
the end of the period of 3 months beginning with the
 
 
day on which it was appointed.”
 
 
(11)
In paragraph 10 (meaning of “consenting company” and “non-consenting
35
 
company”)—
 
 
(a)
in sub-paragraph (2)—
 
 
(i)
in paragraph (a), for “the appropriate persons” substitute “the
 
 
reporting company in relation to the period of account”, and
 
 
(ii)
in paragraph (b), for “the appropriate persons” substitute “the
40
 
reporting company”, and
 
 
(b)
omit sub-paragraph (3).
 

Page 72

 
(12)
Omit paragraph 11 (company authorising reporting company appointment
 
 
treated as consenting company) together with the italic cross-heading before
 
 
it.
 
 
(13)
After paragraph 11 insert—
 
 
“Penalty for submission of return where no reporting company appointed
5
 
11A
(1)
A company is liable to a penalty if the company has purported to
 
 
submit to an officer of Revenue and Customs a return for a period
 
 
of account of a worldwide group in circumstances where it had not
 
 
been appointed for the period of account at the time at which it
 
 
submitted the return.
10
 
(2)
The penalty is £1,000.
 
 
(3)
If a company becomes liable to a penalty under this paragraph, an
 
 
officer of Revenue and Customs must—
 
 
(a)
assess the penalty, and
 
 
(b)
notify the company.
15
 
(4)
The assessment must be made within the period of 12 months
 
 
beginning with the day on which a company is (after the time
 
 
mentioned in sub-paragraph (1)) appointed as the group’s reporting
 
 
company for the period of account.
 
 
(5)
A company may, by notice, appeal against a decision of an officer
20
 
of Revenue and Customs that a penalty is payable under this
 
 
paragraph.
 
 
(6)
Notice of appeal under this paragraph must be given—
 
 
(a)
within 30 days after the penalty was notified to the company,
 
 
(b)
to the officer of Revenue and Customs who notified the
25
 
company.
 
 
(7)
A penalty under this paragraph must be paid before the end of the
 
 
period of 30 days beginning with—
 
 
(a)
the day on which the company was notified of the penalty,
 
 
or
30
 
(b)
if notice of appeal against the penalty is given, the day on
 
 
which the appeal is finally determined or withdrawn.
 
 
11B
(1)
Liability to a penalty under paragraph 11A does not arise if, in
 
 
reliance on paragraph 1A, a company is, at any time up to the end
 
 
of the period of 18 months after the end of the period of account,
35
 
appointed as the group’s reporting company for the period of
 
 
account.
 
 
(2)
Liability to a penalty under paragraph 11A also does not arise if—
 
 
(a)
without being prompted by an officer of Revenue and
 
 
Customs to do so, the company notified an officer of Revenue
40
 
and Customs of the circumstances mentioned in paragraph
 
 
11A (1), or
 

Page 73

 
(b)
there is a reasonable excuse for failing to appoint a reporting
 
 
company before the return was submitted.
 
 
(3)
If there is a reasonable excuse for the failure but the excuse has
 
 
ceased, the excuse is to be treated as having continued if a reporting
 
 
company is appointed without unreasonable delay after the excuse
5
 
ceased.”
 
 
(14)
In paragraph 20 (required contents of interest restriction return: full returns
 
 
and abbreviated returns)—
 
 
(a)
in sub-paragraph (3)—
 
 
(i)
before paragraph (a) insert—
10
 
“(za)
state the name and (where it has one) the
 
 
Unique Taxpayer Reference of the reporting
 
 
company,”,
 
 
(ii)
in paragraph (c), at the end insert “and whether it authorised
 
 
the appointment of the reporting company for the period of
15
 
account”, and
 
 
(iii)
after that paragraph insert—
 
 
“(ca)
contain a statement that each of the companies
 
 
authorising the appointment of the reporting
 
 
company was an eligible company and that they
20
 
together constituted more than half of the
 
 
eligible companies,”, and
 
 
(b)
in sub-paragraph (5), for “(a) to (c)” substitute “(za) to (ca)”.
 
 
(15)
In paragraph 29 (penalty for failure to deliver return)—
 
 
(a)
in sub-paragraph (1)(a), at the beginning insert “submits or”, and
25
 
(b)
for sub-paragraph (4) substitute—
 
 
“(4)
The assessment must be made—
 
 
(a)
within the period of 12 months beginning with the
 
 
day on which the return was received by an officer
 
 
of Revenue and Customs, or
30
 
(b)
if no return is received by an officer of Revenue and
 
 
Customs, the period of 12 months beginning with
 
 
the filing date mentioned in sub-paragraph (1)(b).”
 
 
(16)
In paragraph 44 (enquiry into return for wrong period or wrong group)—
 
 
“(1A)
Sub-paragraph (1) applies even if the company submitting the return
35
 
had not been appointed as a reporting company for the period of
 
 
account for which the return was submitted; and references to a
 
 
reporting company in paragraph 40, and elsewhere in this Schedule
 
 
where the context is an enquiry into the return, are to the company
 
 
who submitted the return.”
40

Page 74

 
(17)
In paragraph 56 (power of Revenue and Customs to make determinations
 
 
where no return filed etc), in sub-paragraph (4)(a), after “has effect” insert
 
 
“under paragraph 4 or 5”.
 
 
(18)
In paragraph 61 (provision of information between members of group where
 
 
no reporting company appointed), for sub-paragraph (2) substitute—
5
 
“(2)
Condition A is that no appointment of a reporting company in
 
 
relation to the period of account has been made before the end of
 
 
the period of 12 months beginning with the end of the period of
 
 
account.”
 
 
(19)
The amendment made by subsection (3) has effect in relation to periods of
10
 
account ending on or after 31 March 2024 (except so far as it relates to the
 
 
new paragraph 11A of Schedule 7A to TIOPA 2010).
 
 
(20)
The amendments made by subsection (14) have effect in accordance with
 
 
provision made by regulations made by the Commissioners for His Majesty’s
 
 
Revenue and Customs.
15
 
(21)
The remaining amendments made by this section have effect in relation to
 
 
periods of account ending on or after 31 March 2026.
 
59
Corporate interest restriction: capital expenditure and tax-EBITDA calculation
 
 
(1)
In section 407 of TIOPA 2010 (amounts not brought into account in
 
 
determining a company’s tax-EBITDA)—
20
 
(a)
in subsection (1)(b) (allowances or charges under CAA 2001), at the
 
 
end insert “or capital expenditure for which a deduction is given under
 
 
a relevant enactment”, and
 
 
(b)
after subsection (1) insert—
 
 
“(1A)
For the purposes of subsection (1)(b) “relevant enactment”
25
 
means—
 
 
(a)
section 86A of CTA 2009 (contributions to flood and
 
 
coastal erosion risk management projects);
 
 
(b)
section 142 of CTA 2009 (waste disposal site preparation
 
 
expenditure);
30
 
(c)
section 145 of CTA 2009 (waste disposal site restoration
 
 
payments);
 
 
(d)
section 147 of CTA 2009 (cemeteries and crematoria).”
 
 
(2)
The amendments made by this section have effect in relation to periods of
 
 
account ending on or after 31 December 2021.
35
 
(3)
An interest restriction return which is revised to take account of the
 
 
amendments made by this section is, despite paragraph 8(3) of Schedule 7A
 
 
to TIOPA 2010, of effect if the revised return is received by an officer of
 
 
Revenue and Customs before 1 October 2026.
 

Page 75

60
Avoidance schemes involving certain non-derecognition liabilities
 
 
(1)
In Part 20 of CTA 2009 (general calculation rules), in Chapter 1 (restriction
 
 
of deductions), after section 1305A insert—
 
“1305B
Avoidance schemes involving certain non-derecognition liabilities
 
 
(1)
This section applies if—
5
 
(a)
assets (“the underlying assets”) are transferred to a relevant
 
 
entity,
 
 
(b)
for accounting purposes following the transfer—
 
 
(i)
the underlying assets continue to be recognised to any
 
 
extent by a member of the transferor group, and
10
 
(ii)
a liability is also recognised by a member of the
 
 
transferor group in connection with the underlying
 
 
assets or otherwise in connection with the transfer,
 
 
(c)
in calculating a company’s profits for corporation tax purposes
 
 
a deduction would (ignoring this section) be allowed for a loss,
15
 
expense or debit in connection with the liability mentioned in
 
 
paragraph (b) (ii) , and
 
 
(d)
the loss, expense or debit arises, to any extent, as a result of
 
 
arrangements (whether or not they are or include the transfer
 
 
mentioned in paragraph (a) ) where the main purpose, or one
20
 
of the main purposes, of any party to the arrangements in
 
 
being a party to them is to secure a tax advantage for any
 
 
person.
 
 
(2)
The deduction mentioned in subsection (1) (c) is not allowed so far as
 
 
it is attributable on a just and reasonable apportionment to the purpose
25
 
mentioned in subsection (1) (d) .
 
 
(3)
For the purposes of the condition in subsection (1) (b) it does not matter
 
 
whether the assets recognised as mentioned in subsection (1) (b) (i) and
 
 
the liability recognised as mentioned in subsection (1) (b) (ii) —
 
 
(a)
are recognised immediately after the transfer or only later;
30
 
(b)
are first recognised at the same time or at different times;
 
 
(c)
are recognised by the same member of the transferor group as
 
 
they were before the transfer.
 
 
(4)
For the purposes of subsection (1) the circumstances in which assets
 
 
are “transferred” to a relevant entity include circumstances in which—
35
 
(a)
a right to income deriving from the assets is transferred to the
 
 
relevant entity;
 
 
(b)
a contract is entered into to pay the relevant entity income
 
 
deriving from the assets;
 
 
(c)
the assets, or income deriving from them, come to be held in
40
 
trust for the benefit of the relevant entity.
 
 
(5)
In this section—
 

Page 76

 
“arrangements” includes any scheme, arrangement or
 
 
understanding of any kind, whether or not legally enforceable,
 
 
involving a single transaction or two or more transactions;
 
 
“member of the transferor group” means any of the following—
 
 
(a)
the person who transferred the underlying assets as
5
 
mentioned in subsection (1) (a) ;
 
 
(b)
a company that is connected with the person mentioned
 
 
in paragraph (a) and is not the relevant entity
 
 
mentioned in subsection (1) (a) ;
 
 
(c)
a transparent entity in which the person mentioned in
10
 
paragraph (a) or a company falling within paragraph
 
 
(b) has an interest;
 
 
“relevant entity” means—
 
 
(a)
a securitisation company within the meaning of Chapter
 
 
4 of Part 13 of CTA 2010, or
15
 
(b)
any person that is a party to the same capital market
 
 
arrangement (within the meaning of paragraph 1 of
 
 
Schedule 2A to the Insolvency Act 1986) as such a
 
 
company;
 
 
“transparent entity” means anything that—
20
 
(a)
may be treated as an entity for accounting purposes,
 
 
and
 
 
(b)
is not chargeable to corporation tax or income tax as a
 
 
person (ignoring any exemptions).
 
 
(6)
The following apply for the purposes of this section—
25
 
section 1122 of CTA 2010 (“connected” persons)
 
 
section 1139 of CTA 2010 (“tax advantage”).”
 
 
(2)
The amendment made by this section has effect in relation to accounting
 
 
periods beginning on or after 26 November 2025; and for that purpose an
 
 
accounting period beginning before and ending on or after that date is treated
30
 
as if so much of the period as falls before that date, and so much of the period
 
 
as falls on or after that date, were separate accounting periods.
 
61
Energy (oil and gas) profits levy: decommissioning relief agreements
 
 
(1)
In section 80 of FA 2013 (decommissioning relief agreements), after subsection
 
 
(4) insert—
35
 
“(4A)
No payment is to be made to a company under a decommissioning
 
 
relief agreement by reference to the energy (oil and gas) profits levy.
 
 
(4B)
Every decommissioning relief agreement (whenever entered into) is
 
 
to be read accordingly.”
 
 
(2)
The amendment made by subsection (1) has effect in relation to claims under
40
 
decommissioning relief agreements made in relation to decommissioning
 
 
expenditure incurred on or after 26 November 2025.
 

Page 77

Part 2

 

Inheritance tax

 

Agricultural property relief and business property relief

 
62
Agricultural property relief and business property relief etc
 
 
Schedule 12 makes provision—
5
 
(a)
limiting agricultural property relief and business property relief, and
 
 
(b)
extending Schedule A1 to IHTA 1984 (overseas property not excluded
 
 
property if value attributable to UK residential property) to UK
 
 
agricultural property.
 

Pension interests

10
63
Tax to be charged on certain pension interests
 
 
In IHTA 1984, before section 151 (but after the italic heading that precedes
 
 
it) insert—
 
“150A
Certain pension interests treated as part of estate
 
 
(1)
For the purposes of this Act a member of a registered pension scheme,
15
 
a qualifying non-UK pension scheme or a section 615(3) scheme is
 
 
treated as beneficially entitled immediately before their death to
 
 
property (“notional pension property”) by reference to the
 
 
arrangements under the scheme as they stand at that time.
 
 
(2)
The value of the member’s notional pension property in relation to
20
 
the scheme is calculated as follows—
 
 
For each money purchase arrangement under the scheme add
 
 
together—
 
 
(a)
the value of any property that—
25
 
(i)
is held in a pension pot, and
 
 
(ii)
may or must be used to provide benefits under the
 
 
arrangement on the death of the member, and
 
 
(b)
the value of any property that—
 
 
(i)
is not held in a pension pot, and
30
 
(ii)
may be and can reasonably be expected to be used to
 
 
provide benefits under the arrangement on the death
 
 
of the member,
 
 
then deduct the value of any property within paragraph (a) or (b) that
 
 
may only be used to provide an excluded benefit.
35

Page 78

 
For each defined benefits arrangement under the scheme add
 
 
together—
 
 
(a)
the amount of any benefit that must be paid as a lump sum
 
 
death benefit under the arrangement on the death of the
 
 
member,
5
 
(b)
the amount of any benefit not within paragraph (a) that may
 
 
be and can reasonably be expected to be paid as a lump sum
 
 
death benefit under the arrangement on the death of the
 
 
member, and
 
 
(c)
the amount of any benefit that may be and, assuming that the
10
 
maximum amount possible is paid as a lump sum death benefit,
 
 
can reasonably be expected to be paid as a scheme continuation
 
 
payment under the arrangement on the death of the member,
 
 
then deduct the amount of any benefit within paragraph (a) , (b) or (c)
 
 
that may only be paid as an excluded benefit.
15
 
Add together each of the amounts given at Steps 1 and 2.
 
 
(3)
In determining for the purposes of subsection (2) any question as to
 
 
what can reasonably be expected, regard is to be had (in particular)
 
 
to appropriate actuarial assumptions.
20
 
(4)
Except under this section, no interest in or under a registered pension
 
 
scheme, a qualifying non-UK pension scheme or a section 615(3)
 
 
scheme is taken into account for the purposes of this Act in
 
 
determining the value of the estate of a member of the scheme
 
 
immediately before their death.
25
 
(5)
In subsection (2) —
 
 
“excluded benefit” , in relation to a pension scheme, means a
 
 
benefit that may only be paid under the scheme as one or more
 
 
of the following—
 
 
(a)
a dependants’ scheme pension;
30
 
(b)
a trivial commutation lump sum death benefit whose
 
 
payment to a person extinguishes the person’s
 
 
entitlement to a dependants’ scheme pension;
 
 
(c)
a dependants’ annuity, or a nominees’ annuity, that
 
 
was purchased together with a lifetime annuity payable
35
 
to the member (and for that purpose “purchased
 
 
together” is to be construed in accordance with
 
 
paragraphs 17(1A) and 27AA(2) of Schedule 28 to the
 
 
Finance Act 2004);
 
 
(d)
any amount that—
40
 
(i)
is payable as a benefit (in any form) in respect
 
 
of a member of the scheme if the member is an
 
 
active member of the scheme, and is in
 

Page 79

 
employment or other work of a particular
 
 
description, immediately before their death, and
 
 
(ii)
is not payable as a benefit (in any form) in
 
 
respect of a member of the scheme if the
 
 
member does not meet those conditions;
5
 
“held in a pension pot” means available for the purpose of
 
 
providing benefits to or in respect of one specific member of
 
 
the scheme;
 
 
“scheme continuation payment” means a payment made—
 
 
(a)
in relation to a registered pension scheme, in accordance
10
 
with pension rule 2 in section 165(1) of the Finance Act
 
 
2004 (continuing payments after death);
 
 
(b)
in relation to a qualifying non-UK pension scheme or
 
 
a section 615(3) scheme, in such a way as would be in
 
 
accordance with that rule if the scheme in question were
15
 
a registered pension scheme.
 
 
(6)
Each of the following has the same meaning in this section as in Part
 
 
4 of the Finance Act 2004 (pension schemes etc)—
 
 
“active member” (see section 151(2) of that Act);
 
 
“arrangement” (see section 152(1) of that Act);
20
 
“defined benefits arrangement” (see section 152(6) of that Act);
 
 
“dependants’ annuity” (see paragraph 17 of Schedule 28 to that
 
 
Act);
 
 
“dependants’ scheme pension” (see paragraph 16 of Schedule 28
 
 
to that Act);
25
 
“lifetime annuity” (see paragraph 3 of Schedule 28 to that Act);
 
 
“lump sum death benefit” (see section 168(2) of that Act);
 
 
“money purchase arrangement” (see section 152(2) of that Act);
 
 
“nominees’ annuity” (see paragraph 27AA of Schedule 28 to that
 
 
Act);
30
 
“trivial commutation lump sum death benefit” (see paragraph 20
 
 
of Schedule 29 to that Act);
 
 
but for the purposes of this section those definitions are to be read
 
 
with any necessary modifications in applying them to a qualifying
 
 
non-UK pension scheme or a section 615(3) scheme.”
35
64
Liability for tax on pension interests
 
 
(1)
IHTA 1984 is amended as follows.
 
 
(2)
For section 210 substitute—
 
“210
Pension rights
 
 
(1)
This section applies to any tax that is attributable to the value of
40
 
notional pension property of a deceased member of a registered
 

Page 80

 
pension scheme, a qualifying non-UK pension scheme or a section
 
 
615(3) scheme.
 
 
(2)
For the purposes of this Part the tax is treated as also attributable to
 
 
the value of—
 
 
(a)
any property held for the purposes of the scheme that is
5
 
available for paying a benefit on the deceased’s death, except
 
 
so far as the property may only be used to provide an excluded
 
 
benefit on the deceased’s death, and
 
 
(b)
any property that is received by a person under the scheme as
 
 
a benefit, other than an excluded benefit, on the deceased’s
10
 
death.
 
 
(3)
The persons liable for the tax (as well as including a person within
 
 
section 200(1)(c) (person in whom property is vested etc))—
 
 
(a)
include the deceased’s personal representatives so far as they
 
 
are not already liable under section 200(1)(a),
15
 
(b)
where the scheme is a registered pension scheme, include the
 
 
scheme administrator where—
 
 
(i)
a benefit has been paid in breach of section 226A
 
 
(withholding of benefits), or
 
 
(ii)
the scheme administrator has failed to comply with
20
 
section 226B (direct payment of tax on receipt of notice),
 
 
and
 
 
(c)
where the scheme is a registered pension scheme or a section
 
 
615(3) scheme, do not (despite section 200(1)(b) and (c)) include
 
 
the trustees of the scheme (if there are any) or any other person
25
 
who holds property for the purposes of the scheme in question.
 
 
(4)
Where the scheme administrator is liable for tax by virtue of subsection
 
 
(3) (b) (ii) (and not by virtue of subsection (3) (b) (i) ), their liability is
 
 
limited to the amount of tax that they have failed to pay as required
 
 
under section 226B .
30
 
(5)
Sections 271 to 272C of the Finance Act 2004 (liability of scheme
 
 
administrator) apply in relation to a liability under this Act as they
 
 
apply in relation to a liability under Part 4 of that Act.
 
 
(6)
Subsection (3) (c) does not prevent a person from being liable to tax—
 
 
(a)
under subsection (3) (b) in their capacity as scheme
35
 
administrator, or
 
 
(b)
by virtue of subsection (5) .”
 
 
(3)
In section 211 (burden of tax on death), for subsection (3) substitute—
 
 
“(3)
If—
 
 
(a)
personal representatives pay an amount of tax,
40
 
(b)
the amount does not fall to be borne as part of the general
 
 
testamentary and administration expenses of the estate,
 

Page 81

 
(c)
property to whose value the tax is attributable is vested in
 
 
someone other than the personal representatives (“the vestee”),
 
 
and
 
 
(d)
the personal representatives cannot recover the amount by
 
 
deducting it from any sums payable to the vestee out of the
5
 
estate (whether because there are no sums so payable or
 
 
because such sums are insufficient or have already been paid
 
 
without deduction),
 
 
the vestee must repay the amount to the personal representatives.”
 
 
(4)
In section 212 (powers to raise tax), in subsection (1), for “or any part of it”
10
 
substitute “, any property derived from that property, or any part of that
 
 
property or of property derived from it”.
 
 
(5)
In section 239 (certificates of discharge), after subsection (4) insert—
 
 
“(4A)
If—
 
 
(a)
the personal representatives of a deceased person are given a
15
 
certificate under subsection (2), and
 
 
(b)
further property is afterwards shown to have been included
 
 
in the estate of the deceased immediately before their death
 
 
by virtue of section 150A(1) (notional pension property),
 
 
then despite subsection (4)(b) the personal representatives are not
20
 
liable for any tax attributable to that further property unless the failure
 
 
to disclose the property in the application under subsection (2) was
 
 
due to carelessness on the part of the personal representatives.”
 
65
Withholding of benefits and payment of tax by pension scheme administrator
 
 
In IHTA 1984, after section 226 insert—
25
“226A
Tax on notional pension property: withholding of benefits
 
 
(1)
The personal representatives of a deceased person may give a notice
 
 
under this section (a “withholding notice”) to the scheme administrator
 
 
of a registered pension scheme if they know that they are, or have
 
 
reason to believe that they may be, liable for tax attributable to notional
30
 
pension property of the deceased in relation to the scheme.
 
 
(2)
While a withholding notice has effect, no benefit may be paid under
 
 
the scheme if payment of the benefit would result in the total amount
 
 
of benefits paid under the scheme to a particular person on the
 
 
deceased’s death exceeding 50% of that person’s benefit entitlement.
35
 
(3)
In subsection (2) a person’s “benefit entitlement” means so much of
 
 
the value of the notional pension property of the deceased in relation
 
 
to the scheme as is attributable on a just and reasonable apportionment,
 
 
having regard to appropriate actuarial assumptions, to benefits that
 
 
have been paid, or are or will be payable, to that person.
40
 
(4)
Subsection (2) does not apply—
 

Page 82

 
(a)
to the payment of an excluded benefit, or
 
 
(b)
to the payment of a benefit to the deceased’s spouse or civil
 
 
partner or to charities or registered clubs.
 
 
(5)
A withholding notice has effect from the time when it is received by
 
 
the scheme administrator until the earliest of the following—
5
 
(a)
any time when it is withdrawn by the personal representatives;
 
 
(b)
any time when all the tax attributable to notional pension
 
 
property of the deceased in relation to the scheme, and any
 
 
interest due in respect of that tax, is paid;
 
 
(c)
15 months after the end of the month in which the deceased
10
 
died.
 
 
(6)
A withholding notice does not have effect unless it complies with any
 
 
requirements prescribed by the Commissioners for His Majesty's
 
 
Revenue and Customs as to form and content.
 
 
(7)
The rules of a registered pension scheme are void so far as they
15
 
purport to require a benefit to be paid in breach of subsection (2) .
 
 
(8)
A payment that would fall due but for a withholding notice instead
 
 
falls due immediately after the notice ceases to have effect.
 
 
(9)
For the consequences if a benefit is paid in breach of subsection (2)
 
 
, see section 210 (3) (b) (joint liability of scheme administrator).
20
 
(10)
In subsection (4) (b) “registered club” has the same meaning as in
 
 
Chapter 9 of Part 13 of the Corporation Tax Act 2010.
 
 
226B
Tax on notional pension property: direct payment by scheme
 
 
administrator
 
 
(1)
A person (“the taxpayer”) may by notice (a “payment notice”) require
25
 
the scheme administrator of a registered pension scheme to pay any
 
 
tax for which the taxpayer is liable and which is attributable to the
 
 
value of the notional pension property of a deceased member of the
 
 
scheme.
 
 
(2)
The scheme administrator must pay the amount of tax specified in a
30
 
payment notice before the end of the period of 35 days beginning with
 
 
the day on which they receive the notice, unless the notice—
 
 
(a)
is withdrawn by the taxpayer during that period (and before
 
 
the amount is paid), or
 
 
(b)
does not comply with the requirements of subsection (3) , or
35
 
ceases to comply with them during that period (and before the
 
 
amount is paid).
 
 
(3)
The requirements are—
 
 
(a)
that the payment notice specifies the amount of tax that it
 
 
requires to be paid;
40

Page 83

 
(b)
that the amount specified is not less than £1,000;
 
 
(c)
that the amount specified does not exceed the amount of tax
 
 
for which the taxpayer is liable in respect of notional pension
 
 
property of the deceased in relation to the scheme;
 
 
(d)
that where the taxpayer is a beneficiary the amount specified
5
 
does not exceed the difference between—
 
 
(i)
the amount of the benefits payable to the beneficiary
 
 
under the scheme on the deceased’s death, and
 
 
(ii)
the amount that has already been paid on the deceased’s
 
 
death in benefits to or for the benefit of the beneficiary
10
 
under the scheme, or that has already been specified in
 
 
a payment notice given by the beneficiary in relation
 
 
to the deceased;
 
 
(e)
that where the taxpayer is the deceased’s personal
 
 
representatives the amount specified does not exceed the
15
 
difference between—
 
 
(i)
the amount of the benefits payable under the scheme
 
 
on the deceased’s death, and
 
 
(ii)
the amount that has already been paid on the deceased’s
 
 
death in benefits under the scheme, or that has already
20
 
been specified in a payment notice given by any person
 
 
in relation to the deceased;
 
 
(f)
that the payment notice complies with any requirements
 
 
prescribed by the Commissioners for His Majesty's Revenue
 
 
and Customs as to form and content.
25
 
(4)
The references in subsection (3) (d) and (e) to the amount of benefits
 
 
payable under the scheme—
 
 
(a)
include any amount that has been or will in future be payable,
 
 
and
 
 
(b)
in a case where the exact amount of benefits that will in future
30
 
be payable cannot be known, are to be read as references to
 
 
the amount that, having regard (in particular) to appropriate
 
 
actuarial assumptions, can reasonably be expected to be paid.
 
 
(5)
Where the scheme administrator pays an amount of tax under this
 
 
section, a consequential adjustment may be made, on a basis that is
35
 
just and reasonable having regard to appropriate actuarial assumptions
 
 
and to any tax previously paid—
 
 
(a)
where the taxpayer is a beneficiary, to the benefits payable to
 
 
that beneficiary under the scheme on the deceased’s death;
 
 
(b)
where the taxpayer is the deceased’s personal representatives,
40
 
to any benefit payable under the scheme on the deceased’s
 
 
death.
 
 
(6)
Any repayment under section 241 (overpayments) of tax paid by the
 
 
scheme administrator under this section may, regardless of who the
 
 
taxpayer is, be paid to—
45

Page 84

 
(a)
the deceased’s personal representatives, or
 
 
(b)
any of the beneficiaries to whom an officer of Revenue and
 
 
Customs considers the overpayment of tax to relate
 
 
(but may not be paid to the scheme administrator).
 
 
(7)
The rules of a registered pension scheme are void so far as they
5
 
purport to prohibit or restrict—
 
 
(a)
the payment of tax by the scheme administrator as required
 
 
under this section, or
 
 
(b)
the making of a consequential adjustment under subsection (5)
 
 
to a benefit payable under the scheme.
10
 
(8)
In this section—
 
 
“beneficiary” , in relation to a deceased member of a pension
 
 
scheme, means a person who receives or has a right to receive
 
 
benefits under the scheme on the member’s death;
 
 
“tax” includes interest on tax.
15
 
(9)
The Treasury may by regulations made by statutory instrument amend
 
 
the figure for the time being mentioned in subsection (3) (b) .
 
 
(10)
A statutory instrument containing regulations under subsection (9) is
 
 
subject to annulment in pursuance of a resolution of the House of
 
 
Commons.
20
 
(11)
For the consequences if the scheme administrator fails to comply with
 
 
this section, see section 210 (3) (b) (joint liability of scheme
 
 
administrator).”
 
66
Connected amendments to IHTA 1984
 
 
(1)
IHTA 1984 is amended as follows.
25
 
(2)
Omit section 12A (pension drawdown fund not used up: no deemed
 
 
disposition).
 
 
(3)
In section 18 (exemption for transfers between spouses or civil partners), after
 
 
subsection (3) insert—
 
 
“(3A)
To the extent that the value transferred by a transfer of value made
30
 
on the death of a member of a pension scheme is attributable to the
 
 
member’s notional pension property—
 
 
(a)
the value transferred is treated for the purposes of this section
 
 
as also attributable to any property that the person’s spouse
 
 
or civil partner receives, or has a present or future right to
35
 
receive, under the scheme on the death of the member
 
 
otherwise than as an excluded benefit;
 
 
(b)
the estate of the transferor’s spouse or civil partner is treated
 
 
for the purposes of subsection (1) (so far as would not
 
 
otherwise be the case) as increased by the value of any property
40

Page 85

 
that they receive, or have a right to receive, as mentioned in
 
 
paragraph (a) , and
 
 
(c)
subsection (3) does not apply in relation to the transfer of
 
 
value.”
 
 
(4)
In section 23 (gifts to charities or registered clubs), after subsection (5A)
5
 
insert—
 
 
“(5B)
To the extent that the value transferred by a transfer of value made
 
 
on the death of a member of a pension scheme is attributable to the
 
 
member’s notional pension property—
 
 
(a)
the value transferred is treated for the purposes of this section
10
 
as also attributable to any property that on the death of the
 
 
member is given under the scheme to charities or registered
 
 
clubs, and
 
 
(b)
subsection (2) does not apply in relation to the transfer of
 
 
value.”
15
 
(5)
In section 151 (treatment of pension rights etc)—
 
 
(a)
for the heading substitute “Other provision about pension interests”;
 
 
(b)
for subsections (2) and (3) substitute—
 
 
“(3)
Sections 49 to 53 (holder of interest in possession treated as
 
 
directly entitled to property in which interest subsists etc) do
20
 
not apply in relation to an interest in possession in property
 
 
where the property is held for the purposes of a registered
 
 
pension scheme, a qualifying non-UK pension scheme or a
 
 
section 615(3) scheme.”;
 
 
(c)
omit subsection (4).
25
 
(6)
Omit section 152 (cash options).
 
 
(7)
In section 272 (general interpretation), in subsection (1)—
 
 
(a)
in the definition of “member”, after “scheme,” insert “a qualifying
 
 
non-UK pension scheme or a section 615(3) scheme,”;
 
 
(b)
at the appropriate places insert—
30
 
““excluded benefit” , in relation to a pension scheme, has the
 
 
meaning given by section 150A (5) ;”;
 
 
““notional pension property” , in relation to a member of a pension
 
 
scheme and a pension scheme, means property to which the
 
 
member is treated under section 150A (1) (certain pension
35
 
property treated as part of estate) as having been beneficially
 
 
entitled immediately before their death by reference to the
 
 
arrangements under the scheme;”;
 
 
““qualifying non-UK pension scheme” has the meaning given in
 
 
section 271A;”;
40
 
““the scheme administrator” , in relation to a registered pension
 
 
scheme, has the meaning given in section 270 of the Finance
 
 
Act 2004;”.
 

Page 86

67
Connected amendments to income tax rules
 
 
(1)
ITEPA 2003 is amended in accordance with subsections (2) to (5) .
 
 
(2)
In section 567 (amount charged to tax), in subsection (5), at the appropriate
 
 
place insert—
 
 
“section 567B (deduction where inheritance tax is paid in respect of
5
 
pension death benefit);”.
 
 
(3)
After section 567A insert—
 
 
“567B
Cases where inheritance tax is paid in respect of pension death
 
 
benefit
 
 
(1)
This section applies if—
10
 
(a)
there is an amount of taxable pension income (“amount TPI”)
 
 
for a tax year for a pension, annuity or other item of pension
 
 
income,
 
 
(b)
amount TPI reflects (to any extent) the payment to a person
 
 
(“the beneficiary”) of a benefit under a pension scheme on the
15
 
death of a member of the scheme (“the deceased”),
 
 
(c)
the benefit is not an excluded benefit, and
 
 
(d)
at any time (whether before or after the benefit is paid)—
 
 
(i)
the beneficiary pays an amount of inheritance tax that
 
 
is attributable to the value of the deceased’s notional
20
 
pension property, or
 
 
(ii)
the deceased’s personal representatives pay an amount
 
 
of inheritance tax that is so attributable and pass on the
 
 
burden of that payment to the beneficiary.
 
 
(2)
A deduction is allowed from amount TPI equal to the lesser of—
25
 
(a)
the amount of inheritance tax paid as mentioned in subsection
 
 
(1) (d) , and
 
 
(b)
so much of amount TPI as reflects the payment to the
 
 
beneficiary of the benefit.
 
 
(3)
If the amount mentioned in subsection (2) (a) exceeds the amount
30
 
mentioned in subsection (2) (b) , the excess is to be carried forward to
 
 
future tax years to be deducted under this section (when applicable)
 
 
until it has all been deducted.
 
 
(4)
In this section, “excluded benefit” and “notional pension property”
 
 
have the same meaning as in the Inheritance Tax Act 1984.
35
 
(5)
For the purposes of subsection (1) (d) the deceased’s personal
 
 
representatives “pass on the burden” of a payment of inheritance tax
 
 
to the beneficiary if—
 
 
(a)
the personal representatives pay a sum to the beneficiary out
 
 
of the deceased’s estate that has been reduced by the amount
40
 
of inheritance tax, or
 

Page 87

 
(b)
the beneficiary reimburses the personal representatives that
 
 
amount.”
 
 
(4)
After section 579CA insert—
 
“579CB
Refund of overpaid inheritance tax treated as pension
 
 
(1)
This section applies if—
5
 
(a)
the scheme administrator of a registered pension scheme pays
 
 
an amount of inheritance tax under section 226B of the
 
 
Inheritance Tax Act 1984 in respect of a deceased member of
 
 
the scheme,
 
 
(b)
some or all of the inheritance tax paid by the scheme
10
 
administrator—
 
 
(i)
is repaid under section 241(1) of that Act to a person
 
 
who is entitled to receive benefits under the scheme on
 
 
the deceased’s death (a “beneficiary”), or
 
 
(ii)
is repaid under that section to the deceased’s personal
15
 
representatives and passed on by the personal
 
 
representatives to a beneficiary, and
 
 
(c)
the deceased was aged 75 or over at the date of their death.
 
 
(2)
The payment made to the beneficiary under subsection (1) (b) (i) or (ii)
 
 
is treated for the purposes of this Part as though it were a pension
20
 
paid under the registered pension scheme (and is treated as accruing
 
 
in the tax year in which it is paid).”
 
 
(5)
In section 683 (PAYE income), in subsection (3B), at the end insert “or section
 
 
579CB (inheritance tax overpaid by scheme administrator: refund treated as
 
 
pension)”.
25
 
(6)
FA 2004 is amended in accordance with subsections (7) and (8) .
 
 
(7)
In section 164 (authorised member payments), in subsection (1), after
 
 
paragraph (e) (but before the “and” that follows it) insert—
 
 
“(ea)
payments of inheritance tax under section 226B of the
 
 
Inheritance Tax Act 1984 (direct payment of tax by scheme
30
 
administrator),”.
 
 
(8)
In section 274A (power to split pension schemes), at the end insert—
 
 
“(5)
Sections 226A and 226B of the Inheritance Tax Act 1984 (withholding
 
 
of benefits and payment of inheritance tax by scheme administrator)
 
 
are treated for the purposes of this section as provision made by this
35
 
Part.”
 
68
Commencement of
 
 
The amendments made by sections 63 to 67 apply in relation to deaths, and
 
 
(so far as relevant) to other transfers of value within the meaning of IHTA
 
 
1984, occurring on or after 6 April 2027.
40

Page 88

Freeze of nil rate band etc

 
69
Rate bands etc for tax year 2030-31
 
 
In section 86 of FA 2021 (no indexation of rate bands, residential enhancement
 
 
and taper threshold for tax years up to 2029-30)—
 
 
(a)
for “or 2028” substitute “, 2028 or 2029”, and
5
 
(b)
in the heading, for “2029-30” substitute “2030-31”.
 

Provision relating to new regime in FA 2025

 
70
Relevant property: disapplication of exemptions from exit charges
 
 
(1)
In IHTA 1984, in section 65 (relevant property: exit charges), after subsection
 
 
(8A) insert—
10
 
“(8B)
None of subsections (7), (7A) and (8) applies in relation to property
 
 
comprised in a settlement if—
 
 
(a)
a long-term residence change took place at a time—
 
 
(i)
before the event in question, and
 
 
(ii)
if there have been one or more ten-year anniversaries
15
 
before the event in question, after the most recent of
 
 
them,
 
 
(b)
the long-term residence change did not result in tax being
 
 
charged under this section by reference to the property, and
 
 
(c)
the long-term residence change would have resulted in tax
20
 
being charged under this section by reference to the property
 
 
if the property had been property situated outside the United
 
 
Kingdom when the long-term residence change took place.
 
 
(8C)
In subsection (8B) “long-term residence change” means—
 
 
(a)
the settlor not being a long-term UK resident at the start of the
25
 
tax year 2025-26, or
 
 
(b)
the settlor ceasing to be a long-term UK resident at the start
 
 
of any later tax year.”
 
 
(2)
The amendment made by subsection (1) is treated as having come into force
 
 
on 26 November 2025.
30
71
Relevant property: cap on charges for pre-30 October 2024 excluded property
 
 
(1)
In IHTA 1984, after section 75A insert—
 
“75B
Cap on charges for pre-30 October 2024 excluded property
 
 
(1)
This section applies if (ignoring this section) tax is charged under
 
 
section 64 (ten-year anniversary charge) or 65 (exit charge) by reference
35
 
to the value of property—
 

Page 89

 
(a)
that became comprised in the settlement in question before 30
 
 
October 2024,
 
 
(b)
that immediately before 30 October 2024 was excluded property
 
 
by virtue of section 48(3) or (3A) (as it had effect at that time),
 
 
and
5
 
(c)
that immediately before the occasion of the charge—
 
 
(i)
is situated outside the United Kingdom and is not
 
 
property to which paragraph 2 or 3 of Schedule A1
 
 
applies, or
 
 
(ii)
is a holding in an authorised unit trust or a share in an
10
 
open-ended investment company.
 
 
(2)
The amount of tax charged by reference to the value of the property
 
 
is, if it would otherwise be greater, to be reduced (but not below zero)
 
 
to the difference between—
 
 
(a)
the applicable cap in relation to the relevant period in which
15
 
the occasion of the charge falls, and
 
 
(b)
any amount of tax already charged under section 65 in relation
 
 
to the settlement, earlier in that relevant period, by reference
 
 
to the value of property meeting the conditions in subsection
 
 
(1) .
20
 
(3)
In this section—
 
 
“the applicable cap” means—
 
 
(a)
in relation to the first relevant period, £125,000
 
 
multiplied by the number of whole successive quarters
 
 
in the period;
25
 
(b)
in relation to a subsequent relevant period, £5 million;
 
 
“relevant period” means—
 
 
(a)
the period beginning with 6 April 2025 and ending with
 
 
the first ten-year anniversary falling after that date, and
 
 
(b)
each subsequent period of ten years.”
30
 
(2)
The amendment made by subsection (1) is treated as having come into force
 
 
on 6 April 2025.
 
72
Foreign diplomats etc: periods of UK residence to be disregarded
 
 
(1)
In IHTA 1984, after section 155 insert—
 
 
“Foreign diplomats etc
35
155ZA
Foreign diplomats etc
 
 
(1)
In determining whether a person is a long-term UK resident for the
 
 
purposes of this Act, the person is treated (so far as would not
 
 
otherwise be the case) as not having been resident in the United
 

Page 90

 
Kingdom for any tax year in which they were subject at any time to
 
 
a relevant international exemption.
 
 
(2)
For that purpose a person is “subject to a relevant international
 
 
exemption” at a given time if, were the person to die at that time, an
 
 
exemption in respect of inheritance tax would apply in relation to any
5
 
of the person’s property by virtue of any of the following—
 
 
the Diplomatic Privileges Act 1964
 
 
the Consular Relations Act 1968
 
 
the International Organisations Act 1968
 
 
the European Communities Act 1972
10
 
the International Criminal Court Act 2001.”
 
 
(2)
The amendment made by subsection (1) is treated as having come into force
 
 
on 6 April 2025 (and has effect in relation to tax years ending before that date
 
 
as it has effect in relation to later tax years).
 
73
Minor corrections
15
 
(1)
IHTA 1984 is amended in accordance with subsections (2) and (3) .
 
 
(2)
In section 267ZD (further provision about elections under section 267ZC), in
 
 
subsection (8) , for “a lifetime election” substitute “an election under section
 
 
267ZC”.
 
 
(3)
In section 157 (non-residents’ bank accounts), in subsection (3) , in each of
20
 
paragraphs (c) and (d) , omit “not”.
 
 
(4)
The amendment made by subsection (2) is treated as having come into force
 
 
on 6 April 2025.
 
 
(5)
The amendment made by subsection (3) is treated as having come into force
 
 
on 26 November 2025.
25
 
(6)
Section 157 (3) of IHTA 1984 is treated as having had effect for the period
 
 
beginning with 6 April 2025 and ending with 26 November 2025 with the
 
 
omission of its paragraphs (c) and (d) (and the insertion of “or” after paragraph
 
 
(a)).
 

Infected blood compensation payments

30
74
Power to make provision about infected blood compensation payments
 
 
(1)
The Treasury may by regulations made by statutory instrument make
 
 
provision conferring relief from inheritance tax in respect of infected blood
 
 
compensation payments.
 
 
(2)
The provision that may be made under subsection (1) includes provision
35
 
about the treatment of dispositions of amounts received by way of, or that
 
 
are otherwise referable to, infected blood compensation payments.
 

Page 91

 
(3)
Regulations under subsection (1) may—
 
 
(a)
amend or otherwise modify Schedule 15 to FA 2020 (tax relief for
 
 
scheme payments etc);
 
 
(b)
include retrospective provision that does not increase any person’s
 
 
liability to tax;
5
 
(c)
make different provision for different cases;
 
 
(d)
include consequential, transitional or saving provision.
 
 
(4)
In this section—
 
 
“infected blood compensation payment” means a payment that—
 
 
(a)
is made under an infected blood compensation scheme, and
10
 
(b)
is a qualifying payment for the purposes of Schedule 15 to FA
 
 
2020 (tax relief for scheme payments etc) by virtue of
 
 
regulations made under paragraph 2(5) of that Schedule;
 
 
“infected blood compensation scheme” means—
 
 
(a)
the infected blood compensation scheme established by virtue
15
 
of section 49 of the Victims and Prisoners Act 2024, or
 
 
(b)
the scheme known as the Infected Blood Interim Compensation
 
 
Payment Scheme (a non-statutory scheme established before
 
 
that mentioned in paragraph (a)).
 
 
(5)
A statutory instrument containing regulations under subsection (1) that amend
20
 
or otherwise modify Schedule 15 to FA 2020 may not be made unless a draft
 
 
of the instrument has been laid before, and approved by a resolution of, the
 
 
House of Commons.
 
 
(6)
A statutory instrument containing any other regulations under subsection (1)
 
 
is subject to annulment in pursuance of a resolution of the House of Commons.
25

Gifts to charities and registered clubs

 
75
Scope of exemption for gifts to charities and registered clubs
 
 
(1)
IHTA 1984 is amended as follows.
 
 
(2)
In section 23 (gifts to charities or registered clubs), in subsection (6)—
 
 
(a)
in paragraph (a), omit “or is held on trust for charitable purposes
30
 
only”;
 
 
(b)
in paragraph (b), omit “or is held on trust for purposes of registered
 
 
clubs only”.
 
 
(3)
In section 29A (abatement of exemption where claim settled out of beneficiary’s
 
 
own resources), in subsection (6), in paragraph (b) of the definition of “the
35
 
exempt beneficiary”, omit sub-paragraph (ii) and the “or” before it.
 
 
(4)
In section 142 (alteration of dispositions taking effect on death)—
 
 
(a)
in subsection (3A), for “the appropriate person” substitute “the charity
 
 
or registered club to which the property is given”;
 
 
(b)
omit subsection (3B).
40

Page 92

 
(5)
The amendments made by this section have effect—
 
 
(a)
in relation to a transfer of value made on a person’s death, if the
 
 
person dies on or after 6 April 2026;
 
 
(b)
in relation to a transfer of value made at any other time, if the transfer
 
 
is made on or after 26 November 2025.
5
 
References in this subsection to the making of a transfer of value are to be
 
 
construed in accordance with IHTA 1984.
 
76
Section
 
 
(1)
Subsection (2) applies in relation to a transfer of value (“the original transfer”)
 
 
to the extent that the value transferred by it is attributable to property which
10
 
meets each of the following conditions, namely—
 
 
(a)
that immediately before the original transfer a person was beneficially
 
 
entitled to an interest in possession in the property to which section
 
 
49(1) of IHTA 1984 (interests treated as part of estate) applied;
 
 
(b)
that the person became beneficially entitled to the interest in possession
15
 
before 26 November 2025;
 
 
(c)
that by virtue of the original transfer the property is held on trust—
 
 
(i)
only for charitable purposes, or
 
 
(ii)
only for purposes of registered clubs,
 
 
but is not given to charities or registered clubs;
20
 
(d)
that the property is given to charities or registered clubs within the
 
 
period of 2 years beginning with the date of the original transfer (“the
 
 
subsequent gift”).
 
 
(2)
For the purposes of IHTA 1984—
 
 
(a)
the original transfer is treated as attributable (and as always having
25
 
been attributable) to property given to charities or registered clubs,
 
 
and
 
 
(b)
the subsequent gift is disregarded.
 
 
(3)
Subsections (1) and (2) have effect—
 
 
(a)
where the original transfer is made on a person’s death, if the person
30
 
dies on or after 6 April 2026;
 
 
(b)
where the original transfer is made at any other time, if the transfer
 
 
is made on or after 26 November 2025.
 
 
(4)
Subsections (1) to (3) are to be construed as though they were contained in
 
 
section 23 of IHTA 1984.
35

Page 93

Part 3

 

Other existing taxes

 

Value added tax and insurance premium tax

 
77
Zero-rating of leases of vehicles to recipients of disability benefits
 
 
(1)
VATA 1994 is amended as follows.
5
 
(2)
In Schedule 8, in Group 12 (drugs, medicines, aids for the disabled, etc), omit
 
 
item 14.
 
 
(3)
In consequence of the amendment made by subsection (2) , in that Group—
 
 
(a)
for item 15 substitute—
 
 
“15
(1)
The sale of a motor vehicle that had been let on hire on
10
 
relevant benefit terms, where such sale constitutes the first
 
 
supply of the vehicle after the end of the period of such
 
 
letting.
 
 
(2)
A vehicle has been let on hire on relevant benefit terms if—
 
 
(a)
the letting on hire was to a disabled person in receipt
15
 
of—
 
 
(i)
a relevant disability benefit by virtue of
 
 
entitlement to the mobility component of that
 
 
benefit,
 
 
(ii)
an armed forces independence payment, or
20
 
(iii)
mobility supplement,
 
 
(b)
the letting was for a period of not less than 3 years,
 
 
(c)
the vehicle was unused at the commencement of the
 
 
period of letting, and
 
 
(d)
the consideration for the letting consists wholly or
25
 
partly of sums paid to the lessor by a relevant
 
 
authority on behalf of the lessee in respect of—
 
 
(i)
the mobility component of a relevant disability
 
 
benefit,
 
 
(ii)
armed forces independence payment, or
30
 
(iii)
mobility supplement.
 
 
(3)
For the purposes of paragraph (2)—
 
 
“relevant authority” means—
 
 
(a)
the Department for Work and Pensions,
 
 
(b)
the Ministry of Defence,
35
 
(c)
the Scottish Ministers, or
 
 
(d)
the Department for Communities in Northern
 
 
Ireland;
 
 
“relevant disability benefit” means—
 

Page 94

 
(a)
disability living allowance,
 
 
(b)
personal independence payment,
 
 
(c)
Child Disability Payment,
 
 
(d)
Adult Disability Payment, or
 
 
(e)
Scottish Adult Disability Living Allowance.”,
5
 
(b)
omit note (6), and
 
 
(c)
in note (7)—
 
 
(i)
in the words before paragraph (a), for “14” substitute “15”,
 
 
(ii)
in paragraph (aa), for “the corresponding provision having
 
 
effect in Northern Ireland” substitute “Part 5 of the Welfare
10
 
Reform (Northern Ireland) Order 2015”,
 
 
(iii)
in paragraph (aaa), for “disability assistance for children and
 
 
young people” substitute “Child Disability Payment”,
 
 
(iv)
in paragraph (aab), for “disability assistance for working age
 
 
people” substitute “Adult Disability Payment”,
15
 
(v)
after that paragraph insert—
 
 
“(aac)
“Scottish Adult Disability Living Allowance”
 
 
means a category of disability assistance for
 
 
adults given in accordance with regulations
 
 
made under section 31 of the Social Security
20
 
(Scotland) Act 2018;”, and
 
 
(vi)
for paragraph (b) substitute—
 
 
“(b)
“mobility supplement” is a mobility supplement
 
 
within the meaning of—
 
 
(i)
Article 20 of the Naval, Military and Air
25
 
Forces Etc. (Disablement and Death)
 
 
Service Pensions Order 2006, or
 
 
(ii)
Article 25A of the Personal Injuries
 
 
(Civilians) Scheme 1983.”
 
 
(4)
In Schedule 6 (valuation: special cases), after paragraph 11A insert—
30
 
“11B
(1)
This paragraph applies for the purposes of determining the value
 
 
of a supply consisting of the letting on hire of a motor vehicle on
 
 
relevant benefit terms.
 
 
(2)
But this paragraph is to be ignored for the purposes of Schedule 1
 
 
(VAT registration).
35
 
(3)
“Relevant benefit terms” is to be construed in accordance with
 
 
paragraph (2) of item 15 in Group 12 in Schedule 8 (zero-rating).
 
 
(4)
Any amount of consideration for the letting that falls within
 
 
sub-paragraph (d) of that paragraph (payments of relevant benefits)
 
 
is to be disregarded in determining the amount of the consideration
40
 
for the purposes of calculating the value of the supply under this
 
 
Act.”
 

Page 95

 
(5)
The amendments made by this section have effect in relation to leases of
 
 
motor vehicles commencing on or after—
 
 
(a)
1 July 2026, or
 
 
(b)
such later date as may be appointed in regulations made (before 1
 
 
July 2026) by statutory instrument by the Treasury.
5
78
Insurance premium tax relief limited to adapted vehicles
 
 
(1)
In Schedule 7A to FA 1994 (insurance premium tax: contracts that are not
 
 
taxable), for paragraph 3 (and the italic heading before it) substitute—
 
 
“Contracts relating to motor vehicles let on relevant benefit terms
 
 
3
(1)
A contract falls within this paragraph if it relates only to a motor
10
 
vehicle and—
 
 
(a)
the vehicle is let on hire on relevant benefit terms to a
 
 
person, and
 
 
(b)
the supply of the vehicle to that person is zero-rated for the
 
 
purposes of the Value Added Tax Act 1994 as a result of it
15
 
being a supply falling within—
 
 
(i)
paragraph (f) in item 2 in Group 12 in Schedule 8 to
 
 
that Act, or
 
 
(ii)
item 2A in that Group.
 
 
(2)
“Relevant benefit terms” is to be construed in accordance with
20
 
paragraph (2) of item 15 in Group 12 in Schedule 8 to the Value
 
 
Added Tax Act 1994 (zero-rating).”
 
 
(2)
The amendment made by this section has effect in relation to contracts relating
 
 
to leases of motor vehicles where the lease commences on or after—
 
 
(a)
1 July 2026, or
25
 
(b)
such later date as may be appointed in regulations made (before 1
 
 
July 2026) by statutory instrument by the Treasury.
 
79
Private hire vehicles or taxis
 
 
(1)
In section 53 of VATA 1994 (tour operators), after subsection (3) insert—
 
 
“(3A)
But a person is not a tour operator if and so far as their business
30
 
consists of making supplies of services consisting of the transport of
 
 
passengers by private hire vehicle or taxi, unless those supplies are
 
 
made in conjunction with, and are ancillary to, the making of supplies
 
 
by the person consisting of—
 
 
(a)
the provision of accommodation, or
35
 
(b)
the transport of passengers by bus, coach, train, ship or
 
 
aircraft.”
 
 
(2)
The amendment made by subsection (1) has effect in relation to supplies
 
 
made on or after 2 January 2026.
 

Page 96

80
Certain charitable donations not to be treated as supplies of goods
 
 
(1)
Schedule 4 to VATA 1994 (matters to be treated as supply of goods or services)
 
 
is amended as follows.
 
 
(2)
In paragraph 5 (transfer of business goods treated as supply)—
 
 
(a)
in sub-paragraph (2), at the end insert—
5
 
“(c)
a qualifying charitable donation.”;
 
 
(b)
in sub-paragraph (2ZA), at the appropriate place insert—
 
 
““qualifying charitable donation” has the meaning given in
 
 
paragraph 5A ;”.
 
 
(3)
After paragraph 5 insert—
10
 
“5A
(1)
In paragraph 5 “qualifying charitable donation” means (subject to
 
 
sub-paragraphs (6) and (7) ) a donation of an item to a charity
 
 
where—
 
 
(a)
the item’s value does not exceed the applicable limit, and
 
 
(b)
the donation is made—
15
 
(i)
for use by the charity otherwise than in the course
 
 
or furtherance of a business, or
 
 
(ii)
for onward donation by the charity (whether or not
 
 
to another charity).
 
 
(2)
In sub-paragraph (1) (a) “the applicable limit” means—
20
 
(a)
£200 where the item donated is any of the following—
 
 
(i)
a household appliance;
 
 
(ii)
furniture;
 
 
(iii)
flooring (including carpets and rugs);
 
 
(iv)
a computer;
25
 
(v)
a mobile phone;
 
 
(vi)
a tablet;
 
 
(b)
£100 in any other case.
 
 
(3)
For the purposes of sub-paragraph (1) (a) an item’s value is taken
 
 
to be the lower of—
30
 
(a)
the cost to the donor of acquiring or, as the case may be,
 
 
producing the item, and
 
 
(b)
such consideration in money as would be payable by the
 
 
donor if the donor were, at the time of the donation, to
 
 
purchase—
35
 
(i)
an item identical in every respect (including age and
 
 
condition) to the item concerned, or
 
 
(ii)
where such consideration cannot be determined on
 
 
the basis described in sub-paragraph (i) , an item
 
 
similar to and of the same age and condition as the
40
 
item concerned;
 

Page 97

 
but where the amount described in paragraph (a) is not known, the
 
 
item’s value is taken to be the amount described in paragraph (b) .
 
 
(4)
Paragraph 5(2A) and (5A) (goods acquired by predecessor
 
 
businesses) applies for the purposes of sub-paragraph (3) .
 
 
(5)
For the purposes of sub-paragraph (3) the amount of consideration
5
 
in money that would be payable by the donor if they were to
 
 
purchase any goods is taken to be the amount that would be so
 
 
payable by the donor after the deduction of any amount included
 
 
in the purchase price in respect of VAT on the supply of the goods
 
 
to the donor.
10
 
(6)
A donation is not a qualifying charitable donation if the item
 
 
donated is any of the following—
 
 
(a)
a tobacco product within the meaning of the Tobacco
 
 
Products Duty Act 1979;
 
 
(b)
a vaping product within the meaning of Part 4 of the Finance
15
 
Act 2026;
 
 
(c)
an alcohol product within the meaning of Part 2 of the
 
 
Finance (No.2) Act 2023, other than one belonging to a class
 
 
or description on which alcohol duty is not charged under
 
 
that Part of that Act.
20
 
(7)
A donation is not a qualifying charitable donation if (disregarding
 
 
this paragraph) it is a zero-rated supply.
 
 
(8)
The Treasury may by order amend this paragraph for the purpose
 
 
of varying the definition of “the applicable limit” in sub-paragraph
 
 
(2) .”
25
 
(4)
The amendments made by subsections (1) to (3) have effect in relation to
 
 
donations made on or after 1 April 2026.
 
81
Refunds of VAT to combined county authorities
 
 
(1)
In section 33 of VATA 1994 (refunds of VAT in certain cases), in subsection
 
 
(3)(a) (which provides for the section to apply to local authorities and
30
 
combined authorities), for the words from “and” to the end substitute “, a
 
 
combined authority established by an order made under section 103(1) of the
 
 
Local Democracy, Economic Development and Construction Act 2009 and a
 
 
combined county authority established by regulations made under section
 
 
9(1) of the Levelling-up and Regeneration Act 2023;”.
35
 
(2)
The amendment made by this section has effect in relation to supplies made,
 
 
and importations or acquisitions taking place, on or after 1 December 2025.
 

Page 98

Stamp duty reserve tax

 
82
UK listing relief
 
 
(1)
After section 89B of FA 1986 (stamp duty reserve tax) insert—
 
“89C
Section 87: UK listing relief
 
 
(1)
Section 87 does not apply as regards an agreement to transfer
5
 
chargeable securities in a listed company—
 
 
(a)
that was first listed after the beginning of the period of 3 years
 
 
ending with the relevant day, and
 
 
(b)
whose shares are admitted to trading on a UK regulated
 
 
market,
10
 
if none of the following exclusions apply.
 
 
(2)
Exclusion A (listed company mergers) applies if the listing referred
 
 
to in subsection (1) (a) was connected to arrangements by which—
 
 
(a)
a listed company took control of another listed company,
 
 
(b)
a company took control of two or more listed companies, or
15
 
(c)
two or more listed companies merged all or substantially all
 
 
of their businesses.
 
 
(3)
Exclusion B (new holding company) applies if—
 
 
(a)
the listing referred to in subsection (1) (a) was connected to
 
 
arrangements by which the company took control of another
20
 
company, and
 
 
(b)
immediately before those arrangements, the other company
 
 
was—
 
 
(i)
listed other than by reference to depositary interests,
 
 
and
25
 
(ii)
controlled by the person or persons who, at the time
 
 
of the listing referred to in subsection (1) (a) , controlled
 
 
the company.
 
 
(4)
Exclusion C (change of control) applies if—
 
 
(a)
during the period beginning with the listing referred to in
30
 
subsection (1) (a) and ending with the relevant day, there was
 
 
a change of control in the company, or
 
 
(b)
the agreement to transfer forms part of arrangements changing
 
 
control in the company.
 
 
(5)
In subsection (1) (a) , the reference to a company being first listed is a
35
 
reference to—
 
 
(a)
in the case of a company falling within subsection (6) , the
 
 
company first making a regulatory announcement to the effect
 
 
that it has taken control of a company as described in
 
 
subsection (6) (b) , or
40

Page 99

 
(b)
in other cases, shares in the company being admitted to the
 
 
official list at a time when no other shares of the company
 
 
were included in the official list.
 
 
(6)
A company falls within this subsection if—
 
 
(a)
shares in the company were admitted to the official list at a
5
 
time when the company’s assets consisted wholly or mainly
 
 
of cash or short-dated securities, and
 
 
(b)
the shares were admitted with a view to the company taking
 
 
control of an unlisted company before the end of a certain
 
 
period.
10
 
(7)
In this section—
 
 
(a)
a reference to a company being listed is a reference to shares
 
 
in the company being included in the official list;
 
 
(b)
a reference to shares being included in the official list is a
 
 
reference to shares—
15
 
(i)
being included in the official list in accordance with
 
 
Part 6 of the Financial Services and Markets Act 2000
 
 
( “FSMA” ) (see section 74 of that Act ), or
 
 
(ii)
not being included only by reason of suspension under
 
 
that Part ;
20
 
(c)
a reference to shares being admitted to the official list has the
 
 
same meaning as in that Part ;
 
 
(d)
a reference to shares includes a reference to depositary interests
 
 
in shares.
 
 
(8)
In this section—
25
 
“arrangements” includes any preliminary steps taken in connection
 
 
with arrangements;
 
 
“control” has the meaning given in section 1124 of the Corporation
 
 
Tax Act 2010;
 
 
“depositary interest” has the meaning given in regulations made
30
 
under section 119 of the Finance Act 1999 (power to exempt
 
 
UK depositary interests in foreign securities);
 
 
“regulatory announcement” means an announcement required
 
 
by, and made in accordance with, Part 6 rules made under
 
 
section 73A of FSMA;
35
 
“relevant day” has the meaning given in section 87(3);
 
 
“UK regulated market” has the same meaning as in Regulation
 
 
(EU) No 600/2014 of the European Parliament and of the
 
 
Council of 15 May 2014 on markets in financial instruments
 
 
(see Article 2(13A)).”
40
 
(2)
The amendment made by subsection (1) has effect in relation to an agreement
 
 
to transfer chargeable securities in a company that is first listed on or after
 
 
27 November 2025 (with “first listed” having the same meaning as in section
 
 
89C(1)(a) of FA 1986, as inserted by subsection (1)).
 

Page 100

Gambling duties

 
83
Rate of remote gaming duty
 
 
(1)
In Chapter 3 of Part 3 of FA 2014 (remote gaming duty), in section 155(3)
 
 
(which specifies the rate), for “21%” substitute “40%”.
 
 
(2)
The amendment made by this section has effect in relation to accounting
5
 
periods beginning on or after 1 April 2026.
 
 
(3)
In a case where an accounting period (a “straddling period”) begins before 1
 
 
April 2026 and ends on or after that date—
 
 
(a)
so much of the straddling period as falls before 1 April 2026, and
 
 
(b)
so much of it as falls on or after that date,
10
 
are to be treated as separate accounting periods for the purpose of calculating
 
 
the duty concerned for the straddling period.
 
 
(4)
For the purposes of subsection (3) , the amount on which duty is charged is
 
 
apportioned to those separate accounting periods on a time basis according
 
 
to the respective lengths of those periods.
15
84
General betting duty on remote bets
 
 
(1)
Chapter 1 of Part 3 of FA 2014 (general betting duty) is amended as follows.
 
 
(2)
In the cross-heading after section 125, after “General” insert “, remote”.
 
 
(3)
In section 126 (meaning of “general bet”), in subsection (1) after paragraph
 
 
(a) insert—
20
 
“(aa)
it is not a remote bet,”.
 
 
(4)
After 127 (general bets) insert—
 
“127A
General betting duty charge on remote bets
 
 
(1)
General betting duty is charged on a remote bet made with a
 
 
bookmaker.
25
 
(2)
It is charged at the rate of 25% of the bookmaker’s profits on remote
 
 
bets for an accounting period.
 
 
(3)
The bookmaker’s profits on remote bets for an accounting period are
 
 
the aggregate of—
 
 
(a)
the amount of the bookmaker’s ordinary profits for the period
30
 
in respect of remote bets (calculated in accordance with section
 
 
131), and
 
 
(b)
the amount of the bookmaker’s retained winnings profits for
 
 
the period in respect of remote bets (calculated in accordance
 
 
with section 132).
35
 
(4)
Where the calculation for an accounting period under subsection (3)
 
 
produces a negative amount—
 

Page 101

 
(a)
the bookmaker’s profits on remote bets for the accounting
 
 
period are treated as nil, and
 
 
(b)
the amount produced by the calculation may be carried forward
 
 
in reduction of the bookmaker’s profits on remote bets for one
 
 
or more later accounting periods.
5
 
(5)
A bet is a remote bet for the purposes of this Part if—
 
 
(a)
it is made using remote communication,
 
 
(b)
it is not an on-course bet, a spread bet or made by way of pool
 
 
betting,
 
 
(c)
it is not made using a self-service betting terminal, and
10
 
(d)
condition B or C in section 126 is met in relation to it.
 
 
(6)
The reference here to “remote communication” is to communication
 
 
using—
 
 
(a)
the internet,
 
 
(b)
telephone,
15
 
(c)
television,
 
 
(d)
radio, or
 
 
(e)
any other kind of electronic or other technology for facilitating
 
 
communication.
 
 
(7)
A bet is to be treated as not being a remote bet for the purposes of
20
 
this Part if it is made wholly in relation to horse racing taking place
 
 
in the United Kingdom.
 
 
(8)
In this section, “self-service betting terminal” means a machine which—
 
 
(a)
is designed or adapted for use to bet on future real events,
 
 
(b)
is not a gaming machine (within the meaning of section 235
25
 
of the Gambling Act 2005), and
 
 
(c)
is located on premises in respect of which there is a betting
 
 
premises licence (within the meaning of section 150(1)(e) of the
 
 
Gambling Act 2005) or a bookmaking office licence (within the
 
 
meaning of Article 2(2) of the Betting, Gaming, Lotteries and
30
 
Amusements (Northern Ireland) Order 1985 (S.I. 1985/1204)).
 
 
(9)
The Treasury may by regulations amend subsection (6) .”
 
 
(5)
In section 190 of FA 2014 (index of defined expressions), in the Table, after
 
 
the entry for “registrable person” insert—
 
 
“remote bet
35
 
section 127A”.
35
 
(6)
In section 194(4) of FA 2014 (made affirmative procedure for regulations),
 
 
before paragraph (za) insert—
 
 
“(zza)
regulations under section 127A (9) which have the effect of
 
 
adding to the class of bets falling with the definition of “remote
 
 
bet”;”.
40

Page 102

 
(7)
This section has effect in relation to accounting periods beginning on or after
 
 
1 April 2027, and the charge under section 127A of FA 2014 is on bets made
 
 
on or after that date.
 
 
(8)
In a case where an accounting period (a “straddling period”) begins before 1
 
 
April 2027 and ends on or after that date—
5
 
(a)
so much of the straddling period as falls before 1 April 2027, and
 
 
(b)
so much of it as falls on or after that date,
 
 
are to be treated as separate accounting periods for the purpose of calculating
 
 
the duty concerned for the straddling period.
 
 
(9)
For the purposes of subsection (8) , the amount on which duty is charged is
10
 
apportioned to those separate accounting periods on a time basis according
 
 
to the respective lengths of those periods.
 
85
Abolition of bingo duty
 
 
(1)
Omit—
 
 
(a)
sections 17 to 20C and 31 of the Betting and Gaming Duties Act 1981
15
 
(bingo duty);
 
 
(b)
the cross-heading before section 17 of that Act;
 
 
(c)
Schedule 3 to that Act (further provision about bingo duty).
 
 
(2)
Schedule 13 makes—
 
 
(a)
provision in consequence of subsection (1) ;
20
 
(b)
transitional and saving provision.
 
 
(3)
The repeals and amendments made by this section and Schedule 13 come
 
 
into force on 1 April 2026.
 
 
(4)
The Treasury may by regulations make such further transitional, transitory
 
 
or saving provision as the Treasury consider appropriate in connection with
25
 
the coming into force of those repeals and amendments.
 
 
(5)
Regulations under subsection (4) are to be made by statutory instrument.
 

Alcohol duty

 
86
Rates of duty
 
 
(1)
Part 2 of F(No.2)A 2023 (alcohol duty) is amended as follows.
30
 
(2)
For Schedule 7 (main rates) substitute—
 

Schedule 7

 
 
Rates of alcohol duty
 
 
TABLE 1
 
 
Rate of duty per litre of
 
 
alcohol in the product
 
 
Less than 3.5%
 
 
£9.96
 
 
At least 3.5% but less than 8.5%
 
 
See Table 2
 
 
At least 8.5% but not exceeding 22%
5
 
£30.62
5
 
Exceeding 22%
 
 
£33.99
 
 
TABLE 2
 
 
Description of alcoholic product (of an alcoholic
 
 
Rate of duty per litre of
 
 
strength of at least 3.5% but less than 8.5%)
 
 
alcohol in the product
 
 
(a)
Still cider
10
 
£10.39
10
 
(b)
Sparkling cider of an alcoholic strength not
 
 
exceeding 5.5%
 
 
Beer
 
 
£22.58
 
 
(a)
Spirits, wine and other fermented products
 
 
£26.61”.
 
 
(b)
Sparkling cider of an alcoholic strength
15
 
exceeding 5.5%
 
 
(3)
For Schedule 8 (reduced rates for qualifying draught products) substitute—
 

Schedule 8

 
 
Qualifying draught products: reduced rates
 
 
Description of alcoholic product
20
 
Rate of duty per
20
 
litre of alcohol in
 
 
the product
 
 
Alcoholic products of an alcoholic strength of less
 
 
£8.58
 
 
than 3.5%
 
 
(a)
Still cider of an alcoholic strength of at least
25
 
£8.95
25
 
3.5%
 
 
(b)
Sparkling cider of an alcoholic strength of at
 
 
least 3.5% but not exceeding 5.5%
 
 
(a)
Beer, spirits, wine and other fermented products
 
 
£19.45”.
 
 
of an alcoholic strength of at least 3.5% (but less
30
 
than 8.5%)
 
 
(b)
Sparkling cider of an alcoholic strength
 
 
exceeding 5.5%
 

Page 104

 
(4)
For Schedule 9 (duty discount for small producer alcoholic products)—
 

Schedule 9

 
 
Small producer alcoholic products: duty discount
 

Part 1

 
 
Alcoholic products, other than qualifying draught products, of an
5
 
alcoholic strength of less than 8.5%
 
 
Alcoholic products, other than spirits, of an alcoholic strength of less than
 
 
3.5%
 
 
Discount
 
 
Start threshold
 
 
End threshold
 
 
Marginal
 
 
Cumulative
 
 
band
10
 
(hectolitres)
10
 
discount (£)
10
 
1
 
 
0
 
 
5
 
 
9.96
 
 
-
 
 
2
 
 
5
 
 
50
 
 
2.53
 
 
49.80
 
 
3
 
 
50
 
 
100
 
 
1.52
 
 
163.74
 
 
4
 
 
100
 
 
200
 
 
0.51
 
 
239.71
 
 
5
15
 
200
15
 
600
15
 
-
15
 
290.35
15
 
6
 
 
600
 
 
1000
 
 
-
 
 
290.35
 
 
7
 
 
1000
 
 
4500
 
 
-0.08
 
 
290.35
 
 
Spirits of an alcoholic strength of less than 3.5%
 
 
Discount
 
 
Start threshold
 
 
End threshold
 
 
Marginal
 
 
Cumulative
 
 
band
20
 
(hectolitres)
20
 
discount (£)
20
 
1
 
 
0
 
 
5
 
 
6.58
 
 
-
 
 
2
 
 
5
 
 
50
 
 
2.53
 
 
32.92
 
 
3
 
 
50
 
 
100
 
 
1.52
 
 
146.86
 
 
4
 
 
100
 
 
200
 
 
0.51
 
 
222.82
 
 
5
25
 
200
25
 
600
25
 
-
25
 
273.47
25
 
6
 
 
600
 
 
1000
 
 
-
 
 
273.47
 
 
7
 
 
1000
 
 
4500
 
 
-0.08
 
 
273.47
 

Page 105

 
Still cider of an alcoholic strength of at least 3.5%; sparkling cider of an
 
 
alcoholic strength of at least 3.5% but not exceeding 5.5%
 
 
Discount
 
 
Start threshold
 
 
End threshold
 
 
Marginal
 
 
Cumulative
 
 
band
 
 
(hectolitres)
 
 
discount (£)
 
 
1
5
 
0
5
 
5
5
 
10.39
5
 
-
5
 
2
 
 
5
 
 
50
 
 
2.64
 
 
51.95
 
 
3
 
 
50
 
 
100
 
 
1.59
 
 
170.87
 
 
4
 
 
100
 
 
200
 
 
0.53
 
 
250.15
 
 
5
 
 
200
 
 
600
 
 
-
 
 
303
 
 
6
10
 
600
10
 
1000
10
 
-
10
 
303
10
 
7
 
 
1000
 
 
4500
 
 
-0.09
 
 
303
 
 
Beer of an alcoholic strength of at least 3.5%
 
 
Discount
 
 
Start threshold
 
 
End threshold
 
 
Marginal
 
 
Cumulative
 
 
band
 
 
(hectolitres)
 
 
discount (£)
 
 
1
15
 
0
15
 
5
15
 
20.67
15
 
-
15
 
2
 
 
5
 
 
112.5
 
 
11.48
 
 
103.34
 
 
3
 
 
112.5
 
 
225
 
 
10.33
 
 
1,337.72
 
 
4
 
 
225
 
 
450
 
 
5.74
 
 
2,500.33
 
 
5
 
 
450
 
 
900
 
 
3.44
 
 
3,792.12
 
 
6
20
 
900
20
 
1350
20
 
-
20
 
5,342.27
20
 
7
 
 
1350
 
 
4500
 
 
-1.70
 
 
5,342.27
 
 
Wine and other fermented products of an alcoholic strength of at least
 
 
3.5%; sparkling cider of an alcoholic strength exceeding 5.5%
 
 
Discount
 
 
Start threshold
 
 
End threshold
 
 
Marginal
 
 
Cumulative
 
 
band
25
 
(hectolitres)
25
 
discount (£)
25
 
1
 
 
0
 
 
5
 
 
26.61
 
 
-
 
 
2
 
 
5
 
 
50
 
 
2.71
 
 
133.05
 
 
3
 
 
50
 
 
100
 
 
2.71
 
 
254.84
 
 
4
 
 
100
 
 
200
 
 
1.35
 
 
390.16
 
 
5
30
 
200
30
 
600
30
 
-
30
 
525.48
30
 
6
5
 
600
5
 
1000
5
 
-
5
 
525.48
5
 
7
 
 
1000
 
 
4500
 
 
-0.15
 
 
525.48
 
 
Spirits of an alcoholic strength of at least 3.5%
 
 
Discount
 
 
Start threshold
 
 
End threshold
 
 
Marginal
 
 
Cumulative
 
 
band
 
 
(hectolitres)
 
 
discount (£)
 
 
1
10
 
0
10
 
5
10
 
21.65
10
 
-
10
 
2
 
 
5
 
 
50
 
 
2.71
 
 
108.26
 
 
3
 
 
50
 
 
100
 
 
2.71
 
 
230.04
 
 
4
 
 
100
 
 
200
 
 
1.35
 
 
365.36
 
 
5
 
 
200
 
 
600
 
 
-
 
 
500.68
 
 
6
15
 
600
15
 
1000
15
 
-
15
 
500.68
15
 
7
 
 
1000
 
 
4500
 
 
-0.14
 
 
500.68
 

Part 2

 
 
Qualifying draught products of an alcoholic strength of less than
 
 
8.5%
 
 
Alcoholic products, other than spirits, of an alcoholic strength of less than
20
 
3.5%
 
 
End threshold
 
 
Marginal
 
 
Cumulative
 
 
Discount
 
 
Start threshold
 
 
discount (£)
 
 
band
 
 
(hectolitres)
 
 
1
 
 
0
 
 
5
 
 
8.58
 
 
-
 
 
2
25
 
5
25
 
50
25
 
2.18
25
 
42.90
25
 
3
 
 
50
 
 
100
 
 
1.31
 
 
141.06
 
 
4
 
 
100
 
 
200
 
 
0.44
 
 
206.50
 
 
5
 
 
200
 
 
600
 
 
-
 
 
250.12
 
 
6
 
 
600
 
 
1000
 
 
-
 
 
250.12
 
 
7
30
 
1000
30
 
4500
30
 
-0.07
30
 
250.12
30

Page 107

 
Spirits of an alcoholic strength of less than 3.5%
 
 
Discount
 
 
Start threshold
 
 
End threshold
 
 
Marginal
 
 
Cumulative
 
 
band
 
 
(hectolitres)
 
 
discount (£)
 
 
1
 
 
0
 
 
5
 
 
5.67
 
 
-
 
 
2
5
 
5
5
 
50
5
 
2.18
5
 
28.36
5
 
3
 
 
50
 
 
100
 
 
1.31
 
 
126.51
 
 
4
 
 
100
 
 
200
 
 
0.44
 
 
191.95
 
 
5
 
 
200
 
 
600
 
 
-
 
 
235.58
 
 
6
 
 
600
 
 
1000
 
 
-
 
 
235.58
 
 
7
10
 
1000
10
 
4500
10
 
-0.07
10
 
235.58
10
 
Still cider of an alcoholic strength of at least 3.5%; sparkling cider of an
 
 
alcoholic strength of at least 3.5% but not exceeding 5.5%
 
 
Discount
 
 
Start threshold
 
 
End threshold
 
 
Marginal
 
 
Cumulative
 
 
band
 
 
(hectolitres)
 
 
discount (£)
 
 
1
15
 
0
15
 
5
15
 
8.95
15
 
-
15
 
2
 
 
5
 
 
50
 
 
2.28
 
 
44.75
 
 
3
 
 
50
 
 
100
 
 
1.37
 
 
147.19
 
 
4
 
 
100
 
 
200
 
 
0.46
 
 
215.48
 
 
5
 
 
200
 
 
600
 
 
-
 
 
261.01
 
 
6
20
 
600
20
 
1000
20
 
-
20
 
261.01
20
 
7
 
 
1000
 
 
4500
 
 
-0.07
 
 
261.01
 
 
Beer of an alcoholic strength of at least 3.5%
 
 
Discount
 
 
Start threshold
 
 
End threshold
 
 
Marginal
 
 
Cumulative
 
 
band
 
 
(hectolitres)
 
 
discount (£)
 
 
1
25
 
0
25
 
5
25
 
17.80
25
 
-
25
 
2
 
 
5
 
 
112.5
 
 
9.89
 
 
89.02
 
 
3
 
 
112.5
 
 
225
 
 
8.90
 
 
1,152.29
 
 
4
 
 
225
 
 
450
 
 
4.95
 
 
2,153.74
 
 
5
 
 
450
 
 
900
 
 
2.97
 
 
3,266.46
 
 
6
30
 
900
30
 
1350
30
 
-
30
 
4,601.73
30
 
7
 
 
1350
 
 
4500
 
 
-1.46
 
 
4,601.73
 
 
Wine and other fermented products of an alcoholic strength of at least
5
 
3.5%; sparkling cider of an alcoholic strength exceeding 5.5%
 
 
Discount
 
 
Start threshold
 
 
End threshold
 
 
Marginal
 
 
Cumulative
 
 
band
 
 
(hectolitres)
 
 
discount (£)
 
 
1
 
 
0
 
 
5
 
 
19.45
 
 
-
 
 
2
10
 
5
10
 
50
10
 
1.98
10
 
97.25
10
 
3
 
 
50
 
 
100
 
 
1.98
 
 
186.27
 
 
4
 
 
100
 
 
200
 
 
0.99
 
 
285.18
 
 
5
 
 
200
 
 
600
 
 
-
 
 
384.09
 
 
6
 
 
600
 
 
1000
 
 
-
 
 
384.09
 
 
7
15
 
1000
15
 
4500
15
 
-0.11
15
 
384.09
15
 
Spirits of an alcoholic strength of at least 3.5%
 
 
Discount
 
 
Start threshold
 
 
End threshold
 
 
Marginal
 
 
Cumulative
 
 
band
 
 
(hectolitres)
 
 
discount (£)
 
 
1
 
 
0
 
 
5
 
 
15.83
 
 
-
 
 
2
20
 
5
20
 
50
20
 
1.98
20
 
79.13
20
 
3
 
 
50
 
 
100
 
 
1.98
 
 
168.15
 
 
4
 
 
100
 
 
200
 
 
0.99
 
 
267.05
 
 
5
 
 
200
 
 
600
 
 
-
 
 
365.96
 
 
6
 
 
600
 
 
1000
 
 
-
 
 
365.96
 
 
7
25
 
1000
25
 
4500
25
 
-0.10
25
 
365.96”.
25
 
(5)
In consequence of the amendments made by the preceding subsections of this
 
 
section, in Schedule 2 to the Travellers’ Allowances Order 1994 (which
 
 
provides in certain circumstances for a simplified calculation of excise duty
 
 
on goods brought into Great Britain)—
 
 
(a)
in the entry relating to beer, in the second column, for “£0.91”
30
 
substitute “£0.95”,
 

Page 109

 
(b)
in the entry relating to still wine, in the second column, for “£3.40”
 
 
substitute “£3.52”,
 
 
(c)
in the entry relating to sparkling wine, in the second column, for
 
 
“£3.40” substitute “£3.52”,
 
 
(d)
in the entry relating to cider, in the second column, for “£0.46”
5
 
substitute “£0.48”,
 
 
(e)
in the entry relating to sparkling cider of an alcoholic strength not
 
 
exceeding 5.5% by volume, in the second column, for “£0.46” substitute
 
 
“£0.48”,
 
 
(f)
in the entry relating to sparkling cider of an alcoholic strength
10
 
exceeding 5.5% but less than 8.5% by volume, in the second column,
 
 
for “£1.80” substitute “£1.86”,
 
 
(g)
in the entry relating to other fermented products, in the second column,
 
 
for “£3.40” substitute “£3.52”, and
 
 
(h)
in the entry relating to spirits, in the second column, for “£12.30”
15
 
substitute “£12.75”.
 
 
(6)
The amendments made by this section are treated as having come into force
 
 
on 1 February 2026.
 

Tobacco products duty

 
87
Rates of duty effective from 6pm on 26 November 2025
20
 
(1)
In Schedule 1 to TPDA 1979 (table of rates of tobacco products duty), for the
 
 
Table substitute—
 
 
“TABLE
 
 
1 Cigarettes
 
 
An amount equal to the higher of—
 
 
(a)
16.5% of the retail price plus £353.50
25
 
per thousand cigarettes, or
 
 
(b)
£471.93 per thousand cigarettes.
 
 
2 Cigars
 
 
£440.93 per kilogram
 
 
3 Hand-rolling tobacco
 
 
£503.80 per kilogram
 
 
4 Other smoking tobacco and
30
 
£193.87 per kilogram
30
 
chewing tobacco
 
 
5 Tobacco for heating
 
 
£363.36 per kilogram”.
 
 
(2)
In consequence of the provision made by subsection (1) , in Schedule 2 to the
 
 
Travellers’ Allowances Order 1994 (which provides in certain circumstances
 
 
for a simplified calculation of excise duty on goods brought into Great
35
 
Britain)—
 
 
(a)
in the entry relating to cigarettes, for “£446.67” substitute “£471.93”,
 

Page 110

 
(b)
in the entry relating to hand rolling tobacco, for “£476.83” substitute
 
 
“£503.80”,
 
 
(c)
in the entry relating to other smoking tobacco and chewing tobacco,
 
 
for “£183.49” substitute “£193.87”,
 
 
(d)
in the entry relating to cigars, for “£417.33” substitute “£440.93”,
5
 
(e)
in the entry relating to cigarillos, for “£417.33” substitute “£440.93”,
 
 
and
 
 
(f)
in the entry relating to tobacco for heating, for “£103.17” substitute
 
 
“£109.01”.
 
 
(3)
The amendments made by this section are treated as having come into force
10
 
at 6pm on 26 November 2025.
 
88
Rates of duty effective from 1 October 2026
 
 
(1)
In Schedule 1 to TPDA 1979 (table of rates of tobacco products duty), for the
 
 
Table substitute—
 
 
“TABLE
15
 
1 Cigarettes
 
 
An amount equal to the higher of—
 
 
(a)
16.5% of the retail price plus £394.09
 
 
per thousand cigarettes, or
 
 
(b)
£518.75 per thousand cigarettes.
 
 
2 Cigars
20
 
£508.12 per kilogram
20
 
3 Hand-rolling tobacco
 
 
£574.30 per kilogram
 
 
4 Other smoking tobacco and
 
 
£248.07 per kilogram
 
 
chewing tobacco
 
 
5 Tobacco for heating
 
 
£426.47 per kilogram”.
 
 
(2)
In consequence of the provision made by subsection (1) , in Schedule 2 to the
25
 
Travellers’ Allowances Order 1994 (which provides in certain circumstances
 
 
for a simplified calculation of excise duty on goods brought into Great
 
 
Britain)—
 
 
(a)
in the entry relating to cigarettes, for “£471.93” substitute “£518.75”,
 
 
(b)
in the entry relating to hand rolling tobacco, for “£503.80” substitute
30
 
“£574.30”,
 
 
(c)
in the entry relating to other smoking tobacco and chewing tobacco,
 
 
for “£193.87” substitute “£248.07”,
 
 
(d)
in the entry relating to cigars, for “£440.93” substitute “£508.12”,
 
 
(e)
in the entry relating to cigarillos, for “£440.93” substitute “£508.12”,
35
 
and
 
 
(f)
in the entry relating to tobacco for heating, for “£109.01” substitute
 
 
“£127.94”.
 

Page 111

 
(3)
The amendments made by this section come into force on 1 October 2026.
 

Taxes relating to vehicles

 
89
Vehicle excise duty for light passenger or light goods vehicles etc
 
 
(1)
Schedule 1 to VERA 1994 (annual rates of vehicle excise duty) is amended
 
 
as follows.
5
 
(2)
In paragraph 1 (general rate)—
 
 
(a)
in sub-paragraph (2) (vehicle not covered elsewhere in Schedule with
 
 
engine cylinder capacity exceeding 1,549cc), for “£360” substitute
 
 
“£375”, and
 
 
(b)
in sub-paragraph (2A) (vehicle not covered elsewhere in Schedule with
10
 
engine cylinder capacity not exceeding 1,549cc), for “£220” substitute
 
 
“£230”.
 
 
(3)
In paragraph 1B, for the Table substitute—
 
 
“CO2 Emissions Figure
 
 
(1)
15
 
(2)
15
 
(3)
15
 
Exceeding or, in the first
 
 
Not exceeding
 
 
Rate
 
 
row, equal to or exceeding
 
 
g/km
 
 
£
 
 
0
 
 
100
 
 
20
 
 
100
20
 
110
20
 
20
20
 
110
 
 
120
 
 
35
 
 
120
 
 
130
 
 
170
 
 
130
 
 
140
 
 
200
 
 
140
 
 
150
 
 
225
 
 
150
25
 
165
25
 
275
25
 
165
 
 
175
 
 
325
 
 
175
 
 
185
 
 
360
 
 
185
 
 
200
 
 
410
 
 
200
 
 
225
 
 
445
 
 
225
30
 
255
30
 
760
30
 
255
 
 
—
 
 
790”.
 

Page 112

 
(4)
In the sentence immediately following the Table in that paragraph, for the
 
 
words from “as if” to the end substitute “as if, in column (3), in the last two
 
 
rows, “445” were substituted for “760” and “790”.”
 
 
(5)
In paragraph 1GC, for Table 1 (vehicles other than higher rate diesel vehicles)
 
 
substitute—
5
 
“CO2 Emissions Figure
 
 
(1)
 
 
(2)
 
 
(3)
 
 
Exceeding or, in the first
 
 
Not exceeding
 
 
Rate
 
 
row, equal to
 
 
g/km
10
 
£
10
 
0
 
 
10
 
 
0
 
 
50
 
 
115
 
 
50
 
 
75
 
 
135
 
 
75
 
 
90
 
 
280
 
 
90
15
 
100
15
 
365
15
 
100
 
 
110
 
 
405
 
 
110
 
 
130
 
 
455
 
 
130
 
 
150
 
 
560
 
 
150
 
 
170
 
 
1410
 
 
170
20
 
190
20
 
2270
20
 
190
 
 
225
 
 
3420
 
 
225
 
 
255
 
 
4850
 
 
255
 
 
—
 
 
5690”.
 
 
(6)
In that paragraph, for Table 2 (higher rate diesel vehicles) substitute—
 
 
“CO2 Emissions Figure
25
 
Rate
25
 
(1)
 
 
(2)
 
 
(3)
 
 
Exceeding or, in the first
 
 
Not exceeding
 
 
Rate
 
 
row, equal to or exceeding
 
 
g/km
 
 
£
 
 
0
30
 
50
30
 
135
30
 
50
 
 
75
 
 
280
 
 
75
 
 
90
 
 
365
 
 
90
 
 
100
 
 
405
 
 
100
 
 
110
 
 
455
 
 
110
5
 
130
5
 
560
5
 
130
 
 
150
 
 
1410
 
 
150
 
 
170
 
 
2270
 
 
170
 
 
190
 
 
3420
 
 
190
 
 
225
 
 
4850
 
 
225
10
 
255
10
 
5690
10
 
255
 
 
—
 
 
5690”.
 
 
(7)
In paragraph 1GD(1)(rates for any other licence for light passenger vehicles
 
 
registered on or after 1 April 2017), for “£195” substitute “£200”.
 
 
(8)
In paragraph 1GE(2) (rates for light passenger vehicles registered on or after
 
 
1 April 2017 with a price exceeding £40,000), for “£620” substitute “£640”.
15
 
(9)
In paragraph 1J(a) (rates for light goods vehicles that are not pre-2007 or
 
 
post-2008 lower emission vans), for “£345” substitute “£360”.
 
 
(10)
In paragraph 2(1) (rates for motorcycles)—
 
 
(a)
in paragraph (a) (engine cylinder capacity not exceeding 150cc), for
 
 
“£26” substitute “£27”,
20
 
(b)
in paragraph (b) (motorbicycles with engine cylinder capacity exceeding
 
 
150cc but not exceeding 400cc), for “£57” substitute “£59”,
 
 
(c)
in paragraph (c) (motorbicycles with engine cylinder capacity exceeding
 
 
400cc but not exceeding 600cc), for “£87” substitute “£90”, and
 
 
(d)
in paragraph (d) (other cases), for “£125” substitute “£125”.
25
 
(11)
The amendments made by this section have effect in relation to licences taken
 
 
out on or after 1 April 2026.
 
 
90
Vehicle excise duty for rigid goods vehicles without trailers and tractive
 

units

 
 
(1)
Schedule 1 to VERA 1994 (annual rates of vehicle excise duty) is amended
30
 
as follows.
 

Page 114

 
(2)
In paragraph 9 (rigid goods vehicles exceeding 3,500 kgs revenue weight),
 
 
for the table in sub-paragraph (1) substitute—
 
 
“Revenue weight of vehicle
 
 
Rate
 
 
(1)
 
 
(2)
 
 
(3)
 
 
(4)
 
 
(5)
 
 
Exceeding
5
 
Not exceeding
5
 
Two axle
5
 
Three axle
5
 
Four or more
5
 
vehicle
 
 
axle vehicle
 
 
kgs
 
 
£
 
 
3,500
 
 
7,500
 
 
177
 
 
7,500
 
 
11,999
 
 
215
 
 
11,999
10
 
14,000
10
 
102
10
 
14,000
 
 
15,000
 
 
113
 
 
102
 
 
15,000
 
 
19,000
 
 
322
 
 
102
 
 
19,000
 
 
21,000
 
 
322
 
 
135
 
 
102
 
 
21,000
 
 
23,000
 
 
322
 
 
226
 
 
102
 
 
23,000
15
 
25,000
15
 
322
15
 
226
15
 
25,000
 
 
27,000
 
 
322
 
 
27,000
 
 
44,000
 
 
322
 
 
601
 
 
(3)
In paragraph 11(1) (tractive units), for Table 1 and Table 2 substitute—
 

Table 1

 
 
Tractive unit with two axles
20
 
Revenue weight of vehicle
 
 
Rate
 
 
(1)
 
 
(2)
 
 
(3)
 
 
(4)
 
 
(5)
 
 
Exceeding
 
 
Not exceeding
 
 
Any no of
 
 
2 or more
 
 
3 or more
 
 
semi-trailer
 
 
axles
25
 
kgs
 
 
£
 
 
3,500
 
 
11,999
 
 
177
 
 
11,999
 
 
22,000
 
 
86
 
 
22,000
 
 
23,000
 
 
90
 
 
86
 
 
23,000
30
 
25,000
30
 
163
30
 
86
30
 
25,000
 
 
26,000
 
 
285
 
 
108
 
 
86
 
 
26,000
 
 
28,000
 
 
285
 
 
157
 
 
86
 
 
28,000
 
 
31,000
 
 
322
 
 
86
 
 
31,000
5
 
33,000
5
 
601
5
 
226
5
 
33,000
 
 
34,000
 
 
601
 
 
654
 
 
226
 
 
601
 
 
34,000
 
 
38,000
 
 
741
 
 
38,000
 
 
44,000
 
 
913
 

Table 2

 
 
Tractive unit with three or more axles
10
 
Revenue weight of vehicle
 
 
Rate
 
 
(1)
 
 
(2)
 
 
(3)
 
 
(4)
 
 
(5)
 
 
Exceeding
 
 
Not exceeding
 
 
Any no of
 
 
2 or more
 
 
3 or more
 
 
semi-trailer
 
 
axles
15
 
kgs
 
 
£
 
 
3,500
 
 
11,999
 
 
177
 
 
11,999
 
 
25,000
 
 
86
 
 
25,000
 
 
26,000
 
 
108
 
 
86
 
 
26,000
20
 
28,000
20
 
157
20
 
86
20
 
28,000
 
 
29,000
 
 
226
 
 
86
 
 
29,000
 
 
31,000
 
 
311
 
 
86
 
 
31,000
 
 
33,000
 
 
601
 
 
226
 
 
86
 
 
33,000
 
 
34,000
 
 
654
 
 
322
 
 
86
 
 
34,000
25
 
36,000
25
 
654
25
 
322
25
 
226
25
 
36,000
 
 
38,000
 
 
741
 
 
601
 
 
322
 
 
38,000
 
 
44,000
 
 
913
 
 
601
 
 
(4)
The amendments made by this section have effect in relation to licences taken
 
 
out on or after 1 April 2026.
 

Page 116

91
Vehicle excise duty for rigid goods vehicles with trailers
 
 
(1)
In paragraph 10 of Schedule 1 to VERA 1994 (supplement to annual rate of
 
 
duty for rigid goods vehicles with trailers), in sub-paragraph (6), for the Tables
 
 
1 to 6 substitute—
 

Table 1

5
 
Vehicles with road-friendly suspension and 2 axles
 
 
Vehicle
 
 
Plated gross weight of
 
 
Total weight
 
 
Rate
 
 
excise duty
 
 
trailer
 
 
band
 
 
(1)
10
 
(2)
10
 
(3)
10
 
(4)
10
 
(5)
10
 
(6)
10
 
Exceeding
 
 
Not
 
 
£
 
 
(kgs)
 
 
exceeding
 
 
(kgs)
 
 
B(T)
 
 
4,000
 
 
12,000
 
 
-
 
 
27,000
 
 
247
 
 
B(T)
15
 
12,000
15
 
-
15
 
33,000
15
 
317
15
 
B(T)
 
 
12,000
 
 
-
 
 
33,000
 
 
36,000
 
 
431
 
 
B(T)
 
 
12,000
 
 
-
 
 
36,000
 
 
38,000
 
 
343
 
 
B(T)
 
 
12,000
 
 
-
 
 
38,000
 
 
477
 
 
D(T)
 
 
4,000
 
 
12,000
 
 
-
 
 
30,000
 
 
392
 
 
38,000
20
 
462
20
 
D(T)
20
 
12,000
20
 
-
20
 
D(T)
 
 
12,000
 
 
-
 
 
38,000
 
 
477
 

Table 2

 
 
Vehicles with road-friendly suspension and 3 axles
 
 
Vehicle
 
 
Plated gross weight of
 
 
Total weight
 
 
Rate
 
 
excise duty
25
 
trailer
25
 
band
 
 
(1)
 
 
(2)
 
 
(3)
 
 
(4)
 
 
(5)
 
 
(6)
 
 
Exceeding
 
 
Not
 
 
£
 
 
(kgs)
 
 
exceeding
 
 
(kgs)
30
 
B(T)
 
 
4,000
 
 
12,000
 
 
-
 
 
33,000
 
 
247
 
 
B(T)
 
 
12,000
 
 
-
 
 
38,000
 
 
317
 
 
B(T)
 
 
12,000
 
 
-
 
 
38,000
 
 
40,000
 
 
421
 
 
B(T)
5
 
12,000
5
 
-
5
 
40,000
5
 
317
5
 
C(T)
 
 
4,000
 
 
12,000
 
 
-
 
 
35,000
 
 
328
 
 
C(T)
 
 
12,000
 
 
-
 
 
38,000
 
 
397
 
 
C(T)
 
 
12,000
 
 
-
 
 
38,000
 
 
40,000
 
 
421
 
 
C(T)
 
 
12,000
 
 
-
 
 
40,000
 
 
397
 
 
D(T)
10
 
4,000
10
 
10,000
10
 
-
10
 
33,000
10
 
392
10
 
D(T)
 
 
4,000
 
 
10,000
 
 
33,000
 
 
36,000
 
 
431
 
 
D(T)
 
 
10,000
 
 
12,000
 
 
-
 
 
38,000
 
 
392
 
 
D(T)
 
 
12,000
 
 
-
 
 
462
 

Table 3

 
 
Vehicles with road-friendly suspension and 4 or more axles
15
 
Vehicle
 
 
Plated gross weight of
 
 
Total weight
 
 
Rate
 
 
excise duty
 
 
trailer
 
 
band
 
 
(1)
 
 
(2)
 
 
(3)
 
 
(4)
 
 
(5)
 
 
(6)
 
 
Exceeding
20
 
Not
20
 
£
20
 
(kgs)
 
 
exceeding
 
 
(kgs)
 
 
B(T)
 
 
4,000
 
 
12,000
 
 
-
 
 
35,000
 
 
247
 
 
B(T)
 
 
12,000
 
 
-
 
 
317
 
 
C(T)
25
 
4,000
25
 
12,000
25
 
-
25
 
37,000
25
 
328
25
 
12,000
 
 
-
 
 
397
 
 
C(T)
 
 
D(T)
 
 
4,000
 
 
12,000
 
 
-
 
 
39,000
 
 
392
 
 
D(T)
 
 
12,000
 
 
-
 
 
462
 
 
E(T)
 
 
4,000
 
 
12,000
 
 
-
 
 
575
 
 
E(T)
30
 
12,000
30
 
-
30
 
645
30

Table 4

 

Page 118

 
Vehicles without road-friendly suspension with 2 axles
 
 
Vehicle
 
 
Plated gross weight of
 
 
Total weight
 
 
Rate
 
 
excise duty
 
 
trailer
 
 
band
 
 
(1)
5
 
(2)
5
 
(3)
5
 
(4)
5
 
(5)
5
 
(6)
5
 
Exceeding
 
 
Not
 
 
£
 
 
(kgs)
 
 
exceeding
 
 
(kgs)
 
 
B(T)
 
 
4,000
 
 
12,000
 
 
-
 
 
27,000
 
 
247
 
 
B(T)
10
 
12,000
10
 
-
10
 
31,000
10
 
317
10
 
B(T)
 
 
12,000
 
 
-
 
 
31,000
 
 
33,000
 
 
431
 
 
B(T)
 
 
12,000
 
 
-
 
 
33,000
 
 
36,000
 
 
654
 
 
B(T)
 
 
12,000
 
 
-
 
 
36,000
 
 
38,000
 
 
477
 
 
B(T)
 
 
12,000
 
 
-
 
 
38,000
 
 
649
 
 
D(T)
15
 
4,000
15
 
12,000
15
 
-
15
 
30,000
15
 
392
15
 
D(T)
 
 
12,000
 
 
-
 
 
33,000
 
 
462
 
 
D(T)
 
 
12,000
 
 
-
 
 
33,000
 
 
36,000
 
 
654
 
 
D(T)
 
 
12,000
 
 
-
 
 
36,000
 
 
38,000
 
 
477
 
 
D(T)
 
 
12,000
 
 
-
 
 
38,000
 
 
649
 

Table 5

20
 
Vehicles without road-friendly suspension with 3 axles
 
 
Vehicle
 
 
Plated gross weight of
 
 
Total weight
 
 
Rate
 
 
excise duty
 
 
trailer
 
 
band
 
 
(1)
25
 
(2)
25
 
(3)
25
 
(4)
25
 
(5)
25
 
(6)
25
 
Exceeding
 
 
Not
 
 
£
 
 
(kgs)
 
 
exceeding
 
 
(kgs)
 
 
B(T)
 
 
4,000
 
 
10,000
 
 
-
 
 
29,000
 
 
247
 
 
B(T)
30
 
4,000
30
 
10,000
30
 
29,000
30
 
31,000
30
 
311
30
 
B(T)
 
 
10,000
 
 
12,000
 
 
-
 
 
33,000
 
 
247
 
 
B(T)
 
 
12,000
 
 
-
 
 
36,000
 
 
317
 
 
B(T)
 
 
12,000
 
 
-
 
 
36,000
 
 
38,000
 
 
421
 
 
B(T)
5
 
12,000
5
 
-
5
 
38,000
5
 
583
5
 
C(T)
 
 
4,000
 
 
10,000
 
 
-
 
 
31,000
 
 
328
 
 
C(T)
 
 
4,000
 
 
10,000
 
 
31,000
 
 
33,000
 
 
431
 
 
C(T)
 
 
10,000
 
 
12,000
 
 
-
 
 
35,000
 
 
328
 
 
C(T)
 
 
12,000
 
 
-
 
 
36,000
 
 
397
 
 
C(T)
10
 
12,000
10
 
-
10
 
36,000
10
 
38,000
10
 
421
10
 
C(T)
 
 
12,000
 
 
-
 
 
38,000
 
 
583
 
 
D(T)
 
 
4,000
 
 
10,000
 
 
-
 
 
31,000
 
 
392
 
 
D(T)
 
 
4,000
 
 
10,000
 
 
31,000
 
 
33,000
 
 
431
 
 
D(T)
 
 
4,000
 
 
10,000
 
 
33,000
 
 
35,000
 
 
654
 
 
D(T)
15
 
10,000
15
 
12,000
15
 
-
15
 
36,000
15
 
392
15
 
D(T)
 
 
10,000
 
 
12,000
 
 
36,000
 
 
37,000
 
 
421
 
 
D(T)
 
 
12,000
 
 
-
 
 
38,000
 
 
462
 
 
D(T)
 
 
12,000
 
 
-
 
 
38,000
 
 
583
 

Table 6

 
 
Vehicles without road-friendly suspension with 4 or more axles
20
 
Vehicle
 
 
Plated gross weight of
 
 
Total weight
 
 
Rate
 
 
excise duty
 
 
trailer
 
 
band
 
 
(1)
 
 
(2)
 
 
(3)
 
 
(4)
 
 
(5)
 
 
(6)
 
 
Exceeding
25
 
Not exceeding
25
 
Not
25
 
£
25
 
(kgs)
 
 
exceeding
 
 
(kgs)
 
 
B(T)
 
 
4,000
 
 
12,000
 
 
-
 
 
35,000
 
 
247
 
 
B(T)
 
 
12,000
 
 
-
 
 
317
 
 
C(T)
30
 
4,000
30
 
12,000
30
 
-
30
 
37,000
30
 
328
30
 
C(T)
 
 
12,000
 
 
-
 
 
397
 
 
D(T)
 
 
4,000
 
 
10,000
 
 
-
 
 
36,000
 
 
392
 
 
D(T)
5
 
4,000
5
 
10,000
5
 
36,000
5
 
37,000
5
 
477
5
 
D(T)
 
 
10,000
 
 
12,000
 
 
-
 
 
39,000
 
 
392
 
 
D(T)
 
 
12,000
 
 
-
 
 
462
 
 
E(T)
 
 
4,000
 
 
10,000
 
 
-
 
 
38,000
 
 
575
 
 
E(T)
 
 
4,000
 
 
10,000
 
 
38,000
 
 
-
 
 
649
 
 
E(T)
10
 
10,000
10
 
12,000
10
 
-
10
 
575”
10
 
(2)
In that paragraph, in sub-paragraph (7), for “£631” substitute “£654”.
 
 
(3)
The amendments made by this section have effect in relation to licences taken
 
 
out on or after 1 April 2026.
 
92
Vehicle excise duty for vehicles with exceptional loads etc
 
 
(1)
In—
15
 
(a)
paragraph 6(2A)(a) of Schedule 1 to VERA 1994 (vehicles with
 
 
exceptional loads),
 
 
(b)
paragraph 9(3) of that Schedule (rigid goods vehicle which has weight
 
 
exceeding 44,000 kg and is not an island goods vehicle), and
 
 
(c)
paragraph 11(3) of that Schedule (tractive unit vehicle which has weight
20
 
exceeding 44,000 kg and is not an island goods vehicle),
 
 
for “£1,643” substitute “£1,703”.
 
 
(2)
The amendments made by this section have effect in relation to licences taken
 
 
out on or after 1 April 2026.
 
93
Vehicle excise duty for haulage vehicles other than showman’s vehicles
25
 
(1)
In paragraph 7(3A) of Schedule 1 to VERA 1994 (which specifies the rate
 
 
applicable to haulage vehicles other than showman’s vehicles), for £365”
 
 
substitute “£380”.
 
 
(2)
The amendment made by this section has effect in relation to licences taken
 
 
out on or after 1 April 2026.
30
94
Vehicle excise duty: expensive car supplement
 
 
(1)
In paragraph 1GE of Schedule 1 to VERA 1994 (rates for light passenger
 
 
vehicles registered on or after 1 April 2017 with a price exceeding £40,000)—
 

Page 121

 
(a)
in sub-paragraph (1)(a), for “£40,000” substitute “the applicable
 
 
amount”, and
 
 
(b)
after sub-paragraph (1) insert—
 
 
“(1A)
For the purposes of sub-paragraph (1) “the applicable
 
 
amount” is—
5
 
(a)
in the case of a vehicle whose applicable CO2
 
 
emissions figure in grams per kilometre driven is
 
 
zero, £50,000, and
 
 
(b)
in any other case, £40,000.”
 
 
(2)
The amendments made by this section have effect in relation to any licence
10
 
where the period for which the licence has effect begins on or after 1 April
 
 
2026 (whenever the licence is taken out).
 
95
Rates of HGV road user levy
 
 
(1)
Schedule 1 to the HGV Road User Levy Act 2013 (rates of the levy) is amended
 
 
as follows.
15
 
(2)
In paragraph 5, for Table 1 substitute—
 
 
“TABLE 1: VEHICLES MEETING EURO 6 EMISSIONS STANDARDS —
 
 
RATES FOR EACH BAND
 
 
Band
 
 
Daily rate
 
 
Weekly rate
 
 
Monthly rate
 
 
Half-yearly
 
 
Yearly rate
 
 
rate
20
 
A
 
 
£3.22
 
 
£8.05
 
 
£16.10
 
 
£96.60
 
 
£161
 
 
B
 
 
£7.74
 
 
£19.35
 
 
£38.70
 
 
£232.20
 
 
£387
 
 
C
 
 
£9.67
 
 
£30.95
 
 
£61.90
 
 
£371.40
 
 
£619”.
 
 
(3)
In paragraph 5, for Table 1A substitute—
 
 
“TABLE 1A: VEHICLES NOT MEETING EURO 6 EMISSIONS STANDARDS
25
 
— RATES FOR EACH BAND
 
 
Band
 
 
Daily rate
 
 
Weekly rate
 
 
Monthly rate
 
 
Half-yearly
 
 
Yearly rate
 
 
rate
 
 
A
 
 
£4.18
 
 
£10.45
 
 
£20.90
 
 
£125.40
 
 
£209
 
 
£10.06
30
 
£25.15
30
 
£50.30
30
 
£301.80
30
 
£503
30
 
B
30
 
C
 
 
£10.74
 
 
£40.20
 
 
£80.40
 
 
£482.40
 
 
£804”.
 
 
(4)
The amendments made by this section come into force on 1 April 2026.
 

Page 122

96
Rates of air passenger duty
 
 
(1)
Section 30 of FA 1994 (air passenger duty: rates) is amended as follows.
 
 
(2)
In subsection (1B) (journeys ending in the United Kingdom)—
 
 
(a)
in paragraph (a), for “£8” substitute “£8.26”, and
 
 
(b)
in paragraph (b), for “£16” substitute “£16.52”.
5
 
(3)
In subsection (2) (short-haul journeys)—
 
 
(a)
in paragraph (a), for “£15” substitute “£15.49”, and
 
 
(b)
in paragraph (b), for “£32” substitute “£33.04”.
 
 
(4)
In subsection (2A) (long-haul journeys)—
 
 
(a)
in paragraph (a), for “£102” substitute “£105.33”, and
10
 
(b)
in paragraph (b), for “£244” substitute “£251.95”.
 
 
(5)
In subsection (4A) (ultra-long haul journeys)—
 
 
(a)
in paragraph (a), for “£106” substitute “£109.46”, and
 
 
(b)
in paragraph (b), for “£253” substitute “£261.25”.
 
 
(6)
In subsection (4E) (journeys on aircraft equipped to carry fewer than 19
15
 
passengers)—
 
 
(a)
in paragraph (za), for “£142” substitute “£146.63”,
 
 
(b)
in paragraph (a), for “£142” substitute “£146.63”,
 
 
(c)
in paragraph (aa), for “£1,097” substitute “£1132.76”, and
 
 
(d)
in paragraph (d), for “£1,141” substitute “£1178.20”.
20
 
(7)
The amendments made by this section have effect in relation to the carriage
 
 
of passengers beginning on or after 1 April 2027.
 

Environmental taxes

 
97
Rates of climate change levy
 
 
(1)
In paragraph 42(1) of Schedule 6 to FA 2000 (climate change levy: amount
25
 
payable by way of levy), for the table substitute—
 
 
“TABLE
 
 
Taxable commodity supplied
 
 
Rate at which levy payable if supply
 
 
is not a reduced-rate supply
 
 
Electricity
30
 
£0.00827 per kilowatt hour
30
 
Gas supplied by a gas utility or any gas
 
 
£0.00827 per kilowatt hour
 
 
supplied in a gaseous state that is of a
 
 
kind supplied by a gas utility
 
 
Any petroleum gas, or other gaseous
 
 
£0.02175 per kilogram
 
 
hydrocarbon, supplied in a liquid state
35
 
Any other taxable commodity
 
 
£0.06468 per kilogram”.
 
 
(2)
The amendment made by this section has effect in relation to supplies treated
 
 
as taking place on or after 1 April 2027.
5
98
Rates of landfill tax
 
 
(1)
Section 42 of FA 1996 (amount of landfill tax) is amended as follows.
 
 
(2)
In subsection (1)(a) (standard rate), for “£126.15” substitute “£130.75”.
 
 
(3)
In subsection (2) (reduced rate for certain disposals), in the words after
 
 
paragraph (b)—
10
 
(a)
for “£126.15” substitute “£130.75”, and
 
 
(b)
for “£4.05” substitute “£8.65”.
 
 
(4)
The amendments made by this section have effect in relation to disposals
 
 
made (or treated as made) on or after 1 April 2026.
 
99
Rate of aggregates levy
15
 
(1)
In section 16(4) of FA 2001 (rate of aggregates levy), for “£2.08” substitute
 
 
“£2.16”.
 
 
(2)
The amendment made by this section has effect in relation to aggregate
 
 
subjected to commercial exploitation on or after 1 April 2026.
 
100
Aggregates levy: amendments relating to disapplication of levy to Scotland
20
 
Schedule 23 (aggregates levy: amendments relating to disapplication of levy
 
 
to Scotland) has effect.
 
101
Rate of plastic packaging tax
 
 
(1)
In section 45(1) of FA 2021 (rate of plastic packaging tax), for “£223.69”
 
 
substitute “£228.82”.
25
 
(2)
The amendment made by this section has effect in relation to packaging
 
 
components produced in, or imported into, the United Kingdom on or after
 
 
1 April 2026.
 
102
Chemical recycling: mass balance approach
 
 
(1)
Part 2 of FA 2021 (plastic packaging tax) is amended as follows.
30
 
(2)
In section 47(1)(a) (chargeable plastic packaging components)—
 
 
(a)
before “proportion” insert “combined”;
 

Page 124

 
(b)
after “recycled plastic” insert “and attributed recycled plastic”.
 
 
(3)
In section 49 (meaning of “plastic” and “recycled plastic”)—
 
 
(a)
in the heading, for “and “recycled plastic”” substitute “, “recycled
 
 
plastic” and “attributed recycled plastic””;
 
 
(b)
after subsection (2) insert—
5
 
“(2A)
“Attributed recycled plastic” is plastic to which recovered
 
 
material has been attributed in accordance with a chemical
 
 
recycling certification scheme.”;
 
 
(c)
after subsection (7) insert—
 
 
“(7A)
Plastic is not to be taken as attributed recycled plastic unless
10
 
it is shown that it is attributed recycled plastic.”;
 
 
(d)
in subsection (8), for “and “recycled plastic”” substitute “, “recycled
 
 
plastic” and “attributed recycled plastic””;
 
 
(e)
in subsection (10), after “recycled plastic” insert “or attributed recycled
 
 
plastic”.
15
 
(4)
After section 49 insert—
 
“49A
Meaning of “chemical recycling certification scheme”
 
 
(1)
For the purposes of this Part, a scheme is a “chemical recycling
 
 
certification scheme” if—
 
 
(a)
it is a scheme under which a certified person produces plastic
20
 
from recovered material and other material by means of one
 
 
or more mass balance processes,
 
 
(b)
that process or (as the case may be) at least one of those
 
 
processes alters the chemical structure of the recovered material,
 
 
and
25
 
(c)
the scheme meets such conditions as may be specified in
 
 
regulations made by the Commissioners.
 
 
(2)
A “mass balance process” is a process under which—
 
 
(a)
qualifying input material is added to other material to form a
 
 
mixture (“the mixture”),
30
 
(b)
the mixture is processed, and
 
 
(c)
a certified person attributes recovered material to—
 
 
(i)
material withdrawn from the mixture after the
 
 
processing, and
 
 
(ii)
any waste material.
35
 
(3)
The certified person may attribute recovered material under subsection
 
 
(2) (c) in any way, provided that—
 
 
(a)
the quantity of recovered material so attributed does not exceed
 
 
the quantity of qualifying input material added to the mixture
 
 
under subsection (2) (a) ,
40

Page 125

 
(b)
the proportion of withdrawn fuel to which recovered material
 
 
is attributed is the same as the proportion of the mixture (before
 
 
it is processed) that is qualifying input material, and
 
 
(c)
the attribution meets such conditions as may be specified in
 
 
regulations made by the Commissioners.
5
 
(4)
In subsections (2) and (3) “qualifying input material” means—
 
 
(a)
recovered material, or
 
 
(b)
material to which recovered material has been attributed under
 
 
subsection (2) (c) in connection with an earlier mass balance
 
 
process.
10
 
(5)
In this section—
 
 
“certified person” means a person certified under a chemical
 
 
recycling certification scheme;
 
 
“consumed fuel” means fuel added to the mixture that is
 
 
consumed to provide energy for the processing of the mixture;
15
 
“process losses” means material, other than consumed fuel, added
 
 
to the mixture which is converted to waste products as part of
 
 
the processing (and which is not withdrawn from the mixture);
 
 
“waste material” means any consumed fuel and process losses;
 
 
“withdrawn fuel” means material withdrawn from the mixture
20
 
after processing that—
 
 
(a)
is fuel, or
 
 
(b)
might reasonably be expected to be reprocessed
 
 
(otherwise than as part of a mass balance process) into
 
 
fuel.
25
 
(6)
The Commissioners may by regulations—
 
 
(a)
make provision about cases in which the chemical structure of
 
 
recovered material is to be regarded as having been altered,
 
 
or not altered, for the purposes of subsection (1) (b) ;
 
 
(b)
make provision about materials which are, or are not, to be
30
 
regarded as withdrawn fuel for the purposes of this section.
 
49B
Chemical recycling certification schemes: further conditions
 
 
The conditions that may be specified under section 49A (1) (c) (scheme
 
 
conditions) include, in particular, conditions about—
 
 
(a)
the assessment of the scheme by an accreditation body
35
 
specified, or of a description specified, in the regulations;
 
 
(b)
the types of material that the may be used in a mass balance
 
 
process under the scheme;
 
 
(c)
when, and the circumstances in which, materials may be mixed
 
 
together as part of a mass balance process under the scheme;
40
 
(d)
the methodology that may be used as part of a mass balance
 
 
process under the scheme in connection with the calculation
 

Page 126

 
of amounts of waste material (within the meaning of section
 
 
49A );
 
 
(e)
the measurement of materials under a mass balance process
 
 
under the scheme;
 
 
(f)
the operation of a mass balance process under the scheme by
5
 
reference to accounting periods or other periods of time;
 
 
(g)
which persons are required to be certified under the scheme;
 
 
(h)
the accreditation of certification bodies recognised by the
 
 
scheme;
 
 
(i)
the keeping and retention of records by persons under the
10
 
scheme;
 
 
(j)
the auditing of scheme members by certification bodies under
 
 
the scheme;
 
 
(k)
compliance with, and enforcement of, the scheme rules;
 
 
(l)
the provision of information to HMRC and others regarding
15
 
compliance by scheme members with the scheme rules.”
 
 
(5)
In section 83 (interpretation), at the appropriate places insert—
 
 
““attributed recycled plastic” is to be construed in accordance with section
 
 
49;”;
 
 
““chemical recycling certification scheme” is to be construed in accordance
20
 
with section 49A ;”.
 
 
(6)
In section 84(5)(b) (regulations), for “and “recycled plastic”” substitute “,
 
 
“recycled plastic” and “attributed recycled plastic””.
 
103
Pre-consumer plastic
 
 
In section 49 of FA 2021 (meaning of “plastic” and “recycled plastic”)—
25
 
(a)
in subsection (4), in the opening words, omit “pre-consumer plastic
 
 
or”;
 
 
(b)
omit subsection (5).
 
104
Sections
 
 
(1)
The following come into force on the day on which this Act is passed—
30
 
(a)
this section;
 
 
(b)
any provision of, or amendment made by, section 102 so far as it
 
 
confers a power to make regulations or relates to the exercise of such
 
 
a power.
 
 
(2)
The following come into force on 1 April 2027—
35
 
(a)
section 102 , so far as not brought into force by subsection (1) (b) ;
 
 
(b)
section 103 .
 

Page 127

Soft drinks industry levy

 
105
Rates of levy
 
 
(1)
In section 36(1) of FA 2017 (rates of soft drinks industry levy)—
 
 
(a)
in paragraph (a) (soft drinks that meet higher sugar threshold), for
 
 
“£2.59” substitute “£2.78”, and
5
 
(b)
in paragraph (b) (other soft drinks), for “£1.94” substitute “£2.08”.
 
 
(2)
The amendments made by this section have effect in relation to chargeable
 
 
events occurring on or after 1 April 2026.
 

Customs duties

 
106
Amendment of customs tariff power
10
 
(1)
Section 8 of TCTA 2018 (the customs tariff) is amended as follows.
 
 
(2)
After subsection (3) insert—
 
 
“(3A)
The provision that the customs tariff may make under subsection
 
 
(1)(c), by virtue of section 32(7), includes provision specifying different
 
 
rates of import duty applicable to goods falling within a code by
15
 
reference to their nature, origin or any other factor.”
 
 
(3)
After subsection (8) insert—
 
 
“(9)
Regulations under this section may amend provision made under
 
 
section 9 or 10 so as to provide that the rate of import duty that applies
 
 
to goods in a standard case applies in any specified case to which
20
 
either of those sections applies (instead of the rate of import duty for
 
 
the time being applicable by virtue of provision made under either of
 
 
them).”
 
107
Dumping and subsidisation investigations
 
 
(1)
Schedule 4 to TCTA 2018 (dumping of goods or foreign subsidies causing
25
 
injury to UK industry) is amended as follows.
 
 
(2)
In the italic heading before paragraph 9, after “investigation” insert “: request
 
 
made to TRA”.
 
 
(3)
In paragraph 9 (initiation of a dumping or a subsidisation investigation)—
 
 
(a)
in sub-paragraph (1)—
30
 
(i)
in the opening words, omit “only”;
 
 
(ii)
in paragraph (a), omit sub-paragraph (ii) and the “or” before
 
 
it;
 
 
(b)
in sub-paragraph (2)—
 
 
(i)
in paragraph (a), omit “in the case of an application under
35
 
sub-paragraph (1)(a)(i),”;
 

Page 128

 
(ii)
omit paragraph (b).
 
 
(4)
After paragraph 9 insert—
 
 
“Initiation of a dumping or a subsidisation investigation: Secretary of State direction
 
 
9A
(1)
The Secretary of State may, in exceptional circumstances, direct the
 
 
TRA to initiate a dumping or a subsidisation investigation in relation
5
 
to goods if the Secretary of State is satisfied that—
 
 
(a)
there is sufficient evidence that—
 
 
(i)
the goods have been or are being dumped in the
 
 
United Kingdom and the dumping has caused or is
 
 
causing injury to a UK industry in those goods, or
10
 
(ii)
as the case may be, the goods have been or are being
 
 
imported into the United Kingdom and are
 
 
subsidised, and the importation of the subsidised
 
 
goods has caused or is causing injury to a UK
 
 
industry in those goods, and
15
 
(b)
it appears from that evidence that—
 
 
(i)
the volume of dumped goods (whether actual or
 
 
potential), and the injury, is more than negligible,
 
 
and the margin of dumping in relation to those goods
 
 
is more than minimal, or
20
 
(ii)
as the case may be, the volume of subsidised goods
 
 
(whether actual or potential), and the injury, is more
 
 
than negligible, and the amount of the subsidy in
 
 
relation to those goods is more than minimal.
 
 
(2)
Regulations may make provision about—
25
 
(a)
the giving of directions under sub-paragraph (1) , including
 
 
in particular provision about—
 
 
(i)
the form and content of directions;
 
 
(ii)
when directions are made for the purposes of
 
 
sub-paragraph (1) ;
30
 
(iii)
the publication of directions;
 
 
(b)
what constitutes or does not constitute “negligible” and
 
 
“minimal” for the purposes of sub-paragraph (1) (b) (i) or (ii) ;
 
 
(c)
how it is to be determined for those purposes whether those
 
 
thresholds have been exceeded.
35
 
(3)
Before giving a direction under sub-paragraph (1) , the Secretary of
 
 
State must consult the TRA.
 
 
(4)
The TRA must comply with a direction given under sub-paragraph
 
 
(1) .
 
 
(5)
Where the Secretary of State gives a direction under sub-paragraph
40
 
(1) in respect of a dumping investigation, the TRA must take the
 
 
following steps in the order in which they are set out—
 

Page 129

 
(a)
notify the governments of the relevant foreign countries or
 
 
territories;
 
 
(b)
initiate the investigation;
 
 
(c)
publish notice that it has initiated the investigation (including
 
 
notice of the goods which are the subject of the investigation);
5
 
(d)
notify the Secretary of State and interested parties (see
 
 
paragraph 32(3)) accordingly.
 
 
(6)
Where the Secretary of State gives a direction under sub-paragraph
 
 
(1) in respect of a subsidisation investigation, the TRA must take
 
 
the following steps in the order in which they are set out—
10
 
(a)
invite the governments of the relevant foreign countries or
 
 
territories to participate in consultations;
 
 
(b)
initiate the investigation;
 
 
(c)
publish notice that it has initiated the investigation (including
 
 
notice of the goods which are the subject of the investigation);
15
 
(d)
notify the Secretary of State and interested parties
 
 
accordingly.
 
 
(7)
Notices under sub-paragraphs (5) (c) and (d) and (6) (c) and (d) must
 
 
specify the date of the initiation of the investigation.
 
 
(8)
Nothing in this paragraph prevents the Secretary of State from
20
 
directing the TRA to initiate both a dumping investigation and a
 
 
subsidisation investigation in relation to the same goods if the
 
 
requirements of sub-paragraph (1) (a) and (b) are met in the case of
 
 
each investigation.
 
 
(9)
In this paragraph “relevant foreign country or territory” means—
25
 
(a)
in the case of a direction to initiate a dumping investigation,
 
 
the exporting foreign country or territory (within the meaning
 
 
of paragraph 1(2)) of the alleged dumped goods;
 
 
(b)
in the case of a direction to initiate a subsidisation
 
 
investigation, a foreign country or territory within whose
30
 
territory is located a foreign authority which is alleged to
 
 
have granted one or more of the subsidies in question.”
 
 
(5)
In paragraph 10(2) (conduct of a dumping or a subsidisation investigation),
 
 
after paragraph (d) insert—
 
 
“(da)
the information which must or may be provided or made
35
 
available by the Secretary of State to the TRA or others in
 
 
connection with the giving of a direction to initiate a dumping
 
 
or a subsidisation investigation;”.
 
 
(6)
In paragraph 17(8B) (TRA’s duty to recommend an anti-dumping amount or
 
 
countervailing amount)—
40
 
(a)
for “The Secretary of State may by regulations” substitute “Regulations
 
 
may”;
 
 
(b)
after “specified circumstances, to” insert “give or”.
 

Page 130

 
(7)
In paragraph 18 (TRA's recommendations about an anti-dumping amount or
 
 
a countervailing amount)—
 
 
(a)
in sub-paragraph (6), omit paragraph (b) and the “or” before it;
 
 
(b)
after sub-paragraph (6) insert—
 
 
“(6A)
Regulations may provide that a recommendation must be
5
 
such that an anti-dumping amount or a countervailing
 
 
amount applicable to goods does not exceed a specified
 
 
amount that is lower than the amount referred to in
 
 
sub-paragraph (6)(a).”;
 
 
(c)
in sub-paragraph (7) omit the words from “for the purposes of” to the
10
 
end and insert “about how an amount specified in regulations under
 
 
sub-paragraph (6A) is to be determined by the TRA”.
 
108
Safeguarding investigations
 
 
(1)
Schedule 5 to TCTA 2018 (increase in imports causing serious injury to UK
 
 
producers) is amended in accordance with subsections (2) to (5) .
15
 
(2)
In the italic heading before paragraph 7, after “investigation” insert “: request
 
 
made to TRA”.
 
 
(3)
In paragraph 7 (initiation of a safeguarding investigation)—
 
 
(a)
in sub-paragraph (1)—
 
 
(i)
in the opening words, omit “only”;
20
 
(ii)
in paragraph (a), omit sub-paragraph (ii) and the “or” before
 
 
it;
 
 
(b)
in sub-paragraph (2)—
 
 
(i)
in paragraph (a), omit “in the case of an application under
 
 
sub-paragraph (1)(a)(i),”;
25
 
(ii)
omit paragraph (b);
 
 
(c)
in sub-paragraph (3)—
 
 
(i)
in paragraph (a), omit “in the case of an application under
 
 
sub-paragraph (1)(a)(i),”;
 
 
(ii)
omit paragraph (b).
30
 
(4)
After paragraph 7 insert—
 
 
“Initiation of a safeguarding investigation: Secretary of State direction
 
 
7A
(1)
The Secretary of State may direct the TRA to initiate a safeguarding
 
 
investigation in relation to goods if the Secretary of State is satisfied
 
 
that there is sufficient evidence that—
35
 
(a)
the goods have been or are being imported into the United
 
 
Kingdom in increased quantities, and
 
 
(b)
the importation of the goods in increased quantities has
 
 
caused or is causing serious injury to UK producers of those
 
 
goods.
40

Page 131

 
(2)
A direction given under sub-paragraph (1) may be accompanied by
 
 
a preliminary adjustment plan setting out how UK producers of the
 
 
goods might be able to adjust to the importation of the goods in
 
 
increased quantities.
 
 
(3)
Regulations may make provision about—
5
 
(a)
the giving of directions under sub-paragraph (1) , including
 
 
in particular provision about—
 
 
(i)
the form and content of directions;
 
 
(ii)
when directions are made for the purposes of
 
 
sub-paragraph (1) ;
10
 
(iii)
the publication of directions;
 
 
(b)
the form and content of a preliminary adjustment plan.
 
 
(4)
Before giving a direction under sub-paragraph (1) , the Secretary of
 
 
State must consult the TRA.
 
 
(5)
The TRA must comply with a direction given under sub-paragraph
15
 
(1) .
 
 
(6)
Where the Secretary of State gives a direction under sub-paragraph
 
 
(1) in respect of a safeguarding investigation, the TRA must take
 
 
the following steps in the order in which they are set out—
 
 
(a)
initiate the investigation;
20
 
(b)
publish notice that it has initiated the investigation (including
 
 
notice of the goods which are the subject of the investigation);
 
 
(c)
notify the Secretary of State and interested parties (see
 
 
paragraph 31(3)) accordingly.
 
 
(7)
Notices under sub-paragraph (6) (b) and (c) must specify the date
25
 
of the initiation of the investigation.”
 
 
(5)
In paragraph 16 (final affirmative determination), for sub-paragraph (6)
 
 
substitute—
 
 
“(6)
But the requirement in sub-paragraph (5)(b) does not apply in a
 
 
case where—
30
 
(a)
the safeguarding investigation was initiated in accordance
 
 
with paragraph 7 (application made by or on behalf of UK
 
 
producers) and the TRA waived the requirement for the
 
 
application to initiate the safeguarding investigation to be
 
 
accompanied by a preliminary adjustment plan, or
35
 
(b)
the safeguarding investigation was initiated in accordance
 
 
with paragraph 7A (Secretary of State direction) and the
 
 
TRA waives the requirement in sub-paragraph (5)(b) of this
 
 
paragraph.”
 
 
(6)
Schedule 5A to TCTA 2018 (increase in imports as a result of free trade
40
 
agreement causing serious injury to UK producers) is amended in accordance
 
 
with subsections (7) and (8) .
 

Page 132

 
(7)
In paragraph 5 (initiation of a bilateral safeguarding investigation), for
 
 
sub-paragraphs (3) and (4) substitute—
 
 
“(3)
Sub-paragraph (2) is to be read as if in paragraph (a)—
 
 
(a)
for “the TRA” there were substituted “the Secretary of State”;
 
 
(b)
for “applicant UK producers” there were substituted “UK
5
 
producers of the goods”.
 
 
(4)
Sub-paragraph (3) is to be read as if in paragraph (a), for “the
 
 
applicant UK producers think they” there were substituted “UK
 
 
producers of the goods”.”
 
 
(8)
After paragraph 5 insert—
10
 
“5A
Paragraph 7A (Secretary of State direction to initiate safeguarding
 
 
investigation) does not apply.”
 
 
(9)
This section and section 107 come into force on such day as the Secretary of
 
 
State may by regulations made by statutory instrument appoint; and different
 
 
days may be appointed for different purposes.
15
109
Customs facilities at approved wharves and other places
 
 
(1)
Section 20 of CEMA 1979 (approval of wharves) is amended as follows.
 
 
(2)
In subsection (1A) —
 
 
(a)
omit the “or” after paragraph (a) ,
 
 
(b)
after paragraph (a) insert—
20
 
“(aa)
impose conditions, or specify conditions which may be
 
 
imposed, after an approval has been granted,”.
 
 
(c)
after paragraph (b) insert—
 
 
“(c)
specify restrictions—
 
 
(i)
that apply in all cases, or
25
 
(ii)
which may be imposed, in any particular case,
 
 
at the time of the approval,
 
 
(d)
impose restrictions, or specify restrictions which may
 
 
be imposed, after an approval has been granted, or
 
 
(e)
provide for the imposition of conditions or restrictions
30
 
by direction made by the Commissioners.”
 
 
(3)
After subsection (1B) insert—
 
 
“(1C)
Conditions and restrictions which may be imposed by or specified in
 
 
regulations under subsection (1A) include—
 
 
(a)
conditions requiring the provision at the place approved under
35
 
subsection (1) of specified facilities, services or infrastructure
 
 
for purposes in connection with facilitating the administration,
 
 
collection or enforcement of any duty of customs,
 

Page 133

 
(b)
conditions requiring the provision of specified facilities, services
 
 
or infrastructure for such purposes otherwise than at the place
 
 
approved under subsection (1), including conditions—
 
 
(i)
requiring that provision at a specified place,
 
 
(ii)
requiring a person to whom an approval has been, or
5
 
may be, given to propose a place at which facilities,
 
 
services or infrastructure are to be provided, and
 
 
(iii)
requiring the agreement of the Commissioners to any
 
 
proposal for the provision of facilities, services or
 
 
infrastructure at a place, and
10
 
(c)
conditions and restrictions as respects the movements of goods
 
 
between a place approved under subsection (1) and an off-site
 
 
facility.
 
 
(1D)
For the purposes of subsection (1C) (a) and (b) “specified” means
 
 
specified in—
15
 
(a)
the regulations,
 
 
(b)
an approval under subsection (1), or
 
 
(c)
a direction.
 
 
(1E)
For the purposes of this section and section 20A, an “off-site facility”
 
 
means a place at which facilities, services or infrastructure are provided
20
 
(in accordance with an approval or conditions attaching to it) other
 
 
than a place approved under subsection (1).”
 
 
(4)
Section 20(A) of CEMA 1979 (approved wharves) is amended as follows.
 
 
(5)
Renumber that section as section 20A.
 
 
(6)
In subsection (1)—
25
 
(a)
in paragraph (a), for “20” substitute “20(1)”, and
 
 
(b)
after that paragraph insert “or
 
 
“(aa)
an off-site facility.”
 
 
(7)
In subsection (1A), after “imposed” insert “by or”.
 
 
(8)
The amendments made by this section come into force on the day on which
30
 
this Act is passed.
 
 
(9)
But CEMA 1979 continues to have effect, for any purpose in connection with
 
 
duty under section 30A (3) or 40A of TCTA 2018 , as if the amendments made
 
 
by this section had not been made.
 

Economic crime (anti-money laundering) levy

35
110
Increases to rates of levy
 
 
(1)
In section 54 (charge to the levy)—
 

Page 134

 
(a)
in subsection (1)(b), for the words from “is” to the end substitute “is
 
 
in any of the bands set out in section 55”, and
 
 
(b)
in subsection (2)—
 
 
(i)
in paragraph (a), for “medium” substitute “in band A” and for
 
 
“£10,000” substitute “£10,200”,
5
 
(ii)
in paragraph (b), for “large” substitute “in band B”,
 
 
(iii)
after paragraph (b) insert—
 
 
“(ba)
in the case of a person whose UK revenue for
 
 
the financial year is in band C, £500,000;”, and
 
 
(iv)
in paragraph (c), for “very large” substitute “in band D” and
10
 
for “£500,000” substitute “£1million”.
 
 
(2)
In section 55 (UK revenue: amount), in subsection (1)—
 
 
(a)
in paragraph (a), for “medium” substitute “in band A”,
 
 
(b)
in paragraph (b), for “large” substitute “in band B” and for “£1billion”
 
 
substitute “£500 million”,
15
 
(c)
after paragraph (b) insert—
 
 
“(ba)
is in band C for a financial year if the person’s UK
 
 
revenue for the relevant accounting period is more than
 
 
£500 million but not more than £1 billion;”, and
 
 
(d)
in paragraph (c), for “very large” substitute “in band D”.
20
 
(3)
The amendments made by this section have effect for the financial year
 
 
beginning with April 2026 and subsequent financial years.
 

Annual tax on enveloped dwellings

 
111
Removal of time limit to claim relief under section 106(3) of FA 2013
 
 
(1)
In section 106 of FA 2013 (adjustment of amount chargeable), omit subsection
25
 
(6).
 
 
(2)
The amendment made by this section is treated as always having been in
 
 
force.
 

Part 4

 

Vaping products duty

30

Charge

 
112
Excise duty: charge
 
 
(1)
An excise duty is charged on vaping products produced in, or imported into,
 
 
the United Kingdom.
 
 
(2)
The duty is charged at a rate of £2.20 per 10 millilitres, rounded down to the
35
 
nearest penny.
 

Page 135

 
(3)
In this Part, “vaping products duty” means excise duty charged under this
 
 
section.
 
113
Vaping products
 
 
(1)
In this Part, “vaping product” means a liquid that—
 
 
(a)
contains nicotine and either or both of glycerine and a glycol, or
5
 
(b)
is intended to be vaporised by a vape,
 
 
and is not a medicinal product or a tobacco product.
 
 
(2)
For the purposes of this Part—
 
 
(a)
a liquid may be intended to be vaporised by a vape even if a consumer
 
 
would be required to mix it with another substance before vaporising
10
 
it by a vape;
 
 
(b)
a reference to vaporisation includes a reference to aerosolisation;
 
 
(c)
a reference to a liquid includes a reference to a liquid that has been
 
 
frozen.
 
114
Production of vaping products
15
 
(1)
For the purposes of this Part , a vaping product is produced if—
 
 
(a)
a substance that is not duty-paid is—
 
 
(i)
combined or mixed with another substance (whether or not
 
 
that substance is duty-paid), or
 
 
(ii)
otherwise processed, and
20
 
(b)
the resulting substance is a vaping product.
 
 
(2)
If a liquid that is not duty-paid is packaged, labelled or advertised so as to
 
 
indicate it is intended to be vaporised by a vape, the act of packaging, labelling
 
 
or advertising is to be treated, for the purposes of this Part , as producing a
 
 
vaping product.
25
 
(3)
In this section , a reference to a substance or liquid that is not duty-paid is a
 
 
reference to a substance or liquid that—
 
 
(a)
is not a vaping product, or
 
 
(b)
is a vaping product on which duty has not been paid or deferred
 
 
under a duty deferment arrangement.
30
 
(4)
Vaping products must not be produced except in accordance with regulations
 
 
under section 45 of TCTA 2018 .
 
115
Excise duty point and payment
 
 
Vaping products duty is to be paid, and the amount chargeable is to be
 
 
determined and become due, in accordance with provision made by or under—
35
 
(a)
section 1 of F(No.2)A 1992 (powers to fix excise duty point);
 
 
(b)
section 45 of TCTA 2018 (general power for excise duty purposes etc).
 

Page 136

Administration

 
116
Administration
 
 
(1)
The Commissioners are responsible for the collection and management of
 
 
vaping products duty.
 
 
(2)
For the purposes of this Part, the Commissioners may by regulations make
5
 
provision—
 
 
(a)
requiring vaping products to be held in duty suspense arrangements,
 
 
including in premises of a kind specified in the regulations;
 
 
(b)
requiring the giving of a guarantee or other security;
 
 
(c)
for exceptions to sections 126 to 128 (offences);
10
 
(d)
about civil penalties and forfeiture, including provision for exceptions
 
 
and joint and several liability;
 
 
(e)
about appeals, including provision amending FA 1994.
 

Duty stamps

 
117
Stamping of vaping products
15
 
(1)
A vaping product must be stamped in accordance with regulations made
 
 
under this Part and section 45 of TCTA 2018.
 
 
(2)
For the purposes of this Part, a vaping product is stamped if a duty stamp
 
 
is affixed to—
 
 
(a)
the vaping product, or
20
 
(b)
the retail packaging of the vaping product,
 
 
and a reference to a stamp being affixed to a vaping product includes a
 
 
reference to a stamp being affixed to its retail packaging.
 
 
(3)
The Commissioners may by regulations make provision—
 
 
(a)
requiring a stamp to be linked to a particular vaping product;
25
 
(b)
specifying information to be provided to HMRC for the purpose of
 
 
paragraph (a) or otherwise in connection with a stamped vaping
 
 
product.
 
 
(4)
In this Part , a “duty stamp” means a document issued by the Commissioners
 
 
that—
30
 
(a)
is designed to be affixed to a vaping product or the retail packaging
 
 
of a vaping product,
 
 
(b)
is uniquely identifiable, and
 
 
(c)
indicates that the product to which it is affixed is liable to vaping
 
 
products duty.
35

Page 137

118
Issue and management of duty stamps
 
 
(1)
The Commissioners must make arrangements for the issue and management
 
 
of duty stamps.
 
 
(2)
The Commissioners may by regulations provide for the charging of fees in
 
 
connection with the issue and management of duty stamps (but such a fee
5
 
may not offset any liability to vaping products duty).
 
 
(3)
The Commissioners may by published notice authorise a person to act as a
 
 
stamp issuer for the purposes of this Part.
 
 
(4)
In this Part, “stamp issuer” means—
 
 
(a)
a person authorised under subsection (3) , or
10
 
(b)
if no person is authorised, the Commissioners.
 
119
Approved stamp holders
 
 
(1)
A duty stamp may not be issued to a person who is not approved under this
 
 
section.
 
 
(2)
The Commissioners may approve a person if they are satisfied that the
15
 
person—
 
 
(a)
has a fixed place of business in the United Kingdom, and
 
 
(b)
meets such other requirements as may be specified in regulations
 
 
under section 45 of TCTA 2018.
 
 
(3)
An approved stamp holder may not transfer a duty stamp to any person
20
 
before it has been affixed to, and activated in respect of, a vaping product
 
 
(in which case it may be transferred as part of the vaping product).
 
 
(4)
Subsection (3) does not prevent the return of stamps to a stamp issuer.
 
 
(5)
The Commissioners may by regulations make provision—
 
 
(a)
about what it means to have a fixed place of business in the United
25
 
Kingdom;
 
 
(b)
for exceptions to subsection (3) ;
 
 
(c)
limiting the number of duty stamps that may be issued to (or, in the
 
 
case of an overseas person, in respect of) a person within a specified
 
 
period;
30
 
(d)
permitting or requiring duty stamps to be voided, destroyed or
 
 
returned in certain circumstances, including on the expiry of a specified
 
 
period.
 
120
United Kingdom representatives
 
 
(1)
The Commissioners may approve an approved stamp holder to represent a
35
 
person who does not have a fixed place of business in the United Kingdom.
 
 
(2)
A duty stamp may, at the request of a UK representative, be issued to the
 
 
UK representative by way of delivery to an overseas person.
 

Page 138

 
(3)
A UK representative is responsible for a stamp issued as described in
 
 
subsection (2) from the point at which it is delivered to the overseas person.
 
 
(4)
Section 119 (3) (restriction on transfer) does not apply in relation to the transfer
 
 
of a duty stamp between a UK representative and an overseas person.
 
 
(5)
A UK representative who transfers a duty stamp to an overseas person remains
5
 
responsible for the stamp after transfer.
 
 
(6)
For the purposes of subsections (3) and (5) , a person who is responsible for
 
 
a stamp is also liable to penalties arising under this Part or regulations made
 
 
under this Part in respect of it.
 
 
(7)
The Commissioners may by regulations make provision about UK
10
 
representatives, including provision—
 
 
(a)
about their dealings with an overseas person and what it means to be
 
 
responsible for duty stamps, and
 
 
(b)
providing for exceptions to this section.
 
 
(8)
In this Part—
15
 
“overseas person” means, when used in connection with a UK
 
 
representative, someone in respect of whom the UK representative is
 
 
approved under subsection (1);
 
 
“UK representative” means a person approved under subsection (1),
 
 
and a reference to a stamp being delivered to an approved stamp holder
20
 
includes, in the case of a UK representative, a reference to a stamp being
 
 
delivered to an overseas person.
 

Forfeiture

 
121
Forfeiture
 
 
(1)
The following things are liable to forfeiture—
25
 
(a)
an unstamped vaping product;
 
 
(b)
an invalid duty stamp and any product to which an invalid duty
 
 
stamp is affixed;
 
 
(c)
a duty stamp that, after the end of the period of 12 months beginning
 
 
with the day on which it was issued, has not been—
30
 
(i)
affixed to, and activated in respect of, a vaping product, or
 
 
(ii)
returned to a stamp issuer.
 
 
(2)
In subsection (1) (b) , an “invalid duty stamp” means—
 
 
(a)
a duty stamp which has been altered after it has been issued;
 
 
(b)
a document which purports to be (but is not) a duty stamp;
35
 
(c)
a voided duty stamp.
 
 
(3)
For things that are liable to forfeiture only in particular circumstances, see—
 
 
(a)
section 125 (civil penalties);
 
 
(b)
section 130 (criminal offences).
 

Page 139

Civil penalties and enforcement

 
122
Dealing in unstamped vaping products
 
 
(1)
A person who sells, offers for sale or otherwise deals in unstamped vaping
 
 
products packaged for retail sale is liable to a penalty.
 
 
(2)
The penalty under subsection (1) is the amount indicated in the table, to be
5
 
determined by cross-referencing—
 
 
(a)
the number of units in respect of which the penalty is imposed, and
 
 
(b)
whether it is the first, second or further time that the person has been
 
 
liable to a penalty under subsection (1) since the beginning of the
 
 
relevant period.
10
 
1 to 99
 
 
100 to 299
 
 
300 to 499
 
 
500 units or
 
 
units
 
 
more
 
 
£10,000
 
 
First time
 
 
£2,500
 
 
£5,000
 
 
£7,500
 
 
Second time
 
 
£5,000
 
 
£7,500
 
 
£10,000
 
 
Further
15
 
£7,500
15
 
£10,000
15
 
time
 
 
(3)
For the purpose of determining a penalty under subsection (2)—
 
 
“relevant period” means the period of 24 months ending with the day
 
 
on which the person becomes liable to the penalty being determined;
 
 
“unit” means an amount of vaping product packaged for individual retail
20
 
sale.
 
123
Loss and misuse of duty stamps
 
 
(1)
An approved stamp holder to whom a duty stamp is issued and delivered
 
 
is liable to a penalty if—
 
 
(a)
the stamp is lost, or
25
 
(b)
at the end of the period of 12 months beginning with the day on which
 
 
the stamp was issued, the stamp has not been—
 
 
(i)
affixed to, and activated in respect of, a vaping product,
 
 
(ii)
returned to a stamp issuer, or
 
 
(iii)
destroyed.
30
 
(2)
Subsection (1) does not apply if the stamp was lost in circumstances where
 
 
the approved stamp holder—
 
 
(a)
did not cause the loss, and
 
 
(b)
took all reasonable steps to protect against the loss.
 
 
(3)
The penalty under subsection (1) is an amount equal to five times the monetary
35
 
amount specified in section 112 (excise duty: charge).
 

Page 140

 
(4)
The following is conduct which attracts a penalty under section 9 of FA 1994—
 
 
(a)
altering a duty stamp after it has been issued;
 
 
(b)
affixing an invalid duty stamp to a vaping product.
 
 
(5)
In this section, an “invalid duty stamp” means—
 
 
(a)
a duty stamp which has been altered after it has been issued;
5
 
(b)
a document which purports to be (but is not) a duty stamp;
 
 
(c)
a voided duty stamp.
 
124
Failure to comply with this Part etc
 
 
(1)
Failure to comply with a provision or requirement specified in subsection (2)
 
 
is conduct which attracts a penalty under section 9 of FA 1994 .
10
 
(2)
The following provisions and requirements are specified for the purpose of
 
 
subsection (1) —
 
 
(a)
provision contained in this Part or regulations made under this Part ;
 
 
(b)
provision contained in regulations made under section 45 of TCTA
 
 
2018 insofar as it applies in relation to vaping products duty;
15
 
(c)
any requirements imposed under such provision.
 
125
Forfeiture: civil penalties
 
 
(1)
This section applies (in addition to section 121 ) where a person is liable to a
 
 
penalty under section 122 or 124 (1) .
 
 
(2)
Where a person is liable to a penalty under section 122 (dealing in unstamped
20
 
vaping products), any stamped vaping product—
 
 
(a)
that is in the person’s possession at the time of the conduct in respect
 
 
of which the liability arises, and
 
 
(b)
which the Commissioners have reason to believe is owned or used in
 
 
the course of a business carried out by any person,
25
 
is liable to forfeiture.
 
 
(3)
Where a person is liable to a penalty for a failure of a kind described in
 
 
section 124 (1) (failure to comply with this Part etc), the following things are
 
 
liable to forfeiture—
 
 
(a)
any vaping product or duty stamp to which the failure relates, or
30
 
(b)
where the failure relates to premises—
 
 
(i)
any stamped vaping product found on the premises which the
 
 
Commissioners have reason to believe is owned or used in the
 
 
course of a business carried out by any person, and
 
 
(ii)
any duty stamp found on the premises.
35

Page 141

Offences

 
126
Dealing in duty stamps
 
 
(1)
It is an offence for a person who is not an approved stamp holder to possess
 
 
a duty stamp that has not been affixed to a vaping product.
 
 
(2)
It is an offence for a person to transfer a duty stamp that has not been affixed
5
 
to a vaping product to another person.
 
 
(3)
It is a defence for a person charged with an offence under this section to
 
 
prove that they did not know, suspect or have reason to suspect that they
 
 
were possessing or transferring a duty stamp that had not been affixed to a
 
 
vaping product.
10
 
(4)
Subsection (1) and (2) do not apply in relation to—
 
 
(a)
a transfer between a UK representative and an overseas person,
 
 
(b)
possession by the overseas person, or
 
 
(c)
a person providing a delivery service on a commercial basis.
 
 
(5)
Subsection (2) does not apply in relation to a transfer to a stamp issuer.
15
127
Dealing in unstamped vaping products
 
 
(1)
It is an offence to—
 
 
(a)
possess, transport or display, or
 
 
(b)
sell, offer for sale or otherwise deal in,
 
 
an unstamped vaping product.
20
 
(2)
It is an offence for a person who is a manager of premises to cause or permit
 
 
the premises to be used for the sale of an unstamped vaping product.
 
 
(3)
It is a defence for a person charged with an offence under this section to
 
 
prove that they did not know, suspect or have reason to suspect that the
 
 
product to which the charge relates was an unstamped vaping product.
25
 
(4)
A manager of premises is a person who—
 
 
(a)
is entitled to control their use,
 
 
(b)
is entrusted with their management, or
 
 
(c)
is in charge of them.
 
128
Sales ban following conviction for unlawful use of premises
30
 
(1)
If a person is convicted of an offence under section 127 (2) , the court by which
 
 
the person is convicted of the offence may make an order prohibiting the use
 
 
of the premises in respect of which the offence was committed for the sale
 
 
of vaping products.
 
 
(2)
The term of the order may not exceed twelve months.
35

Page 142

 
(3)
It is an offence for a manager of premises to cause or permit the premises to
 
 
be used in breach of an order under this section .
 
 
(4)
In this section , “manager of premises” has the meaning given in section 127 .
 
129
Offences: penalties
 
 
(1)
A person who commits an offence under sections 126 to 128 is liable on
5
 
summary conviction—
 
 
(a)
in England and Wales, to imprisonment for a term not exceeding the
 
 
general limit in a magistrates’ court, or a fine, or both;
 
 
(b)
in Scotland, to imprisonment for a term not exceeding 12 months, or
 
 
a fine not exceeding the statutory maximum, or both;
10
 
(c)
in Northern Ireland, to imprisonment for a term not exceeding six
 
 
months, or a fine not exceeding the statutory maximum, or both.
 
 
(2)
A person who commits an offence under sections 126 to 128 is liable, on
 
 
conviction on indictment, to imprisonment for a term not exceeding 2 years,
 
 
or a fine, or both.
15
130
Forfeiture: offences
 
 
(1)
This section applies (in addition to section 121 ) where a person has committed
 
 
an offence under sections 126 to 128 .
 
 
(2)
In the case of an offence under section 126 (dealing in duty stamps), the
 
 
following things are liable to forfeiture—
20
 
(a)
any duty stamp in relation to which the offence is committed, and
 
 
(b)
any duty stamp that is not affixed to a vaping product and that is in
 
 
the person’s possession at the time the offence is committed.
 
 
(3)
In the case of an offence under section 127 (1) (dealing in unstamped vaping
 
 
products), any stamped vaping product—
25
 
(a)
that is in the person’s possession at the time the offence is committed,
 
 
and
 
 
(b)
which the Commissioners have reason to believe is owned or used in
 
 
the course of a business carried out by any person,
 
 
is liable to forfeiture.
30
 
(4)
In the case of an offence under section 127 (2) or 128 (unlawful use of
 
 
premises), any stamped vaping product—
 
 
(a)
that is on the premises at the time the offence is committed, and
 
 
(b)
which the Commissioners have reason to believe is owned or used in
 
 
the course of a business carried out by any person,
35
 
is liable to forfeiture.
 

Page 143

General provision

 
131
Publication of information
 
 
The Commissioners may publish information provided to HMRC under
 
 
section 117 (3) (b) (stamping of vaping products) for the purpose of enabling
 
 
retailers, consumers and other persons to assess whether a duty stamp has
5
 
been activated in respect of a vaping product.
 
132
Information sharing
 
 
(1)
The Commissioners may disclose such information as the Commissioners
 
 
consider appropriate in connection with—
 
 
(a)
the Commissioners’ functions relating to vaping products duty, or
10
 
(b)
the recipient’s functions relating to vaping products duty.
 
 
(2)
Any person with functions relating to vaping products duty may disclose to
 
 
HMRC such information as the person considers appropriate in connection
 
 
with—
 
 
(a)
the Commissioners’ functions relating to vaping products duty, or
15
 
(b)
the person’s functions relating to vaping products duty.
 
 
(3)
A person who receives information from the Commissioners as a result of
 
 
this section may not—
 
 
(a)
use the information for a purpose other than the purpose for which
 
 
it was disclosed, or
20
 
(b)
further disclose the information,
 
 
except with the consent of the Commissioners (which may be general or
 
 
specific).
 
 
(4)
If—
 
 
(a)
a person discloses information in contravention of subsection (3) (b)
25
 
, and
 
 
(b)
the information relates to a person whose identity is specified in, or
 
 
can be deduced from, the disclosure,
 
 
section 19 of CRCA 2005 (offence of wrongful disclosure) applies in relation
 
 
to that disclosure as it applies in relation to a disclosure of information in
30
 
contravention of section 20(9) of that Act.
 
 
(5)
Nothing in this section limits the circumstances in which information may
 
 
be disclosed under section 18(2) of CRCA 2005 or under any other enactment
 
 
or rule of law.
 
 
(6)
In this section, a reference to the Commissioners or HMRC include a reference
35
 
to anyone acting on their behalf.
 

Page 144

133
Investigation and enforcement
 
 
(1)
A local enforcement authority may investigate compliance with this Part,
 
 
regulations made under this Part and regulations made under section 45 of
 
 
TCTA 2018 in relation to vaping products duty, and may carry out inspections
 
 
of vaping products for that purpose.
5
 
(2)
In this section, “local enforcement authority” means—
 
 
(a)
in Great Britain, a local weights and measures authority within the
 
 
meaning of section 69 of the Weights and Measures Act 1985;
 
 
(b)
in Northern Ireland, a district council.
 
134
Regulations: further provision
10
 
(1)
Regulations under this Part may—
 
 
(a)
confer a discretion on any specified person to do anything under, or
 
 
for the purposes of, the regulations;
 
 
(b)
make provision by reference to things specified in a notice published
 
 
in accordance with the regulations;
15
 
(c)
make supplementary, incidental and consequential provision;
 
 
(d)
make transitional or transitory provision and savings.
 
 
(2)
A power to make regulations under this Part, or a power to exercise a
 
 
discretion or publish a notice under regulations made under this Part, may
 
 
be exercised—
20
 
(a)
in relation to all cases to which the power extends, or in relation to
 
 
those cases subject to specified exceptions, or in relation to any
 
 
specified case or description of case;
 
 
(b)
so as to make different provision for different purposes or areas.
 
 
(3)
A notice published under this Part may be withdrawn or revised by further
25
 
published notice.
 
 
(4)
A power to make regulations under this Part does not restrict any power to
 
 
make legislation under any other enactment relating to excise duty.
 
135
Regulations: procedure
 
 
(1)
Regulations under this Part must be made by statutory instrument.
30
 
(2)
A statutory instrument containing regulations under this Part is subject to
 
 
made affirmative procedure if it contains (whether alone or with other
 
 
provision) provision that—
 
 
(a)
amends an Act of Parliament,
 
 
(b)
restricts any rebate of or relief from vaping products duty, or
35
 
(c)
extends the cases in which vaping products are required to be stamped.
 
 
(3)
Where a statutory instrument is subject to made affirmative procedure—
 
 
(a)
it must be laid before the House of Commons after being made, and
 

Page 145

 
(b)
it ceases to have effect at the end of the period of 28 days beginning
 
 
with the day on which the instrument is made, unless within that
 
 
period the instrument is approved by a resolution of the House of
 
 
Commons.
 
 
(4)
Where a statutory instrument ceases to have effect as a result of subsection
5
 
(3) , that does not—
 
 
(a)
affect the validity of anything previously done under the instrument,
 
 
or
 
 
(b)
prevent the making of a new statutory instrument.
 
 
(5)
In calculating the period of 28 days for the purposes of subsection (3) , no
10
 
account is to be taken of any whole days that fall within a period during
 
 
which—
 
 
(a)
Parliament is dissolved or prorogued, or
 
 
(b)
the House of Commons is adjourned for more than 4 days.
 
 
(6)
A statutory instrument containing regulations under this Part is subject to
15
 
annulment in pursuance of a resolution of the House of Commons if it does
 
 
not contain provision of a kind described in subsection (2) .
 
 
(7)
Subsections (2) to (6) do not apply to regulations made under section 138
 
 
(commencement and transitional provision).
 
136
Amendments of other enactments
20
 
Schedule 14 contains amendments of other enactments.
 
137
Interpretation
 
 
In this Part —
 
 
“activated” , in relation to a duty stamp, means linked to a particular
 
 
vaping product in accordance with regulations made under section
25
 
117 and section 45 of TCTA 2018;
 
 
“approved stamp holder” means a person approved under section 119
 
 
(approved stamp holders);
 
 
“Commissioners” means the Commissioners for His Majesty’s Revenue
 
 
and Customs;
30
 
“duty deferment arrangement” means provision made by or under the
 
 
customs and excise Acts that permits the payment of excise duty to
 
 
be deferred;
 
 
“duty stamp” has the meaning given in section 117 (4) ;
 
 
“HMRC” means His Majesty’s Revenue and Customs;
35
 
“medicinal product” has the meaning given in the Human Medicines
 
 
Regulations 2012 (S.I. 2012/1916);
 
 
“overseas person” has the meaning given in section 120 (8) (United
 
 
Kingdom representatives);
 

Page 146

 
“retail packaging” , in relation to a product, means the packaging in which
 
 
it is, or is intended to be, presented for sale by retail;
 
 
“stamp issuer” has the meaning given in section 118 (4) ;
 
 
“stamped vaping product” means a vaping product which is stamped
 
 
in accordance with this Part and regulations made under section 45
5
 
of TCTA 2018;
 
 
“tobacco product” has the meaning given in section 1 of TPDA 1979 ;
 
 
“UK representative” has the meaning given in section 120 (8) ;
 
 
“unstamped vaping product” means a vaping product which is required
 
 
to be stamped in accordance with this Part and regulations made
10
 
under section 45 of TCTA 2018, but is not so stamped;
 
 
“vape” means a device that vaporises substances for the purpose of
 
 
inhalation through a mouthpiece;
 
 
“vaping product” has the meaning given in section 113 (1) (but see
 
 
subsection (2));
15
 
“vaping products duty” has the meaning given in section 112 (3) .
 
138
Commencement and transitional provision
 
 
(1)
Section 112 comes into force on 1 October 2026.
 
 
(2)
Section 112 has effect in relation to vaping products that—
 
 
(a)
were produced in, or imported into, the United Kingdom before 1
20
 
October 2026, and
 
 
(b)
are stamped (see section 117 (2) ),
 
 
as though they were produced in, or imported into, the United Kingdom on
 
 
1 October 2026.
 
 
(3)
Section 126 comes into force two months after this Act is passed.
25
 
(4)
Sections 127 and 128 (dealing in unstamped vaping products and sales ban)
 
 
come into force on 1 April 2027.
 
 
(5)
The Treasury may by regulations provide that, for a specified period, this
 
 
Part has effect as though—
 
 
(a)
a reference to a duty stamp includes a reference to a transitional duty
30
 
stamp,
 
 
(b)
in section 119 (3) the words “and activated in respect of” were omitted;
 
 
(c)
sections 121 (1) (c) and 123 (1) (b) were omitted.
 
 
(6)
Regulations under subsection (5) may—
 
 
(a)
define “transitional duty stamps”;
35
 
(b)
make further provision about the specified period and transitional
 
 
duty stamps.
 
 
(7)
The Treasury may by regulations provide that, for a specified period, this
 
 
Part has effect as though a reference to an approved stamp holder or UK
 

Page 147

 
representative is a reference to a person being approved or treated as an
 
 
approved stamp holder or UK representative.
 
 
(8)
Regulations under subsection (7) may make provision about when a person
 
 
is to be treated as an approved stamp holder or UK representative.
 
 
(9)
The Treasury may by regulations extend a period specified in regulations
5
 
under this section.
 
 
(10)
Regulations under subsection (6) (b) may include provision imposing penalties
 
 
and for forfeiture.
 
 
(11)
A statutory instrument containing regulations under this section is subject to
 
 
annulment in pursuance of a resolution of the House of Commons.
10

Part 5

 

Carbon border adjustment mechanism

 

Introduction

 
139
Introduction to CBAM
 
 
(1)
A tax called the carbon border adjustment mechanism (“CBAM”) is to be
15
 
charged in accordance with this Part .
 
 
(2)
In this Part —
 
 
(a)
sections 140 to 147 and Schedule 15 set out the charge to CBAM (and
 
 
include exemptions and relief);
 
 
(b)
section 148 and Schedule 16 provide for the administration and
20
 
enforcement of CBAM;
 
 
(c)
section 149 and Schedule 17 provide for criminal offences relating to
 
 
CBAM;
 
 
(d)
sections 150 to 155 and Schedule 18 make general provision.
 

The charge

25
140
Charge to CBAM
 
 
(1)
CBAM is charged on the emissions embodied in a CBAM good when the
 
 
good is imported into the United Kingdom.
 
 
(2)
In this Part , “CBAM good” means a good specified by Schedule 15 (but see
 
 
section 142 (3) ).
30
 
(3)
Schedule 15 specifies the following kinds of goods—
 
 
(a)
aluminium goods;
 
 
(b)
cement;
 
 
(c)
fertilisers;
 
 
(d)
hydrogen;
35

Page 148

 
(e)
iron and steel goods.
 
141
Importation
 
 
(1)
For the purposes of this Part, a reference to a good being imported into the
 
 
United Kingdom is a reference to—
 
 
(a)
the first time a good is imported as described in this section , and
5
 
(b)
if a good is imported as described in this section and subsequently
 
 
exported from the United Kingdom, the next time the good is imported
 
 
as described in this section .
 
 
(2)
If a CBAM good is chargeable to import duty under section 1 of TCTA 2018
 
 
, it is imported when liability to import duty is incurred in respect of the good.
10
 
(3)
If a CBAM good is chargeable to duty under section 30C of TCTA 2018 , it is
 
 
imported when liability to that duty is incurred in respect of the good.
 
 
(4)
If a CBAM good is chargeable to duty under section 30A (3) or 40A (1) (a) of
 
 
TCTA 2018 (or would be so chargeable but for regulations within section
 
 
30B(1)(a) or 40B(1)(a) of that Act), it is imported when liability to that duty
15
 
is incurred in respect of the good (or would be incurred but for the
 
 
regulations).
 
 
(5)
If a CBAM good is—
 
 
(a)
a Union good that is imported into the United Kingdom as a result
 
 
of its entry into Northern Ireland and not excluded by regulations
20
 
made by the Treasury,
 
 
(b)
a good that is imported into the United Kingdom from the Isle of Man
 
 
and not excluded by regulations made by the Treasury,
 
 
(c)
a domestic good by virtue of regulations made under section 33(8) of
 
 
TCTA 2018 relating to goods declared for an outward processing
25
 
procedure, or
 
 
(d)
a domestic good by virtue of subsection (6) of section 36 of TCTA
 
 
2018 or regulations made under that section,
 
 
it is imported at the time of importation for the purposes of the customs and
 
 
excise Acts.
30
 
(6)
If a CBAM good would be chargeable to duty under section 30C of TCTA
 
 
2018 but for regulations within subsection (6)(a) of that section, it is imported
 
 
at the time of entry of the good in Great Britain in the course of the removal
 
 
of the good to Great Britain from Northern Ireland.
 
 
(7)
The reference in subsection (4) to when liability to duty under section 30A(3)
35
 
or 40A(1)(a) of TCTA 2018 is incurred in respect of a good is to when, for
 
 
the purpose of the duty, a customs debt on import is incurred under UCC
 
 
2013.
 
 
(8)
For the purposes of determining, in accordance with subsection (5) , when a
 
 
CBAM good is imported into the United Kingdom from the Isle of Man,
40
 
section 8 of the Isle of Man Act 1979 (removal of goods from the Isle of Man)
 

Page 149

 
has effect as if, in subsection (2) of that Act , at the end of paragraph (c), there
 
 
were inserted “; or
 
 
“(d)
goods which are CBAM goods.”
 
 
(9)
Section 5 of CEMA 1979 applies for the purpose of subsection (6) to determine
 
 
the time of entry of a CBAM good in Great Britain in the course of the removal
5
 
of the good to Great Britain from Northern Ireland as it applies for the purpose
 
 
of the customs and excise Acts to determine the time of importation of goods—
 
 
(a)
reading references in that section to the time of importation of goods
 
 
as the time of entry of the CBAM good in Great Britain, and
 
 
(b)
reading references in subsections (2) and (6) of that section to the
10
 
United Kingdom as Great Britain.
 
 
(10)
Regulations made by the Treasury may exclude from subsection (4) or (6) (as
 
 
the case may be) goods that would be chargeable to duty under section 30A(3),
 
 
30C or 40A(1)(a) of TCTA 2018 but for regulations within section 30B(1)(a),
 
 
30C(6)(a) or 40B(1)(a) of that Act.
15
142
Goods processed under a special customs procedure
 
 
(1)
Subsection (2) applies where—
 
 
(a)
a CBAM good has been declared for a special customs procedure,
 
 
(b)
the CBAM good is processed under the procedure,
 
 
(c)
the processing produces a good that is not a CBAM good, and
20
 
(d)
that good is imported into the United Kingdom.
 
 
(2)
When the good that is not a CBAM good is first imported as described in
 
 
section 141 , CBAM is charged on so much of the emissions embodied in that
 
 
good as were embodied in the CBAM good when it was declared for the
 
 
special customs procedure.
25
 
(3)
References in this Part to a CBAM good include a reference to a good imported
 
 
in the circumstances described in subsection (1) .
 
 
(4)
In this section, “special customs procedure” means—
 
 
(a)
a special Customs procedure (within the meaning of section 3(4) of
 
 
TCTA 2018);
30
 
(b)
a special procedure provided for by Title 7 of UCC 2013, other than
 
 
the outward processing procedure.
 
143
Person liable: the importer
 
 
(1)
The person liable to CBAM on the emissions embodied in a CBAM good is
 
 
the importer.
35
 
(2)
If a CBAM good is imported as described in section 141 (2) , (3) or (6) , the
 
 
importer is—
 

Page 150

 
(a)
if liability to import duty, or duty under section 30C of TCTA 2018,
 
 
is incurred when a declaration for a Customs procedure is accepted,
 
 
or when there is a breach of a requirement relating to the procedure—
 
 
(i)
the person in whose name the declaration for the procedure
 
 
was made, or
5
 
(ii)
if the declaration was made on behalf of another person, the
 
 
person on whose behalf the declaration was made, or
 
 
(b)
if paragraph (a) does not apply, the person on whose behalf the good
 
 
is imported.
 
 
(3)
If a CBAM good is imported as described in section 141 (4) , the importer is—
10
 
(a)
if liability to duty under section 30A(3) or 40A(1)(a) of TCTA 2018 is
 
 
incurred when a Union customs declaration in respect of the good is
 
 
accepted, or when there is a breach of a requirement relating to the
 
 
procedure for which it is accepted—
 
 
(i)
the declarant, or
15
 
(ii)
if the declaration was made on behalf of another person, the
 
 
person on whose behalf the declaration was made, or
 
 
(b)
if paragraph (a) does not apply, the person on whose behalf the good
 
 
is imported.
 
 
(4)
If a CBAM good is imported as described in section 141 (5) , the importer is
20
 
the person on whose behalf the good is imported.
 
 
(5)
In this section—
 
 
“Customs procedure” means a procedure set out in section 3(3) of TCTA
 
 
2018;
 
 
“declarant” , in relation to a Union customs declaration, has the meaning
25
 
given by Article 5(15) of UCC 2013;
 
 
“Union customs declaration” means a customs declaration for the
 
 
purposes of UCC 2013.
 
144
Exemptions
 
 
(1)
CBAM is not charged on the emissions embodied in a CBAM good if the
30
 
importer—
 
 
(a)
is, at the time the good is imported, neither registrable nor registered
 
 
(see Part 2 of Schedule 16 ), or
 
 
(b)
is importing the good otherwise than in the course of a business.
 
 
(2)
CBAM is not charged on the emissions embodied in a CBAM good if—
35
 
(a)
the place of origin of the good is the United Kingdom, determined in
 
 
accordance with provision applicable in relation to the customs tariff
 
 
in its standard form (see section 17(1) to (6) of TCTA 2018);
 
 
(b)
the good is imported as described in section 141 (2) or (3) and returned
 
 
goods relief is available in respect of the good;
40

Page 151

 
(c)
the good is imported as described in section 141 (4) and relief under
 
 
Article 203 of UCC 2013 (returned goods) is available in respect of the
 
 
good;
 
 
(d)
the good is within section 141 (5) (a) and was—
 
 
(i)
exported from the United Kingdom as a Union good as a result
5
 
of its removal from Northern Ireland, and
 
 
(ii)
imported into the United Kingdom as described in section
 
 
141 (5) (a) not more than 3 years later, in the state in which it
 
 
was exported (see Article 203(5) of UCC 2013);
 
 
(e)
the good is imported as described in section 141 (5) (b) and returned
10
 
goods relief would be available in respect of it if liability to import
 
 
duty were incurred by reference to its importation into the United
 
 
Kingdom.
 
 
(3)
CBAM is not charged on so much of the emissions embodied in a CBAM
 
 
good (“the chargeable good”) as are attributable to the production of another
15
 
CBAM good which—
 
 
(a)
originated from the United Kingdom, determined in accordance with
 
 
provision applicable in relation to the customs tariff in its standard
 
 
form (see section 17(1) to (6) of TCTA 2018), and
 
 
(b)
was processed to produce the chargeable good.
20
 
(4)
If, but for this subsection, a liability to duty would have been incurred for
 
 
the purposes of section 141 (2) or (3) in circumstances where—
 
 
(a)
liability to duty was incurred in accordance with section 4(4)(a) of
 
 
TCTA 2018,
 
 
(b)
liability to duty was incurred by virtue of HMRC accepting a
25
 
declaration of the good for a temporary admission procedure, and
 
 
(c)
full relief was given from the liability to duty incurred,
 
 
the liability to duty is treated as not having been incurred on that occasion
 
 
for the purposes of section 141 (2) or (3) (and, accordingly, the good is treated
 
 
as not having been imported as described in section 141 (2) or (3) on that
30
 
occasion).
 
 
(5)
But subsection (4) does not apply if—
 
 
(a)
there was no entitlement to make the declaration mentioned in
 
 
subsection (4) (b) , or
 
 
(b)
the full relief given, mentioned in subsection (4) (c) , was not available.
35
 
(6)
The Treasury may by regulations specify other circumstances in which CBAM
 
 
is not charged on emissions, or certain emissions, embodied in a CBAM good.
 
 
(7)
Regulations under subsection (6) may also treat an importation into the United
 
 
Kingdom, for any purpose of this Part , of a CBAM good in respect of which
 
 
the regulations apply as not having occurred (including by virtue of provision
40
 
similar to subsection (4) ).
 
 
(8)
In this section—
 

Page 152

 
“customs tariff in its standard form” means the customs tariff, as defined
 
 
in section 8 of TCTA 2018, as it has effect without regard to any
 
 
provision made under sections 9 to 15 or section 19(4) of that Act;
 
 
“returned goods relief” means relief for import duty available—
 
 
(a)
by virtue of the UK Reliefs document, and
5
 
(b)
by reference to the fact the good is being returned to the United
 
 
Kingdom, or Great Britain, having previously been exported;
 
 
“temporary admission procedure” has the meaning given by paragraph
 
 
15 of Schedule 2 to TCTA 2018;
 
 
“UK Reliefs document” has the meaning given by regulations under
10
 
section 19 of TCTA 2018.
 
145
Embodied emissions
 
 
(1)
In this Part, “emissions embodied in a CBAM good” means emissions that
 
 
are attributable to the production of a CBAM good.
 
 
(2)
The Treasury may by regulations make provision about what it means for
15
 
emissions to be attributable to the production of a CBAM good.
 
 
(3)
Regulations under subsection (2) may (among other things) make provision
 
 
about emissions that are emitted in the course of an activity carried out in
 
 
connection with the production of—
 
 
(a)
a CBAM good, or
20
 
(b)
materials used (including goods processed) to produce a CBAM good.
 
 
(4)
See paragraphs 10 and 11 of Schedule 16 for provision about how to determine
 
 
and evidence emissions embodied in a CBAM good.
 
146
Rate
 
 
(1)
CBAM is charged at an amount equal to the sectoral domestic price applicable
25
 
in respect of the CBAM good multiplied by the number of tonnes of carbon
 
 
dioxide equivalent emissions embodied in the CBAM good.
 
 
(2)
The “sectoral domestic price” applicable in respect of a CBAM good is the
 
 
price calculated and published by the Treasury for—
 
 
(a)
the CBAM sector in which the good falls, and
30
 
(b)
the quarter in which the liability to CBAM is incurred in respect of
 
 
the good.
 
 
(3)
The Treasury must calculate and publish the sectoral domestic price for each
 
 
CBAM sector for each quarter (“quarter Q”) as follows—
 
 
Calculate the average price per tonne of specified emissions under the UK
 
 
Emissions Trading Scheme in the quarter preceding quarter Q—
 
 
(a)
by reference to auction clearing prices for UK ETS allowances at
 
 
auctions during the quarter preceding quarter Q, or
 

Page 153

 
(b)
if no allowances were sold at auction during that quarter, as provided
 
 
in regulations under subsection (5) .
 
 
Reduce that price by a percentage equal to the baseline free allocation
 
 
percentage for the CBAM sector, as adjusted by a factor specified by
5
 
regulations under subsection (5) —
 
 
(a)
for the CBAM sector for the year in which quarter Q falls, and
 
 
(b)
in light of reduction factors applicable in determining, under the UK
 
 
Emissions Trading Scheme, the allocation in that year of free UK ETS
 
 
allowances in respect of sub-installations that have a process that
10
 
serves production of goods falling within the CBAM sector.
 
 
(4)
In this section—
 
 
“auction” means an auction under the Greenhouse Gas Emissions Trading
 
 
Scheme Auctioning Regulations 2021 (S.I. 2021/484);
 
 
“auction clearing price” , in relation to a UK ETS allowance, has the same
15
 
meaning as in those Regulations (see regulation 7);
 
 
“baseline free allocation percentage” means, in relation to a CBAM sector,
 
 
the average percentage of sectoral emissions that were covered—
 
 
(a)
in the 2019 scheme year, by free EU ETS allowances, and
 
 
(b)
in the 2022 and 2023 scheme years, by free UK ETS allowances,
20
 
allocated in the scheme years mentioned here in respect of
 
 
sub-installations that have a process that serves the production of
 
 
goods falling within the CBAM sector;
 
 
“CBAM sector” means the commodity codes set out under a single
 
 
heading in the Table in Schedule 15 other than the commodity codes
25
 
that the Table indicates are excepted;
 
 
“the ETS Regulations” means the Greenhouse Gas Emissions Trading
 
 
Scheme Regulations 2012 (S.I. 2012/3038);
 
 
“free EU ETS allowance” means an allowance allocated free of charge in
 
 
accordance with Directive 2003/87/EC of the European Parliament
30
 
and of the Council establishing a scheme for greenhouse gas emissions
 
 
allowance trading within the Community and amending Council
 
 
Directive 96/61/EC;
 
 
“free UK ETS allowance” means an allowance allocated free of charge
 
 
under Part 4A of the UK ETS Order;
35
 
“quarter” means a period of 3 months ending at the end of March, June,
 
 
September or December;
 
 
“regulated activity” and “specified emissions” have the meaning given
 
 
by paragraph 3 of Schedule 2 to the UK ETS Order (or, in relation the
 
 
2019 scheme year, given by regulation 3 of the ETS Regulations as it
40
 
had effect during that year);
 
 
“scheme year” has the meaning—
 
 
(a)
in relation to the 2019 scheme year, given by regulation 3 of
 
 
the ETS Regulations;
 

Page 154

 
(b)
in relation to the 2022 and 2023 scheme years, given by article
 
 
4 of the UK ETS order;
 
 
“sectoral emissions” means, in relation to a CBAM sector, the specified
 
 
emissions that were emitted in the course of regulated activities carried
 
 
out at sub-installations in the United Kingdom that have a process
5
 
that serves the production of goods falling within the CBAM sector;
 
 
“sub-installation” means each kind of sub-installation defined by Article
 
 
2 of Commission Delegated Regulation (EU) 2019/331 determining
 
 
transitional Union-wide rules for harmonised free allocation of emission
 
 
allowances pursuant to Article 10a of Directive 2003/87/EC of the
10
 
European Parliament and of the Council (or, in relation the 2019
 
 
scheme year, has the meaning given by regulation 3 of the ETS
 
 
Regulations as it had effect during that year);
 
 
“UK ETS allowance” means an allowance created under the UK ETS
 
 
Order (see article 18);
15
 
“UK ETS Order” means the Greenhouse Gas Emissions Trading Scheme
 
 
Order 2020 (S.I. 2020/1265).
 
 
(5)
The Treasury may by regulations make further provision about the calculation
 
 
of the sectoral domestic price.
 
 
(6)
In this section—
20
 
(a)
references to a good falling within a CBAM sector are references to
 
 
the good falling within one of the commodity codes comprising the
 
 
sector;
 
 
(b)
references to emissions are references to tonnes of carbon dioxide
 
 
equivalent emissions;
25
 
(c)
references to regulated activities carried out to produce goods include
 
 
regulated activities consisting in the production of heating and cooling
 
 
consumed during the regulated activities.
 
147
Carbon price relief
 
 
(1)
The amount of CBAM charged on emissions may be reduced under this
30
 
section if another monetary amount is payable in relation to the emissions,
 
 
whether the amount is—
 
 
(a)
in the form of taxation,
 
 
(b)
in exchange for allowances (however expressed) under an emissions
 
 
trading scheme, or
35
 
(c)
required to be paid under the law of a country or territory in
 
 
connection with the importation of goods into the country or territory.
 
 
(2)
The Treasury may by regulations make provision about relief under this
 
 
section, including provision—
 
 
(a)
describing which monetary amounts may generate relief,
40
 
(b)
about when a monetary amount is to be treated as being payable in
 
 
relation to emissions, and how the emissions are to be identified, and
 
 
(c)
about determining the amount of relief.
 

Page 155

 
(3)
In this Part , “carbon price” means a monetary amount of a kind described in
 
 
regulations under subsection (2) (a) .
 
 
(4)
Regulations under subsection (2) may (among other things) make provision—
 
 
(a)
for the amount of relief to be determined by reference to averages,
 
 
estimates, assumptions or by reference to information provided by a
5
 
third party;
 
 
(b)
to take account of other reliefs, allowances, offsets or similar relating
 
 
to a carbon price;
 
 
(c)
about cases where two or more carbon prices are payable in relation
 
 
to the same emissions;
10
 
(d)
for the amount of relief to differ depending on where the carbon price
 
 
is payable;
 
 
(e)
specifying periods by reference to which calculations or measurements
 
 
are to be made.
 
 
(5)
In this section, references to an amount being payable in relation to emissions
15
 
includes a reference to—
 
 
(a)
an amount that indirectly relates to emissions, and
 
 
(b)
an amount having been payable, or that is going to become payable,
 
 
in relation to emissions.
 

Administration and enforcement

20
148
Administration and enforcement
 
 
Schedule 16 makes provision for the administration and enforcement of CBAM.
 
149
Criminal offences
 
 
Schedule 17 makes provision for criminal offences relating to CBAM and
 
 
about proceedings for those offences.
25

General

 
150
Supplementary amendments
 
 
Schedule 18 contains supplementary amendments of other legislation.
 
151
Emissions: meaning etc
 
 
(1)
In this Part, “emissions” means emissions of greenhouse gases (within the
30
 
meaning of section 92 of the Climate Change Act 2008) into the atmosphere
 
 
that are attributable to human activity.
 
 
(2)
For the purposes of this Part, “emissions” are determined or expressed in
 
 
tonnes of carbon dioxide equivalent.
 

Page 156

 
(3)
In this Part, a “tonne of carbon dioxide equivalent” means one metric tonne
 
 
of carbon dioxide or an amount of any other greenhouse gas with an
 
 
equivalent global warming potential.
 
 
(4)
The Commissioners may by regulations make provision setting, or about the
 
 
determination of, such amounts.
5
152
Interpretation
 
 
(1)
In this Part—
 
 
“business” includes any activity of a government department or other
 
 
public authority, or of a charity, that is carried out for commercial
 
 
purposes;
10
 
“CBAM good” : see section 140 ;
 
 
“the Commissioners” means the Commissioners for His Majesty’s Revenue
 
 
and Customs;
 
 
“the customs and excise Acts” has the meaning given by section 1 of
 
 
CEMA 1979;
15
 
“emissions” : see section 151 ;
 
 
“HMRC” means His Majesty’s Revenue and Customs;
 
 
“import” : see section 141 ;
 
 
“import duty” has the meaning given by section 1 of TCTA 2018;
 
 
“importer” : see section 143 ;
20
 
“registered person” and “registrable person”: see paragraph 2 (10) of
 
 
Schedule 16 ;
 
 
“tonne of carbon dioxide equivalent” see section 151 ;
 
 
“UCC 2013” means Regulation (EU) No 952/2013 of the European
 
 
Parliament and of the Council of 9 October 2013 laying down the
25
 
Union Customs Code, as it has effect by virtue of section 7A of the
 
 
European Union (Withdrawal) Act 2018;
 
 
“UK Emissions Trading Scheme” has the meaning given in Article 16 of
 
 
the Greenhouse Gas Emissions Trading Order 2020 (S.I. 2020/1265);
 
 
“Union good” has the meaning given by Article 5(23) of UCC 2013;
30
 
“working day” means any day other than—
 
 
(a)
a Saturday or Sunday, or
 
 
(b)
a day that is a bank holiday in any part of the United Kingdom
 
 
under the Banking and Financial Dealings Act 1971.
 
 
(2)
In this Part—
35
 
(a)
a person imports a CBAM good only if the person is “the importer”
 
 
of the good (within the meaning of section 143 );
 
 
(b)
references to the production of goods include the manufacture of
 
 
goods;
 
 
(c)
references to the processing of goods have the same meaning as in
40
 
TCTA 2018 (see section 37(4) of that Act).
 

Page 157

 
(3)
The Treasury may by regulations make such amendments to this Part as they
 
 
consider appropriate in consequence of UCC 2013, or any legislation replacing
 
 
it, being amended or replaced.
 
153
Power to make provision for linked emissions trading schemes
 
 
(1)
The Treasury may by regulations amend this Part for the purpose of—
5
 
(a)
excluding emissions embodied in goods that originate from a country
 
 
or territory with a linked emissions trading scheme from the charge
 
 
to CBAM;
 
 
(b)
providing that such goods are to be disregarded when calculating the
 
 
aggregate value of imports for the purposes of Part 2 of Schedule 2
10
 
(registration).
 
 
(2)
In this section, “a country or territory with a linked emissions trading scheme”
 
 
means—
 
 
(a)
a country or territory that has entered into arrangements with the
 
 
United Kingdom for the purpose of linking its emissions trading
15
 
scheme with the UK Emissions Trading Scheme, or
 
 
(b)
a country or territory that has entered into arrangements with a country
 
 
or territory of a kind referred to in paragraph (a) for the purpose of
 
 
linking its emissions trading scheme with that country or territory’s
 
 
emissions trading scheme.
20
154
Regulations and notices
 
 
(1)
Regulations under this Part—
 
 
(a)
may make different provision for different purposes;
 
 
(b)
may include incidental, consequential, supplementary or transitional
 
 
provision.
25
 
(2)
Regulations under this Part may make provision by reference to things
 
 
specified in a notice that is—
 
 
(a)
published by the Treasury or the Commissioners in accordance with
 
 
the regulations, and
 
 
(b)
not withdrawn by a further notice.
30
 
(3)
Regulations under this Part are to be made by statutory instrument.
 
 
(4)
A statutory instrument containing regulations under section 153 (1) (linked
 
 
emission trading schemes) is subject to the affirmative procedure.
 
 
(5)
A statutory instrument containing regulations under any of the following
 
 
provisions is subject to the made affirmative procedure—
35
 
(a)
section 146 (5) (rate of CBAM);
 
 
(b)
section 147 (2) (carbon price relief);
 
 
(c)
paragraph 47 of Schedule 16 (amount of penalties).
 

Page 158

 
(6)
A statutory instrument containing regulations under paragraph 2 (3) of
 
 
Schedule 15 and under section 8 of TCTA 2018 is subject to the procedure
 
 
under section 32 of TCTA 2018 that applies by virtue of the instrument
 
 
containing regulations section 8 of TCTA 2018.
 
 
(7)
A statutory instrument containing regulations under this Part, other than
5
 
regulations in respect of which subsection (4) , (5) or (6) applies, is subject to
 
 
the negative procedure.
 
 
(8)
Subsection (7) does not apply to a statutory instrument containing only
 
 
regulations under section 155 (transitory provision).
 
 
(9)
Where a statutory instrument is subject to the affirmative procedure, it may
10
 
not be made unless a draft of the instrument has been laid before and
 
 
approved by a resolution of the House of Commons.
 
 
(10)
Where a statutory instrument is subject to the made affirmative procedure—
 
 
(a)
it must be laid before the House of Commons after being made, and
 
 
(b)
it ceases to have effect at the end of the period of 28 days beginning
15
 
with the day on which the instrument is made, unless within that
 
 
period the instrument is approved by a resolution of the House of
 
 
Commons.
 
 
(11)
Where a statutory instrument is subject to the negative procedure, it is subject
 
 
to annulment in pursuance of a resolution of the House of Commons.
20
 
(12)
Where a statutory instrument ceases to have effect as a result of subsection
 
 
(10) , that does not—
 
 
(a)
affect the validity of anything previously done under the instrument,
 
 
or
 
 
(b)
prevent the making of a new statutory instrument.
25
 
(13)
In calculating the period of 28 days for the purposes of subsection (10) , no
 
 
account is to be taken of any whole days that fall within a period during
 
 
which—
 
 
(a)
Parliament is dissolved or prorogued, or
 
 
(b)
the House of Commons is adjourned for more than 4 days.
30
 
(14)
Any provision that may be included in regulations in a statutory instrument
 
 
under this Part subject to the negative procedure may be included in
 
 
regulations in a statutory instrument subject to the affirmative procedure or
 
 
the made affirmative procedure.
 
 
(15)
Any provision that may be included in regulations in a statutory instrument
35
 
under this Part subject to the made affirmative procedure may be included
 
 
in regulations in a statutory instrument subject to the affirmative procedure.
 
 
(16)
A notice published by the Treasury or the Commissioners under this Part—
 
 
(a)
may be amended or withdrawn by a further notice;
 
 
(b)
may include provision mentioned in subsection (1) (a) and (b) .
40

Page 159

155
Commencement and transitory provision
 
 
(1)
This Part has effect in relation to goods imported into the United Kingdom
 
 
on or after 1 January 2027.
 
 
(2)
The Treasury may by regulations modify the effect of—
 
 
(a)
paragraph 2 (4) of Schedule 16 as regards any person who triggers
5
 
registration in 2027 or 2028;
 
 
(b)
paragraph 6 (2) or (3) or 7 (2) for the purposes of any accounting period
 
 
in respect of CBAM falling in 2027 or 2028.
 
 
(3)
Provision included in regulations under this section by virtue of section
 
 
154 (1) (b) may modify the effect of any enactment.
10

Part 6

 

Avoidance

 

Chapter 1

 

Prohibition of promotion of certain tax avoidance arrangements

 

Prohibition

15
156
Prohibition of promotion of certain tax avoidance arrangements
 
 
(1)
A person must not promote arrangements that—
 
 
(a)
have been, or are likely to be, marketed as a means by which a person
 
 
may seek a particular tax advantage if there is no realistic prospect
 
 
that the arrangements will result in the tax advantage, or
20
 
(b)
are of a kind specified in regulations under subsection (2).
 
 
(2)
The Commissioners may by regulations specify arrangements that in the
 
 
reasonable opinion of the Commissioners—
 
 
(a)
have been, or are likely to be, marketed as a means by which a person
 
 
may seek a particular tax advantage,
25
 
(b)
are unlikely to result in the tax advantage, and
 
 
(c)
are likely to cause harm to participants.
 
 
(3)
The following factors would, for example, indicate that arrangements are
 
 
likely to cause harm to participants:
 
 
(a)
a large number of participants;
30
 
(b)
participants that are not independently advised;
 
 
(c)
participants with otherwise straightforward tax affairs;
 
 
(d)
mass-marketing;
 
 
(e)
standardised implementation documents;
 
 
(f)
promoters that are unknown to, or not able to be contacted by,
35
 
participants.
 

Page 160

 
(4)
Regulations under subsection (2) may specify arrangements by—
 
 
(a)
describing—
 
 
(i)
some or all of the steps to be taken by participants or other
 
 
persons;
 
 
(ii)
the tax advantage sought;
5
 
(iii)
the marketing;
 
 
(iv)
characteristics of participants;
 
 
(b)
providing examples or illustrations;
 
 
(c)
such other means as the Commissioners consider appropriate.
 
 
(5)
It does not matter for the purposes of this section whether a person knows,
10
 
or has reason to believe, that the arrangements fall within subsection (1) .
 
157
Meaning of promotion
 
 
(1)
For the purposes of section 156 , a person promotes arrangements if, in the
 
 
course of a business or with a view to monetary gain, the person—
 
 
(a)
communicates information with a view to encouraging another person
15
 
to implement the arrangements or part of the arrangements,
 
 
(b)
makes the arrangements available for implementation by another
 
 
person,
 
 
(c)
in circumstances where the arrangements have been implemented by
 
 
another person, organises or manages any aspect of the arrangements,
20
 
or
 
 
(d)
arranges (whether directly or indirectly) for another person or persons
 
 
to take the steps above.
 
 
(2)
A person does not promote arrangements merely by—
 
 
(a)
providing goods or services on commercial terms in circumstances
25
 
where the person does not know, and could not reasonably be expected
 
 
to know, that the goods or services are being procured or used for
 
 
the purposes of arrangements falling within section 156 (1) (prohibition
 
 
of promotion), or
 
 
(b)
providing legally privileged advice or legally privileged information.
30
 
(3)
For the purposes of subsection (2) (b) , advice or information is legally
 
 
privileged if a claim to legal professional privilege, or (in Scotland) to
 
 
confidentiality of communications as between client and professional legal
 
 
adviser, could be maintained in respect of it in legal proceedings.
 
158
Procedure
35
 
(1)
Regulations under section 156 (2) are to be made by statutory instrument.
 
 
(2)
A statutory instrument containing regulations under section 156 (2) must be
 
 
laid before the House of Commons after being made.
 
 
(3)
Regulations contained in a statutory instrument laid before the House of
 
 
Commons under subsection (2) cease to have effect at the end of the period
40

Page 161

 
of 28 days beginning on the day on which the instrument is made unless,
 
 
during that period, the instrument is approved by a resolution of the House
 
 
of Commons.
 
 
(4)
In calculating the period of 28 days, no account is to be taken of any whole
 
 
days that fall within a period during which—
5
 
(a)
Parliament is dissolved or prorogued, or
 
 
(b)
the House of Commons is adjourned for more than four days.
 
 
(5)
If the regulations cease to have effect as a result of subsection (3) , that does
 
 
not—
 
 
(a)
affect the validity of anything previously done under the regulations,
10
 
or
 
 
(b)
prevent the making of new regulations.
 

Sanctions

 
159
Civil penalties
 
 
(1)
A person who promotes arrangements in breach of section 156 (1) is liable to
15
 
a penalty.
 
 
(2)
The maximum penalty under this section is the sum of—
 
 
(a)
£1,000,000, and
 
 
(b)
£5,000 for each person who participated in the arrangements.
 
 
(3)
Before imposing a penalty under this section, an authorised officer of Revenue
20
 
and Customs must—
 
 
(a)
notify the person of the fact that the authorised officer considers
 
 
subsection (1) to apply, and
 
 
(b)
allow the person 30 days from the date of notification to make
 
 
representations to HMRC.
25
 
(4)
In imposing a penalty under this section, an authorised officer of Revenue
 
 
and Customs must have regard to—
 
 
(a)
the number of persons participating, or targeted to participate, in the
 
 
arrangements,
 
 
(b)
the amount of tax that was likely at risk in connection with the
30
 
arrangements,
 
 
(c)
whether and to what extent the person cooperated with HMRC, and
 
 
(d)
whether the wrongdoing was repeated, or continued over an extended
 
 
period.
 
 
(5)
A penalty imposed under this section is to be treated as a penalty determined
35
 
under section 100(1) of TMA 1970.
 
 
(6)
A penalty imposed under this section is to carry interest in accordance with
 
 
section 101 of FA 2009.
 

Page 162

 
(7)
A person is not liable to a penalty under this section in respect of anything
 
 
for which the person has been convicted of an offence.
 
 
(8)
In paragraph 5(6) of Schedule 13 to FA 2020 (joint and several liability of
 
 
company directors etc) after paragraph (f) insert—
 
 
“(g)
section 159 of FA 2026 (prohibition of promotion of certain tax
5
 
avoidance arrangements: penalties).”
 
160
Criminal offence
 
 
(1)
A person who promotes arrangements in breach of section 156 (1) commits
 
 
an offence.
 
 
(2)
A person who commits an offence under this section is liable—
10
 
(a)
on summary conviction, to—
 
 
(i)
in England and Wales, a fine, or
 
 
(ii)
in Scotland or Northern Ireland, a fine not exceeding the
 
 
statutory maximum, or
 
 
(b)
on conviction on indictment, to imprisonment for a term not exceeding
15
 
two years or to a fine or both.
 
161
Criminal liability of responsible persons
 
 
(1)
If an offence under section 160 is committed by a body corporate or a
 
 
partnership and—
 
 
(a)
is committed with the consent or connivance of a responsible person,
20
 
or
 
 
(b)
is attributable to the neglect of a responsible person,
 
 
the responsible person commits the offence (as well as the body or
 
 
partnership).
 
 
(2)
A “responsible person” means—
25
 
(a)
in relation to a body corporate other than one whose affairs are
 
 
managed by its members—
 
 
(i)
a director, manager, secretary or other similar officer of the
 
 
body, or a person purporting to act in such a capacity, or
 
 
(ii)
a shadow director within the meaning given in section 251 of
30
 
the Companies Act 2006 ;
 
 
(b)
in relation to a limited liability partnership or other body corporate
 
 
whose affairs are managed by its members—
 
 
(i)
a member exercising management functions, or purporting to
 
 
do so, or
35
 
(ii)
in the case of a limited liability partnership, a shadow member;
 
 
(c)
in relation to a partnership, a partner or a person purporting to act
 
 
in that capacity.
 

Page 163

 
(3)
In this section , a “shadow member” means a person in accordance with whose
 
 
directions or instructions the members of the limited liability partnership are
 
 
accustomed to act, save that a person is not a shadow member by reason
 
 
only of the fact that the members act on advice given by that person in a
 
 
professional capacity.
5

General

 
162
Interpretation and commencement
 
 
(1)
In this Chapter—
 
 
“arrangements” includes any agreement, scheme, arrangement or
 
 
understanding of any kind whether or not legally enforceable involving
10
 
one or more transactions, and includes a proposal for arrangements;
 
 
“authorised officer of Revenue and Customs” means an officer of Revenue
 
 
and Customs who is, or is a member of a class of officers who are,
 
 
authorised by the Commissioners for the purpose of this Chapter;
 
 
“Commissioners” means the Commissioners for His Majesty’s Revenue
15
 
and Customs;
 
 
“HMRC” means His Majesty’s Revenue and Customs;
 
 
“promotion” has the meaning given in section 157 ;
 
 
“tax advantage” includes—
 
 
(a)
relief or increased relief from tax,
20
 
(b)
repayment or increased repayment from tax,
 
 
(c)
avoidance or reduction of a charge to tax or an assessment to
 
 
tax,
 
 
(d)
avoidance of a possible assessment to tax,
 
 
(e)
deferral of a payment of tax or advancement of a repayment
25
 
of tax, and
 
 
(f)
avoidance of an obligation to deduct or account for tax.
 
 
(2)
Section 156 (1) comes into force two months after the day on which this Act
 
 
is passed.
 

Chapter 2

30

Promoter action notices

 

Promoter action notices

 
163
Certification of promoters
 
 
(1)
An authorised officer of Revenue and Customs may, for the purposes of this
 
 
Chapter, certify that a person is promoting arrangements—
35
 
(a)
in breach of section 236B of FA 2014 (effect of stop notices), or
 
 
(b)
in breach of section 156 (1) (prohibition of promotion of certain tax
 
 
avoidance arrangements) .
 

Page 164

 
(2)
A certification under subsection (1) must be in writing and include the
 
 
following—
 
 
(a)
the name of the person,
 
 
(b)
a statement to the effect that—
 
 
(i)
an authorised officer of Revenue and Customs has certified
5
 
that the person is promoting arrangements as described in
 
 
subsection (1) (a) or (b) , and
 
 
(ii)
accordingly, the person is a certified promoter for the purposes
 
 
of this Chapter,
 
 
(c)
a summary of the officer’s reasons for coming to the conclusion
10
 
certified, including a description of the arrangements and promotion,
 
 
and
 
 
(d)
information about how the person may make representations to HMRC
 
 
(see subsection (4) (b) ).
 
 
(3)
For the purposes of this Chapter, a “certified promoter” means a person
15
 
certified under this section.
 
 
(4)
Before issuing a notice under section 164 (promoter action notice) in respect
 
 
of a certified promoter, an authorised officer of Revenue and Customs must—
 
 
(a)
provide the certified promoter with a copy of the certification, and
 
 
(b)
allow the certified promoter 30 days from the date of provision to
20
 
make representations to HMRC.
 
164
Promoter action notices
 
 
(1)
An authorised officer of Revenue and Customs may issue a notice to a person
 
 
if the officer reasonably suspects that—
 
 
(a)
the person (the “recipient”) is providing goods or services to a certified
25
 
promoter (the “target”), and
 
 
(b)
the goods or services are being procured or used wholly or partly in
 
 
connection with the promotion of arrangements in respect of which
 
 
the target is certified.
 
 
(2)
For the purposes of this Chapter , a “promoter action notice” means a notice
30
 
issued under subsection (1) .
 
 
(3)
A promoter action notice may, for the purpose of impeding the target’s
 
 
promotion of the arrangements, require the recipient of the notice to—
 
 
(a)
stop providing some or all of the goods or services,
 
 
(b)
provide the goods or services subject to specified conditions, or
35
 
(c)
take specified steps in relation to the provision of the goods or services.
 
 
(4)
A promoter action notice must identify the target and specify—
 
 
(a)
the goods or services in respect of which it is issued,
 
 
(b)
the requirements applicable under subsection (3) , and
 
 
(c)
the time by which the recipient must comply with the requirements
40
 
under subsection (3) .
 

Page 165

 
(5)
A time specified under subsection (4) (c) —
 
 
(a)
must be the end of—
 
 
(i)
the period of 30 days beginning with the day on which the
 
 
notice is issued, or
 
 
(ii)
such longer period as an authorised officer of Revenue and
5
 
Customs considers appropriate, and
 
 
(b)
takes precedence over any statutory or regulatory requirement to
 
 
provide a period of notice before terminating or modifying a contract.
 
 
(6)
A promoter action notice may not—
 
 
(a)
require the recipient to monitor or assess whether or how particular
10
 
goods or services are being procured or used in connection with the
 
 
promotion or arrangements,
 
 
(b)
restrict the provision of services that provide access to the internet, or
 
 
(c)
restrict the provision of legal or auditing services.
 
 
(7)
An authorised officer of Revenue and Customs may withdraw a promoter
15
 
action notice.
 
 
(8)
The recipient is not liable in damages in respect of anything done, or omitted
 
 
to be done, in good faith for the purposes of complying with a promoter
 
 
action notice.
 
165
Preliminary notices
20
 
(1)
An authorised officer of Revenue and Customs may issue a notice to a person
 
 
who the officer reasonably suspects is providing goods or services as described
 
 
in section 164 (1) .
 
 
(2)
A notice under this section must—
 
 
(a)
identify the target referred to in section 164 (1) ;
25
 
(b)
give reasons for the suspicion referred to in subsection (1) ;
 
 
(c)
allow the recipient of the notice a period of 30 days from the date of
 
 
the notice to make representations to HMRC.
 
 
(3)
A notice under this section may request information from the recipient.
 
 
(4)
A disclosure of information by the recipient in response to a request under
30
 
subsection (3) does not breach—
 
 
(a)
any obligation of confidence owed by the person making the disclosure,
 
 
or
 
 
(b)
any other restriction on the disclosure of information (however
 
 
imposed).
35
 
(5)
A person who receives a notice under this section may not disclose the
 
 
existence or contents of the notice to—
 
 
(a)
the target identified in the notice, or
 
 
(b)
any person who might reasonably be expected to disclose the existence
 
 
or contents of the notice to the target.
40

Page 166

 
(6)
An authorised officer of Revenue and Customs may withdraw a notice under
 
 
this section.
 
166
Disclosure of information by HMRC
 
 
(1)
An authorised officer of Revenue and Customs may for the purposes of this
 
 
Chapter disclose—
5
 
(a)
information relating to the target identified in a promoter action notice
 
 
to the recipient of the notice, or
 
 
(b)
information relating to the target identified in a notice issued under
 
 
section 165 (preliminary notices) to the recipient of the notice.
 
 
(2)
A person to whom an authorised officer of Revenue and Customs discloses
10
 
information under this section —
 
 
(a)
may use it only for the purpose for which it was disclosed, and
 
 
(b)
may not further disclose it without the consent of HMRC (which may
 
 
be general or specific).
 
 
(3)
Where a person contravenes subsection (2) (b) by disclosing information relating
15
 
to a person whose identity—
 
 
(a)
is specified in the disclosure, or
 
 
(b)
can be deduced from it,
 
 
section 19 of CRCA 2005 (offence of wrongful disclosure) applies in relation
 
 
to the disclosure as it applies in relation to a disclosure in contravention of
20
 
section 20(9) of that Act.
 
 
(4)
Nothing in this section limits the circumstances in which information may
 
 
be disclosed under section 18(2) of CRCA 2005 or under any other enactment
 
 
or rule of law.
 
167
Appeal against a decision to issue a promoter action notice
25
 
(1)
A recipient of a promoter action notice may appeal to the tribunal against a
 
 
decision to issue the notice on the grounds that—
 
 
(a)
the recipient is not providing the goods or services specified in the
 
 
notice to the target identified in the notice;
 
 
(b)
the goods or services are not being used wholly or partly in connection
30
 
with the arrangements referred to in section 164 (1) .
 
 
(2)
Notice of an appeal must—
 
 
(a)
state the ground of appeal, and
 
 
(b)
be given in writing to HMRC before the end of the period of 30 days
 
 
beginning with the day on which the promoter action notice was
35
 
issued.
 
 
(3)
The provisions of Part 5 of TMA 1970 relating to appeals have effect in relation
 
 
to appeals under this section as they have effect in relation to an appeal
 
 
against an assessment to income tax.
 

Page 167

 
(4)
In this section, the “tribunal” means the First-tier Tribunal or, where
 
 
determined by or under the Tribunal Procedure Rules, the Upper Tribunal.
 

Sanctions

 
168
Civil penalties
 
 
(1)
A recipient of a promoter action notice is liable to a penalty if the recipient—
5
 
(a)
fails to comply with the notice, and
 
 
(b)
does so without reasonable excuse.
 
 
(2)
The maximum penalty under this section is £1000 for each day on which the
 
 
recipient failed, without reasonable excuse, to comply with the notice.
 
 
(3)
Before imposing a penalty under this section, an authorised officer of Revenue
10
 
and Customs must—
 
 
(a)
notify the recipient of the fact that the authorised officer considers
 
 
subsection (1) to apply, and
 
 
(b)
allow the recipient 30 days from the date of notification to make
 
 
representations to HMRC.
15
 
(4)
In imposing a penalty under this section, an authorised officer of Revenue
 
 
and Customs must have regard to—
 
 
(a)
the likely cost to the recipient of complying with the notice;
 
 
(b)
any benefit for the recipient of not complying with the notice;
 
 
(c)
whether and to what extent the recipient cooperated with HMRC or
20
 
made efforts to comply with the notice.
 
 
(5)
A penalty imposed under this section is to be treated as a penalty determined
 
 
under section 100(1) of TMA 1970.
 
 
(6)
A penalty imposed under this section is to carry interest in accordance with
 
 
section 101 of FA 2009.
25
 
(7)
In paragraph 5(6) of Schedule 13 to FA 2020 (joint and several liability of
 
 
company directors etc) after paragraph (g) (inserted by section 159 (8) ) insert—
 
 
“(h)
section 168 of FA 2026 (promoter action notices: penalties).”
 
169
Publication
 
 
(1)
Subsection (2) applies if—
30
 
(a)
a penalty under section 168 has been imposed on a recipient of a
 
 
promoter action notice, and
 
 
(b)
notice of appeal against the penalty can no longer be given or, if notice
 
 
has been given, the appeal has been determined or withdrawn.
 
 
(2)
An authorised officer of Revenue and Customs may publish—
35
 
(a)
the recipient’s name (including any trading name, previous name or
 
 
pseudonym);
 

Page 168

 
(b)
any address used by the recipient;
 
 
(c)
any other information that the authorised officer considers appropriate
 
 
for the purposes of identifying the recipient or their business;
 
 
(d)
details of the recipient’s failure to comply;
 
 
(e)
details of the penalty imposed on the recipient under section 168 .
5
 
(3)
Before publishing information under this section , an authorised officer of
 
 
Revenue and Customs must—
 
 
(a)
notify the recipient of their intention to publish, including the
 
 
information that they intend to publish, and—
 
 
(b)
allow the recipient 30 days from the date of notification to make
10
 
representations to HMRC.
 
 
(4)
Information published under this section must be withdrawn no later than
 
 
12 months after its publication.
 
 
(5)
Nothing in this section limits the circumstances in which information may
 
 
be disclosed under section 18 (2) of CRCA 2005 or under any other enactment
15
 
or rule of law.
 
170
Reporting to regulators etc
 
 
(1)
This section applies if an authorised officer of Revenue and Customs considers
 
 
that a recipient of a promoter action notice—
 
 
(a)
failed to comply with the notice, and
20
 
(b)
did so without reasonable excuse.
 
 
(2)
An authorised officer of Revenue and Customs may, for the permitted purpose,
 
 
disclose the following information to a regulator, representative body or trade
 
 
body of the recipient—
 
 
(a)
the recipient’s name (including any trading name, previous name or
25
 
pseudonym);
 
 
(b)
any address used by the recipient;
 
 
(c)
any other information that the authorised officer considers appropriate
 
 
for the purposes of identifying the recipient or their business;
 
 
(d)
details of the recipient’s failure to comply;
30
 
(e)
details of any penalty imposed on the recipient under section 168 ;
 
 
(f)
any other information that the authorised officer considers appropriate
 
 
for the permitted purpose.
 
 
(3)
In this section, the “permitted purpose” means assisting the person to whom
 
 
the information is disclosed in relation to—
35
 
(a)
a current or future investigation into the failure referred to in
 
 
subsection (1), or
 
 
(b)
any other action taken, or to be taken, by the person in relation to that
 
 
failure.
 
 
(4)
Before disclosing information under this section , an authorised officer of
40
 
Revenue and Customs must—
 

Page 169

 
(a)
notify the recipient of their intention to disclose it, including—
 
 
(i)
their reasons for considering that subsection (1) applies, and
 
 
(ii)
the information that they intend to disclose, and
 
 
(b)
allow the recipient 30 days from the date of notification to—
 
 
(i)
comply with any requirements specified in the promoter action
5
 
notice, or
 
 
(ii)
make representations to HMRC.
 
 
(5)
A person to whom an authorised officer of Revenue and Customs discloses
 
 
information under this section —
 
 
(a)
may use it only for the purpose for which it was disclosed, and
10
 
(b)
may not further disclose it without the consent of HMRC (which may
 
 
be general or specific).
 
 
(6)
Where a person contravenes subsection (5) (b) by disclosing information relating
 
 
to a person whose identity—
 
 
(a)
is specified in the disclosure, or
15
 
(b)
can be deduced from it,
 
 
section 19 of CRCA 2005 (offence of wrongful disclosure) applies in relation
 
 
to the disclosure as it applies in relation to a disclosure in contravention of
 
 
section 20(9) of that Act.
 
 
(7)
Nothing in this section limits the circumstances in which information may
20
 
be disclosed under section 18(2) of CRCA 2005 or under any other enactment
 
 
or rule of law.
 
171
Extension of time periods
 
 
For the purposes of sections 168 and 170 , a failure of a person to do anything
 
 
within a limited period of time is to be disregarded if the person did the
25
 
thing within such further period of time, if any, as an officer of Revenue and
 
 
Customs allowed.
 
172
Reasonable excuse
 
 
For the purposes of sections 168 and 170 —
 
 
(a)
an insufficiency of funds is not a reasonable excuse unless attributable
30
 
to events outside the person’s control,
 
 
(b)
if the person relies on any other person to do anything, that is not a
 
 
reasonable excuse unless the first person took reasonable care to avoid
 
 
the failure,
 
 
(c)
if the person had a reasonable excuse for the failure but the excuse
35
 
has ceased, the person is to be treated as having continued to have
 
 
the excuse if the failure is remedied without unreasonable delay after
 
 
the excuse ceased, and
 
 
(d)
reliance on legal advice is to be taken automatically not to constitute
 
 
a reasonable excuse if either—
40

Page 170

 
(i)
the advice was not based on a full and accurate description of
 
 
the facts, or
 
 
(ii)
the conclusions in the advice that the person relied upon were
 
 
unreasonable.
 

General

5
173
Interpretation
 
 
In this Chapter —
 
 
“arrangements” includes any agreement, scheme, arrangement or
 
 
understanding of any kind whether or not legally enforceable involving
 
 
one or more transactions, and includes a proposal for arrangements;
10
 
“authorised officer of Revenue and Customs” means an officer of Revenue
 
 
and Customs who is, or is a member of a class of officers who are,
 
 
authorised by the Commissioners for the purpose of this Chapter ;
 
 
“certified promoter” has the meaning given in section 163 (3) ;
 
 
“Commissioners” means the Commissioners of His Majesty’s Revenue;
15
 
“HMRC” means His Majesty’s Revenue and Customs;
 
 
“promoter action notice” has the meaning given in section 164 (2) ;
 
 
“promotion” has the meaning it has in section 236B (1) of FA 2014 (effect
 
 
of stop notices) or section 156 (prohibition of promotion of certain tax
 
 
avoidance arrangements) (as the context requires).
20

Chapter 3

 

Anti-avoidance information notices

 

Key definitions

 
174
Connected persons
 
 
(1)
In this Chapter, a “connected person” means a person who an officer of
25
 
Revenue and Customs reasonably suspects is or has been—
 
 
(a)
contravening an anti-avoidance enactment,
 
 
(b)
connected to a person who is or has been contravening an
 
 
anti-avoidance enactment, or
 
 
(c)
connected to arrangements by reference to which a person is or has
30
 
been contravening an anti-avoidance enactment.
 
 
(2)
For the purposes of subsection (1) (b) , two persons (“A” and “B”) are connected
 
 
if—
 
 
(a)
A is a director, manager, secretary or other officer or employee of B,
 
 
(b)
A is a member of, or partner in, B,
35
 
(c)
A is a trustee, settlor, beneficiary or administrator of a trust in respect
 
 
of which B is a trustee, settlor, beneficiary or administrator, or
 

Page 171

 
(d)
A is accustomed to acting in accordance with B’s directions or
 
 
instructions.
 
 
(3)
For the purposes of subsection (1) (c) , a person is connected to arrangements
 
 
if the person is—
 
 
(a)
to any extent involved in making the arrangements available for
5
 
implementation by another person,
 
 
(b)
to any extent involved in the organisation or management of the
 
 
arrangements, or
 
 
(c)
directly or indirectly benefiting from the arrangements.
 
175
Anti-avoidance enactments
10
 
(1)
In this Chapter , an “anti-avoidance enactment” means—
 
 
(a)
Part 7 of FA 2004 (disclosure of tax avoidance schemes);
 
 
(b)
Part 5 of FA 2014 (promoters of tax avoidance schemes);
 
 
(c)
Schedule 16 to F(No.2)A 2017 (penalties for enablers of defeated tax
 
 
avoidance);
15
 
(d)
Schedule 17 to F(No.2)A 2017 (disclosure of tax avoidance schemes:
 
 
VAT and other indirect taxes);
 
 
(e)
Chapter 1 of this Part (prohibition on promotion of certain tax
 
 
avoidance arrangements).
 
 
(2)
And a reference to taking action under an anti-avoidance enactment includes
20
 
a reference to taking action under—
 
 
(a)
sections 8ZF and 8ZG of the Company Directors Disqualification Act
 
 
1986 (disqualification for promoting tax avoidance);
 
 
(b)
Schedule 13 to FA 2020 (joint and several liability);
 
 
(c)
section 85 of FA 2022 (winding up petitions by an officer of HMRC);
25
 
(d)
section 86 of FA 2022 (publication by HMRC of information about tax
 
 
avoidance schemes);
 
 
(e)
sections 87 , 88 and 89 of FA 2022 (freezing orders etc);
 
 
(f)
Schedule 13 to FA 2022 (penalties for facilitating avoidance schemes
 
 
involving non-resident promoters);
30
 
(g)
Chapter 2 of this Part (promoter action notices).
 

Notices by type

 
176
Information notices: connected persons
 
 
(1)
An officer of Revenue and Customs may by notice require a connected person
 
 
to provide information that is, in the opinion of the officer, reasonably required
35
 
for the purposes of—
 
 
(a)
monitoring the compliance of the connected person with an
 
 
anti-avoidance enactment, or
 
 
(b)
HMRC taking, or considering whether HMRC could take, action against
 
 
the connected person under an anti-avoidance enactment.
40

Page 172

 
(2)
An officer of Revenue and Customs may seek the approval of the tribunal
 
 
before issuing a notice under this section .
 
177
Information notices: third parties
 
 
(1)
An officer of Revenue and Customs may by notice require a person to provide
 
 
information that is, in the opinion of the officer, reasonably required for the
5
 
purposes of—
 
 
(a)
monitoring the compliance of a connected person with an
 
 
anti-avoidance enactment, or
 
 
(b)
HMRC taking, or considering whether HMRC could take, action against
 
 
a connected person under an anti-avoidance enactment.
10
 
(2)
A notice under this section must identify the connected person to whom it
 
 
relates.
 
 
(3)
Before issuing a notice under this section , an officer of Revenue and Customs
 
 
must—
 
 
(a)
notify the intended recipient of—
15
 
(i)
the officer’s intention to issue the notice, and
 
 
(ii)
the information that would be required under the notice, and
 
 
(b)
allow the intended recipient reasonable opportunity to make
 
 
representations to HMRC.
 
 
(4)
An officer of Revenue and Customs may not issue a notice under this section
20
 
without either—
 
 
(a)
the agreement of the connected person identified in the notice, or
 
 
(b)
the approval of the tribunal.
 
 
(5)
The tribunal may not approve a notice unless it has been given a summary
 
 
of any representations made under subsection (3) (b) .
25
 
(6)
After issuing a notice under this section , an officer of Revenue and Customs
 
 
must provide to the connected person identified in the notice—
 
 
(a)
a copy of the notice, and
 
 
(b)
a summary of the officer’s reasons for requiring the information.
 
 
(7)
Subsections (2) , (3) and (6) do not apply to the extent the tribunal is satisfied
30
 
that taking the steps in those subsections might prejudice the investigation
 
 
of tax avoidance.
 
178
Information notices: unidentified connected persons
 
 
(1)
An officer of Revenue and Customs may by notice require a person to provide
 
 
information that is, in the opinion of the officer, reasonably required for the
35
 
purposes of—
 
 
(a)
monitoring the compliance of an unidentified connected person with
 
 
an anti-avoidance enactment, or
 

Page 173

 
(b)
HMRC taking, or considering whether HMRC could take, action against
 
 
an unidentified connected person under an anti-avoidance enactment.
 
 
(2)
In this section , “unidentified connected person” means—
 
 
(a)
a connected person whose identity is not known to the officer, or
 
 
(b)
a class of persons whose individual identities are not known to the
5
 
officer but, of which, one or more members is a connected person.
 
 
(3)
A notice under this section may only require information that is not readily
 
 
available from another source.
 
 
(4)
An officer of Revenue and Customs may not issue a notice under this section
 
 
without the approval of the tribunal.
10
 
(5)
In subsection (1) (b) , the reference to taking action against an unidentified
 
 
connected person includes a reference to taking action against one or more
 
 
members of a class referred to in subsection (2) (b) .
 
179
Information notices: identification
 
 
(1)
An officer of Revenue and Customs may by notice require a person to provide
15
 
identifying information that is, in the opinion of the officer, reasonably
 
 
required for the purpose of identifying an unidentified connected person.
 
 
(2)
An officer of Revenue and Customs may not issue a notice under subsection
 
 
(1) unless the officer has reason to believe that—
 
 
(a)
the intended recipient of the notice could identify the unidentified
20
 
connected person by reference to information provided by the officer,
 
 
and
 
 
(b)
the recipient obtained the identifying information in the course of a
 
 
business.
 
 
(3)
A notice under this section may only require information that is not readily
25
 
available from another source.
 
 
(4)
In this section —
 
 
“identifying information” means one or more of an unidentified connected
 
 
person’s—
 
 
(a)
name;
30
 
(b)
last known address;
 
 
(c)
in the case of an individual, date of birth;
 
 
“unidentified connected person” has the meaning given in section 178 .
 
 
(5)
An officer of Revenue and Customs who is not an authorised officer may not
 
 
issue a notice under this section without the approval of either—
35
 
(a)
the tribunal, or
 
 
(b)
an authorised officer of Revenue and Customs.
 
 
(6)
An authorised officer of Revenue and Customs may seek the approval of the
 
 
tribunal before issuing a notice under this section.
 

Page 174

180
Information notices: financial institutions
 
 
(1)
An officer of Revenue and Customs may by notice require a financial
 
 
institution to provide information that is, in the opinion of the officer,
 
 
reasonably required for the purposes of—
 
 
(a)
monitoring the compliance of a connected person with an
5
 
anti-avoidance enactment, or
 
 
(b)
HMRC taking, or considering whether HMRC could take, action against
 
 
a connected person under an anti-avoidance enactment.
 
 
(2)
A notice under this section must identify the connected person to whom it
 
 
relates.
10
 
(3)
An officer of Revenue and Customs may not issue a notice under this section
 
 
without the approval of the tribunal.
 
 
(4)
After issuing a notice under this section, an officer of Revenue and Customs
 
 
must provide to the connected person identified in the notice—
 
 
(a)
a copy of the notice, and
15
 
(b)
a summary of the officer’s reasons for requiring the information.
 
 
(5)
Subsection (4) does not apply to the extent the tribunal is satisfied that taking
 
 
the steps in that subsection might prejudice the investigation of tax avoidance.
 
 
(6)
In this section—
 
 
“financial institution” means—
20
 
(a)
a financial institution under the CRS other than one which is
 
 
such an institution only because it is an investment entity
 
 
within section 8(A)(6)(b) of the CRS;
 
 
(b)
a person who issues credit cards;
 
 
“CRS” means the common reporting standard for automatic exchange
25
 
of financial account information developed by the Organisation for
 
 
Economic Co-operation and Development, as that standard has effect
 
 
from time to time.
 

Content, requirements and withdrawal of notices

 
181
Content and requirements of notices
30
 
(1)
An information notice must specify (or, in the case of paragraphs (a) and (b),
 
 
describe)—
 
 
(a)
the information that the recipient is required to provide;
 
 
(b)
the form in which, and the means by which, the information is to be
 
 
provided;
35
 
(c)
a reasonable period within which the information is to be provided;
 
 
(d)
the provision under which the notice is issued;
 
 
(e)
whether the notice is issued with the approval of the tribunal.
 

Page 175

 
(2)
An information notice issued under section 177 to 180 may only require
 
 
information that would not, in the reasonable opinion of an officer of Revenue
 
 
and Customs, be unduly onerous for the recipient to provide.
 
 
(3)
An information notice may not require a person to produce a document if
 
 
the whole of the document originates more than 6 years before the date of
5
 
the notice without the agreement of an authorised officer of Revenue and
 
 
Customs.
 
 
(4)
An information notice may be issued to a person outside the United Kingdom.
 
182
Restriction on disclosure of notices
 
 
(1)
An information notice may require the recipient not to disclose the existence
10
 
or contents of the notice to—
 
 
(a)
the connected person to whom the notice relates,
 
 
(b)
in the case of a notice under section 178 , members of the class of
 
 
persons to which the notice relates,
 
 
(c)
any person who might reasonably be expected to disclose the existence
15
 
or contents of the notice to the connected person or members of the
 
 
class, or
 
 
(d)
any other person.
 
 
(2)
A requirement under subsection (1) (d) may not prohibit disclosure for, or in
 
 
connection with, the purpose of—
20
 
(a)
complying with the notice, or
 
 
(b)
seeking legal advice.
 
 
(3)
A requirement imposed under subsection (1) has effect until the end of the
 
 
period of 12 months beginning with the day on which the notice is issued,
 
 
unless before the end of that period—
25
 
(a)
the requirement is withdrawn in accordance with subsection (4) , or
 
 
(b)
the period is extended in accordance with subsection (5) .
 
 
(4)
An officer of Revenue and Customs may withdraw the requirement by
 
 
notifying the recipient in writing.
 
 
(5)
An officer of Revenue and Customs may by notice to the recipient—
30
 
(a)
extend the period during which a requirement imposed under
 
 
subsection (1) has effect by a period of 12 months beginning with the
 
 
day after the last day of the previous period of 12 months, and
 
 
(b)
do so on one or more occasions.
 
 
(6)
An officer of Revenue and Customs may not issue a notice under subsection
35
 
(5) unless—
 
 
(a)
the officer considers that there are reasonable grounds for believing
 
 
that failure to extend the period might prejudice the investigation of
 
 
tax avoidance, and
 

Page 176

 
(b)
where the officer is not an authorised officer of Revenue and Customs,
 
 
an authorised officer agrees with the officer’s—
 
 
(i)
decision to extend the period, and
 
 
(ii)
assessment under paragraph (a) .
 
183
Excepted information
5
 
(1)
An information notice does not require a person to provide information that
 
 
is not in the possession or power of that person.
 
 
(2)
An information notice does not require a person to provide—
 
 
(a)
information that relates to the conduct of a pending tax appeal or
 
 
appeal against a decision under an anti-avoidance enactment;
10
 
(b)
personal records (as defined in section 12 of the Police and Criminal
 
 
Evidence Act 1984 ) or information contained in such records, except
 
 
that a notice may require a person to produce a redacted version of
 
 
a document omitting any information that would otherwise make it
 
 
personal records;
15
 
(c)
journalistic material (as defined in section 13 of that Act ) or information
 
 
contained in such material;
 
 
(d)
information in respect of a which a claim to legal professional privilege
 
 
or, (in Scotland) to confidentiality of communications as between a
 
 
client and professional legal advisor, could be maintained by the person
20
 
in legal proceedings.
 
 
(3)
An information notice does not require a person who has been appointed
 
 
auditor for the purposes of an enactment to provide information held or
 
 
created in connection with the performance of the person’s functions under
 
 
the enactment, other than information that the recipient of the notice has
25
 
assisted any client in preparing for, or delivering to, HMRC.
 
 
(4)
Subsection (3) does not apply in relation to—
 
 
(a)
a notice under section 179 (identification), or
 
 
(b)
identifying information (within the meaning given in section 179
 
 
) required by a notice under section 178 in respect of—
30
 
(i)
the connected person to whom the notice relates, or
 
 
(ii)
a person who has acted on behalf of the connected person.
 
 
(5)
The Commissioners may by regulations make provision for the resolution by
 
 
the tribunal of disputes as to whether any information falls within subsection
 
 
(2) (d) (privilege).
35
 
(6)
Regulations under subsection (5) are to be made by statutory instrument and
 
 
a statutory instrument containing regulations under subsection (5) is subject
 
 
to annulment in pursuance of a resolution of the House of Commons.
 

Page 177

184
Tribunal approval of notices
 
 
(1)
An application to the tribunal for approval of a notice, or disapplication of
 
 
requirements, under this Chapter may be made without notice.
 
 
(2)
An officer of Revenue and Customs (other than an authorised officer) may
 
 
not seek the approval of, or disapplication of requirements by, the tribunal
5
 
without the agreement of an authorised officer of Revenue and Customs.
 
 
(3)
The tribunal may not approve the issue of a notice under sections 176 to 180
 
 
unless it is satisfied that the requirements of the relevant section are met.
 
 
(4)
A decision of the tribunal is final (despite sections 11 and 13 of the Tribunals,
 
 
Courts and Enforcement Act 2007).
10
185
Withdrawal of notices
 
 
An officer of Revenue and Customs may withdraw an information notice by
 
 
notifying the recipient in writing.
 

Criminal sanctions

 
186
Offence of failing to comply with a notice
15
 
(1)
A recipient of an information notice commits an offence if the recipient—
 
 
(a)
fails to comply with the notice, or
 
 
(b)
in purporting to comply with the notice, carelessly or deliberately
 
 
provides inaccurate information.
 
 
(2)
It is a defence for a person charged with an offence under subsection (1) (a)
20
 
to show that they had a reasonable excuse.
 
 
(3)
In this section, a reference to carelessness is a reference to a failure to take
 
 
reasonable care.
 
 
(4)
This section does not apply in respect of a notice under section 180 (financial
 
 
institutions).
25
187
Offence of concealing information
 
 
(1)
A recipient of an information notice commits an offence if the recipient
 
 
conceals, destroys or otherwise disposes of information that is required to be
 
 
provided under the notice.
 
 
(2)
It is a defence for a person charged with an offence under subsection (1) to
30
 
show that they concealed, destroyed or otherwise disposed of the information
 
 
only after the information had been provided in accordance with the notice.
 
 
(3)
Subsection (2) does not apply where an officer of Revenue and Customs had
 
 
notified the person in writing that the information must continue to be
 
 
available (and had not withdrawn that notification).
35

Page 178

 
(4)
A person commits an offence if—
 
 
(a)
an officer of Revenue and Customs has notified the person under
 
 
section 177 (3) that —
 
 
(i)
the officer intends to issue an information notice to the person,
 
 
and
5
 
(ii)
certain information would be required under the notice, and
 
 
(b)
the person conceals, destroys or otherwise disposes of the information.
 
 
(5)
It is a defence for a person charged with an offence under subsection (4) to
 
 
show that they concealed, destroyed or otherwise disposed of the information
 
 
only—
10
 
(a)
after the end of the period of six months beginning with the day on
 
 
which they were last notified under section 177 (3) in respect of the
 
 
information, or
 
 
(b)
after an information notice has been issued to the person in respect
 
 
of the information.
15
 
(6)
In this section , a reference to concealing, destroying or otherwise disposing
 
 
of information includes a reference to arranging for the concealment,
 
 
destruction or disposal of information.
 
 
(7)
This section does not apply in respect of a notice under section 180 (financial
 
 
institutions).
20
188
Criminal liability of responsible persons
 
 
(1)
If an offence under section 186 or 187 is committed by a body corporate or
 
 
a partnership and—
 
 
(a)
is committed with the consent or connivance of a responsible person,
 
 
or
25
 
(b)
is attributable to the neglect of a responsible person,
 
 
the responsible person commits the offence (as well as the body or
 
 
partnership).
 
 
(2)
A “responsible person” means—
 
 
(a)
in relation to a body corporate other than one whose affairs are
30
 
managed by its members—
 
 
(i)
a director, manager, secretary or other similar officer of the
 
 
body, or a person purporting to act in such a capacity, or
 
 
(ii)
a shadow director within the meaning given in section 251 of
 
 
the Companies Act 2006 ;
35
 
(b)
in relation to a limited liability partnership or other body corporate
 
 
whose affairs are managed by its members—
 
 
(i)
a member exercising management functions, or purporting to
 
 
do so, or
 
 
(ii)
in the case of a limited liability partnership, a shadow member;
40
 
(c)
in relation to a partnership, a partner or a person purporting to act
 
 
in that capacity.
 

Page 179

 
(3)
In this section , a “shadow member” means a person in accordance with whose
 
 
directions or instructions the members of the limited liability partnership are
 
 
accustomed to act, save that a person is not a shadow member by reason
 
 
only of the fact that the members act on advice given by that person in a
 
 
professional capacity.
5
189
Criminal liability of responsible persons: no prosecution of recipient
 
 
(1)
Subsection (2) applies where a body corporate or partnership that is the
 
 
recipient of an information notice—
 
 
(a)
fails to comply with the notice, or
 
 
(b)
in purporting to comply with the notice, carelessly or deliberately
10
 
provides inaccurate information.
 
 
(2)
If the recipient’s failure or careless or deliberate provision of inaccurate
 
 
information—
 
 
(a)
occurred with the consent or connivance of a responsible person, or
 
 
(b)
is attributable to the neglect of a responsible person,
15
 
the responsible person commits an offence.
 
 
(3)
It is a defence for a person charged with an offence under subsection (2) to
 
 
show that they or the recipient had a reasonable excuse.
 
 
(4)
In this section—
 
 
(a)
a reference to carelessness is a reference to a failure to take reasonable
20
 
care, and
 
 
(b)
“responsible person” has the same meaning as in section 188 .
 
 
(5)
This section does not apply in respect of a notice under section 180 (financial
 
 
institutions).
 
190
Imprisonment or a fine
25
 
A person who commits an offence under section 186 , 187 or 189 is liable—
 
 
(a)
on summary conviction, to—
 
 
(i)
in England and Wales, a fine, or
 
 
(ii)
in Scotland or Northern Ireland, a fine not exceeding the
 
 
statutory maximum, or
30
 
(b)
on conviction on indictment, to imprisonment for a term not exceeding
 
 
two years or to a fine or both.
 

Civil sanctions

 
191
Penalty for failing to comply with a notice
 
 
(1)
A recipient of an information notice is liable to a penalty if the recipient—
35
 
(a)
fails to comply with the notice, and
 
 
(b)
does so without reasonable excuse.
 

Page 180

 
(2)
The penalty under subsection (1) is—
 
 
(a)
in relation to a notice under section 180 (financial institutions), £300;
 
 
(b)
otherwise, £5,000.
 
 
(3)
If a failure referred to in subsection (1) continues after the day on which a
 
 
penalty is imposed in respect of it, the recipient is liable to a further penalty
5
 
for each day on which the failure continues.
 
 
(4)
The penalty under subsection (3) is—
 
 
(a)
in relation to a notice under section 180 (financial institutions), an
 
 
amount not exceeding £60;
 
 
(b)
otherwise, an amount not exceeding £1,000.
10
 
(5)
Before imposing a penalty under this section , an officer of Revenue and
 
 
Customs must—
 
 
(a)
notify the recipient of the fact that the officer considers subsection (1)
 
 
or (3) to apply, and
 
 
(b)
allow the recipient a period of 30 days beginning with the date of
15
 
notification to make representations to HMRC.
 
 
(6)
This section does not apply in relation to a failure to comply with a
 
 
requirement imposed under section 182 (restriction on disclosure of notices).
 
192
Penalty for concealing information
 
 
(1)
A recipient of an information notice is liable to a penalty if the recipient—
20
 
(a)
is required to provide information under the notice issued, and
 
 
(b)
conceals, destroys or otherwise disposes of the information—
 
 
(i)
before the information has been provided in accordance with
 
 
the notice, or
 
 
(ii)
in circumstances where an officer of Revenue and Customs has
25
 
notified the person in writing that the information must
 
 
continue to be available (and has not withdrawn that
 
 
notification).
 
 
(2)
A person is liable to a penalty if—
 
 
(a)
an officer of Revenue and Customs has notified the person under
30
 
section 177 (3) that —
 
 
(i)
the officer intends to issue an information notice to the person,
 
 
and
 
 
(ii)
certain information would be required under the notice, and
 
 
(b)
the person conceals, destroys or otherwise disposes of the information.
35
 
(3)
Subsection (2) does not apply if the person concealed, destroyed or otherwise
 
 
disposed of the information only—
 
 
(a)
after the end of the period of 6 months beginning with the day on
 
 
which they were last notified under section 177 (3) in respect of the
 
 
information, or
40

Page 181

 
(b)
after an information notice has been issued to the person in respect
 
 
of the information.
 
 
(4)
The penalty under subsection (1) or (2) is—
 
 
(a)
in relation to a notice under section 180 (financial institutions), £300,
 
 
or
5
 
(b)
otherwise, £20,000.
 
 
(5)
In this section , a reference to concealing, destroying or otherwise disposing
 
 
of information includes a reference to arranging for the concealment,
 
 
destruction or disposal of information.
 
193
Penalty for inaccurate information
10
 
(1)
A recipient of an information notice is liable to a penalty if the recipient—
 
 
(a)
in purporting to comply with the notice, carelessly or deliberately
 
 
provides inaccurate information, or
 
 
(b)
after purporting to comply with the notice—
 
 
(i)
discovers that, in doing so, they provided inaccurate
15
 
information, and
 
 
(ii)
does not take reasonable steps to notify HMRC of that fact.
 
 
(2)
The maximum penalty under subsection (1) is—
 
 
(a)
in relation to a notice under section 180 (financial institutions), £3,000
 
 
for each inaccuracy, or
20
 
(b)
otherwise, £20,000 for each inaccuracy.
 
 
(3)
Before imposing a penalty under this section , an officer of Revenue and
 
 
Customs must—
 
 
(a)
notify the recipient of the fact that the officer considers subsection (1)
 
 
to apply, and
25
 
(b)
allow the recipient a period of 30 days beginning with the date of
 
 
notification to make representations to HMRC.
 
 
(4)
In this section, a reference to carelessness is a reference to a failure to take
 
 
reasonable care.
 
194
Penalty for disclosing a notice
30
 
(1)
A recipient of an information notice is liable to a penalty if the recipient—
 
 
(a)
fails to comply with a requirement imposed under section 182
 
 
(restriction on disclosure of notices), and
 
 
(b)
does so without reasonable excuse.
 
 
(2)
The penalty under subsection (1) is—
35
 
(a)
in relation to a notice under section 180 (financial institutions), £1,000,
 
 
or
 
 
(b)
otherwise, £10,000.
 

Page 182

195
Penalty based on monies received
 
 
(1)
Subsection (3) applies if—
 
 
(a)
a penalty has been imposed on a person under section 191 (1) for failure
 
 
to comply with a notice,
 
 
(b)
the person, without reasonable excuse, continues to fail to comply
5
 
with the notice,
 
 
(c)
an officer of Revenue and Customs has reason to believe that—
 
 
(i)
the person received money or money’s worth in connection
 
 
with the contravening arrangements to which the notice relates,
 
 
and
10
 
(ii)
the continuing failure is significant, and
 
 
(d)
the Upper Tribunal decides that it is appropriate for a penalty to be
 
 
imposed under this section.
 
 
(2)
For the purposes of subsection (1) (c) (ii) , a continuing failure is significant if—
 
 
(a)
it continues beyond the end of the period of six months beginning
15
 
with the day on which the penalty referred to in subsection (1) (a) was
 
 
imposed, or
 
 
(b)
as a result of the continuing failure, it is or is likely to be significantly
 
 
more difficult for HMRC to—
 
 
(i)
monitor the compliance of a connected person with an
20
 
anti-avoidance enactment, or
 
 
(ii)
take, or consider whether HMRC could take, action against a
 
 
connected person under an anti-avoidance enactment.
 
 
(3)
The person is liable to a penalty equal to the amount of money or money’s
 
 
worth received, or likely to have been received, by the person in connection
25
 
with the contravening arrangements to which the notice relates.
 
 
(4)
The amount of a penalty to which a person is liable under subsection (3) must
 
 
be determined by the Upper Tribunal (with such determination being treated
 
 
as assessment).
 
 
(5)
An application to the Tribunal for the purposes of subsection (1) (d) or (4)
30
 
may be made by an officer of Revenue and Customs and must be made before
 
 
the end of the period of 12 months beginning with—
 
 
(a)
in the case of a penalty relating to a notice against which the recipient
 
 
may appeal under section 201 , the latest of—
 
 
(i)
the day on which the person became liable to a penalty under
35
 
section 191 (1) ,
 
 
(ii)
the last day of the period in which notice of appeal against the
 
 
notice could have been given, and
 
 
(iii)
if notice of such an appeal has been given, the day on which
 
 
the appeal is determined or withdrawn, or
40
 
(b)
in any other case, the day on which the person became liable to a
 
 
penalty under section 191 (1) .
 

Page 183

 
(6)
An officer of Revenue and Customs who makes an application for the purposes
 
 
of subsection (1) (d) or (4) must notify the person concerned.
 
 
(7)
For the purposes of this section , a reference to contravening arrangements to
 
 
which a notice relates is a reference to arrangements by reference to which
 
 
the person to whom the notice relates is considered to be a connected person
5
 
under section 174 (1) (including, where the person is a connected person under
 
 
section 174 (1)(b), arrangements by reference to which the other person is
 
 
considered to be a connected person.)
 
 
(8)
This section does not apply in relation to a notice under section 180 (financial
 
 
institutions).
10
196
Increased daily default penalty
 
 
(1)
An officer of Revenue and Customs may apply to the tribunal for a
 
 
determination that an increased penalty should be available under section
 
 
191 (4) in respect of a person’s failure to comply with an information notice
 
 
if—
15
 
(a)
a penalty has been imposed under section 191 (3) (daily penalties for
 
 
continuing failure) in respect of the failure,
 
 
(b)
the failure continues after the end of the period of 30 days beginning
 
 
with the day on which notification of the penalty under section 191 (3)
 
 
was issued (see paragraph 46 to Schedule 36 to FA 2008), and
20
 
(c)
the officer has notified the person of their intention to apply to the
 
 
tribunal under this section .
 
 
(2)
If the tribunal decides that an increased penalty should be available under
 
 
section 191 (4) in respect of a person’s failure, the tribunal must determine—
 
 
(a)
the amount of the increased penalty, and
25
 
(b)
the day from which it is to be applicable.
 
 
(3)
The increased penalty is available under section 191 (4) in respect of the
 
 
failure—
 
 
(a)
from the day determined by the tribunal, and
 
 
(b)
as though the figure in that subsection were replaced with the amount
30
 
of the increased penalty.
 
 
(4)
An increased penalty under this section may not exceed—
 
 
(a)
in relation to a notice under section 180 (financial institutions), £1,000,
 
 
or
 
 
(b)
otherwise, £5,000.
35
 
(5)
In determining the amount of the increased penalty, the tribunal must have
 
 
regard to—
 
 
(a)
the likely cost to the person of complying with the notice,
 
 
(b)
any benefits to the person of not complying with the notice, and
 
 
(c)
any benefits to anyone else resulting from the person’s non-compliance.
40

Page 184

 
(6)
If the tribunal makes a determination under subsection (2) , an officer of
 
 
Revenue and Customs must notify the person to whom it relates of—
 
 
(a)
the amount of the increased penalty, and
 
 
(b)
the day from which it is to be applicable.
 

Sanctions: general

5
197
Extension of time periods
 
 
For the purposes of sections 186 to 196 (sanctions), a failure of a person to
 
 
do anything within a limited period of time is to be disregarded if the person
 
 
did the thing within such further period of time, if any, as an officer of
 
 
Revenue and Customs or the tribunal allowed.
10
198
Reasonable excuse
 
 
For the purposes of sections 186 (1) (a) (offence of failing to comply), 189
 
 
(criminal liability of responsible persons: no prosecution of recipient), 191
 
 
(penalty for failing to comply), 194 (penalty for disclosing) and 195 (penalty
 
 
based on monies received)—
15
 
(a)
an insufficiency of funds is not a reasonable excuse unless attributable
 
 
to events outside the person’s control,
 
 
(b)
if the person relies on any other person to do anything, that is not a
 
 
reasonable excuse unless the first person took reasonable care to avoid
 
 
the failure,
20
 
(c)
if the person had a reasonable excuse for the failure but the excuse
 
 
has ceased, the person is to be treated as having continued to have
 
 
the excuse if the failure is remedied without unreasonable delay after
 
 
the excuse ceased, and
 
 
(d)
reliance on legal advice is to be taken automatically not to constitute
25
 
a reasonable excuse if either—
 
 
(i)
the advice was not based on a full and accurate description of
 
 
the facts, or
 
 
(ii)
the conclusions in the advice that the person relied upon were
 
 
unreasonable.
30
199
Double jeopardy
 
 
A person is not liable to a penalty under this Chapter in respect of anything
 
 
in respect of which the person has been convicted of an offence.
 
200
Assessment etc of penalties: application of
 
 
(1)
The following paragraphs of Schedule 36 to FA 2008 apply as set out below.
35
 
(2)
Paragraph 46 (assessment of penalty) applies to—
 

Page 185

 
(a)
a penalty under sections 191 (failure to comply) and 192 (concealing
 
 
information) as it applies to a penalty under paragraphs 39 and 40 of
 
 
the Schedule;
 
 
(b)
a penalty under section 193 (inaccurate information) as it applies to a
 
 
penalty under paragraph 40A of the Schedule.
5
 
(3)
Paragraph 51B(2) and (3) (assessment of a penalty for disclosure) apply to a
 
 
penalty under section 194 (disclosure of a notice) as they apply to a penalty
 
 
under paragraph 51B (1) of the Schedule .
 
 
(4)
Paragraph 49 (enforcement of penalty) applies to a penalty under sections
 
 
191 to 194 as it applies to a penalty under paragraphs 39 , 40 and 40A of the
10
 
Schedule and, in the case of a penalty under section 194 (disclosure of a
 
 
notice), the reference to notification under paragraph 46 of the Schedule is to
 
 
be read as a reference to notification under paragraph 51B(2)(b) of the
 
 
Schedule).
 
 
(5)
Paragraph 51 (enforcement of a tax-related penalty) applies to a penalty under
15
 
section 195 (penalties based on monies received) as it applies to a penalty
 
 
under paragraph 50 of the Schedule .
 

Appeals

 
201
Appeals against notices
 
 
(1)
A recipient of a notice under section 176 (connected persons) may appeal
20
 
against the issue of the notice or any requirement in the notice.
 
 
(2)
A recipient of a notice under section 177 (third parties) may appeal against
 
 
the issue of the notice or any requirement in the notice on the grounds that
 
 
it would be unduly onerous to comply with the notice or requirement.
 
 
(3)
A recipient of a notice under section 179 (identification) may appeal against
25
 
the issue of the notice or any requirement in the notice on the grounds that
 
 
it would be unduly onerous to comply with the notice or requirement.
 
 
(4)
Subsections (1) to (3) do not apply in relation to a notice that was issued with
 
 
tribunal approval.
 
 
(5)
Paragraph 32 of Schedule 36 to FA 2008 applies to appeals under this section
30
 
as it applies to appeals under Part 5 of that Schedule (and references to
 
 
information notices are to be read as references to notices under this Chapter).
 
202
Appeals against penalties
 
 
(1)
A person may appeal against any of the following decisions—
 
 
(a)
a decision of an officer of Revenue and Customs that a penalty is
35
 
payable under sections 191 to 194 , and
 
 
(b)
a decision of an officer of Revenue and Customs as to the amount of
 
 
a penalty under sections 191 to 194 .
 

Page 186

 
(2)
Paragraph 48 of Schedule 36 to FA 2008 (procedure on appeal against penalty)
 
 
applies to appeals under this section as it applies to appeals under paragraph
 
 
47 of that Schedule (and references to paragraph 47(1)(a) and (b) in paragraph
 
 
48 are to be read as references to subsection (1)(a) and (b) of this section).
 

Miscellaneous and interpretation

5
203
Interpretation
 
 
(1)
In this Chapter—
 
 
“arrangements” includes any agreement, scheme, arrangement or
 
 
understanding of any kind whether or not legally enforceable involving
 
 
one or more transactions;
10
 
“authorised officer of Revenue and Customs” means an officer of Revenue
 
 
and Customs who is, or is a member of a class of officers who are,
 
 
authorised by the Commissioners for the purpose of this Chapter;
 
 
“Commissioners” means the Commissioners for His Majesty’s Revenue
 
 
and Customs;
15
 
“document” includes any part of a document (and see subsection (2));
 
 
“HMRC” means His Majesty’s Revenue and Customs;
 
 
“information” includes a document (and see subsection (2));
 
 
“information notice” means a notice issued under any of sections 176 to
 
 
180 ;
20
 
“investigation of tax avoidance” includes the exercise of a function under
 
 
an anti-avoidance enactment;
 
 
“recipient” , in relation to a notice, means the person to whom the notice
 
 
is issued;
 
 
“tribunal” means the First-tier Tribunal or, where determined by or under
25
 
the Tribunal Procedure Rules, the Upper Tribunal.
 
 
(2)
For the purposes of this Chapter—
 
 
(a)
a reference to providing information includes a reference to producing
 
 
documents;
 
 
(b)
a reference to a document is a reference to anything in which
30
 
information of any description is recorded.
 
 
(3)
Paragraphs 7 (2) to (4) , 8 , 15 and 16 of Schedule 36 to FA 2008 (provision
 
 
relating to documents) apply in relation to documents required under this
 
 
Chapter as they apply in relation to documents required under that Schedule .
 
204
Application of provisions of
35
 
The following provisions of TMA 1970 apply for the purposes of this Chapter
 
 
as they apply for the purposes of the Taxes Acts—
 
 
(a)
section 108 (responsibility of officers);
 
 
(b)
section 114 (want of form);
 
 
(c)
section 115 (delivery and service of documents).
40

Page 187

205
Repeals
 
 
(1)
Section 272A of FA 2014 is repealed.
 
 
(2)
Subsection (1) comes into force on such day as the Treasury may by
 
 
regulations made by statutory instrument appoint.
 

Chapter 4

5

Miscellaneous

 

Legal professionals

 
206
Declaration in relation to privileged material
 
 
(1)
Subsection (2) applies where—
 
 
(a)
HMRC have notified a lawyer that they intend to publish, or are
10
 
considering publishing, information identifying the lawyer under a
 
 
provision listed in subsection (5) , and
 
 
(b)
the lawyer—
 
 
(i)
intends to make representations to the effect that the
 
 
information should not be published, but
15
 
(ii)
will not be able to substantiate some or all of those
 
 
representations without disclosing the content of privileged
 
 
communications.
 
 
(2)
A lawyer (whether or not the lawyer intending to make the representations)
 
 
may make a declaration to the effect that—
20
 
(a)
the representations are true, and
 
 
(b)
the content of privileged communications would be sufficient (whether
 
 
alone or with other information) to demonstrate this on the balance
 
 
of probabilities.
 
 
(3)
When considering whether the information referred to in subsection (1) (a)
25
 
may be published, HMRC and, in the context of proceedings, a court or
 
 
tribunal must treat a declaration made under subsection (2) and provided
 
 
under a provision listed in subsection (5) as conclusive evidence of the
 
 
information included in the declaration.
 
 
(4)
But subsection (3) does not apply if HMRC, or the court or tribunal, is satisfied
30
 
that the declaration includes any information that is incorrect.
 
 
(5)
The provisions are—
 
 
(a)
section 316C of FA 2004 (disclosure of tax avoidance schemes);
 
 
(b)
paragraph 36 of Schedule 17 to F(No.2)A 2017 (disclosure of tax
 
 
avoidance schemes: VAT and other indirect taxes);
35
 
(c)
section 86 of FA 2022 (publication of information about tax avoidance
 
 
schemes).
 
 
(6)
For the purposes of this section—
 

Page 188

 
(a)
references to a lawyer are references to a person in respect of whose
 
 
communications a claim to legal professional privilege, or (in Scotland)
 
 
to confidentiality of proceedings as between client and professional
 
 
legal adviser, could be maintained in legal proceedings, and
 
 
(b)
a communication is “privileged” if such a claim could be maintained
5
 
in respect of it.
 
 
(7)
In this section—
 
 
“HMRC” means—
 
 
(a)
where the provision referred to in subsection (1) (a) is section
 
 
316C of FA 2004 , HMRC as defined for the purposes of that
10
 
section;
 
 
(b)
where the provision referred to in subsection (1) (a) is paragraph
 
 
36 of Schedule 17 to F(No.2)A 2017 , HMRC as defined for the
 
 
purposes of that paragraph;
 
 
(c)
where the provision referred to in subsection (1) (a) is section
15
 
86 of FA 2022 —
 
 
(i)
in subsection (1) (a) , an officer of Revenue and Customs;
 
 
(ii)
in subsections (3) and (4) , an authorised officer as
 
 
defined for the purposes of that section;
 
 
“tribunal” means the First-tier Tribunal or, where determined by or under
20
 
Tribunal Procedure Rules, the Upper Tribunal.
 
 
(8)
The Commissioners for His Majesty’s Revenue and Customs may by
 
 
regulations make provision about—
 
 
(a)
the form of a declaration made under subsection (2) ,
 
 
(b)
the information to be included in a declaration,
25
 
(c)
when and how a declaration is to be provided.
 
 
(9)
Regulations under this section—
 
 
(a)
are to be made by statutory instrument, and
 
 
(b)
may make different provision for different purposes.
 
 
(10)
A statutory instrument containing regulations made under this section is
30
 
subject to annulment in pursuance of a resolution of the House of Commons.
 
207
Penalties for an incorrect declaration
 
 
(1)
A person who makes a declaration under section 206 (2) and carelessly or
 
 
deliberately includes any incorrect information in the declaration is liable to
 
 
a penalty not exceeding £10,000.
35
 
(2)
Where—
 
 
(a)
a person (“A”) provides a declaration under a provision listed in
 
 
section 206 (5) which is made under section 206 (2) by another person,
 
 
(b)
the declaration includes incorrect information, and
 
 
(c)
A knew, or could reasonably have been expected to have known, that
40
 
the information was incorrect,
 

Page 189

 
A is liable to a penalty not exceeding £10,000.
 
 
(3)
For the purposes of subsection (1) , incorrect information is included in a
 
 
declaration carelessly if the person who makes the declaration has failed to
 
 
take reasonable care to verify the information before including it.
 
208
Penalties: procedure, appeals etc
5
 
(1)
Subject to subsection (2) , a penalty under section 207 is to be treated as a
 
 
penalty imposed under the Taxes Acts and, accordingly, is a penalty to be
 
 
determined and imposed by an authorised officer under section 100(1) of
 
 
TMA 1970.
 
 
(2)
A penalty under section 207 is not required to be paid before the penalty
10
 
becomes final.
 
 
(3)
For the purposes of subsection (2) and sections 209 and 210 a penalty becomes
 
 
“final” at the time when the period for any appeal or further appeal relating
 
 
to the penalty expires or, if later, when any appeal or final appeal relating to
 
 
the penalty is finally determined.
15
209
Publication following an incorrect declaration
 
 
(1)
An authorised officer may publish information about a person where—
 
 
(a)
the person has incurred a penalty under section 207 in relation to a
 
 
declaration, and
 
 
(b)
the penalty has become final.
20
 
(2)
The information that may be published under this section is—
 
 
(a)
the person’s name (including any trading name, previous name or
 
 
pseudonym),
 
 
(b)
any address used by the person,
 
 
(c)
any other information that the authorised officer considers appropriate
25
 
for the purposes of identifying the person or their business;
 
 
(d)
details of the arrangements to which the declaration relates including
 
 
the nature of the person’s involvement in those arrangements;
 
 
(e)
details of the penalty imposed on the person under section 207 .
 
 
(3)
The information may be published in any way that the authorised officer
30
 
considers appropriate.
 
 
(4)
Before publishing information under this section, the authorised officer must—
 
 
(a)
notify the person that they are considering doing so,
 
 
(b)
give the person 30 days from that notification in which to make
 
 
representations about whether it should be published, and
35
 
(c)
have regard to any representations received.
 
 
(5)
In this section—
 
 
“arrangements” means—
 

Page 190

 
(a)
in relation to a declaration provided under section 316C(6)(b)(ii)
 
 
of FA 2004, arrangements or proposed arrangements, with
 
 
those terms having the same meaning as in that section;
 
 
(b)
in relation to a declaration provided under paragraph
 
 
36 (6)(b)(ii) of Schedule 17 to F(No.2)A 2017 , arrangements or
5
 
proposed arrangements, with those terms having the same
 
 
meaning as in that paragraph;
 
 
(c)
in relation to a declaration provided under section 86(5)(b)(ii)
 
 
of FA 2022, a proposal or arrangements, with those terms
 
 
having the same meaning as in that section;
10
 
“authorised officer” means an officer of Revenue and Customs authorised
 
 
for the purposes of this section.
 
210
Time limits for publication
 
 
(1)
Publication of any information under section 209 on the basis of a penalty
 
 
incurred by a person may not take place after the end of the period of 12
15
 
months beginning with the date on which the penalty became final.
 
 
(2)
Subsection (1) is not to be taken to prevent the re-publication, or continued
 
 
publication, after the end of the period referred to in that subsection, of
 
 
information published under section 209 before the end of the period.
 
211
Amendments to existing legislation: removal of privilege exemption
20
 
(1)
In section 316C of FA 2004 (disclosure of tax avoidance schemes)—
 
 
(a)
omit subsection (4A) ;
 
 
(b)
in subsection (6) (b) —
 
 
(i)
the words from “make representations” to the end become
 
 
sub-paragraph (i);
25
 
(ii)
after that sub-paragraph insert “, and
 
 
“(ii)
where section 206 (2) of FA 2026 applies,
 
 
provide a declaration made under that
 
 
subsection substantiating those
 
 
representations.”.
30
 
(2)
In paragraph 36 of Schedule 17 to F(No.2)A 2017 (disclosure of tax avoidance
 
 
schemes: VAT and other indirect taxes)—
 
 
(a)
omit sub-paragraph (4A) ;
 
 
(b)
in sub-paragraph (6) (b) —
 
 
(i)
the words from “make representations” to the end become
35
 
sub-paragraph (i);
 
 
(ii)
after that sub-paragraph insert “, and
 
 
“(ii)
where section 206 (2) of FA 2026 applies,
 
 
provide a declaration made under that
 
 
subsection substantiating those
40
 
representations.”.
 

Page 191

 
(3)
In section 86 of FA 2022 (publication of information about tax avoidance
 
 
schemes)—
 
 
(a)
omit subsection (3) (b) (and the “or” before it);
 
 
(b)
in subsection (5) (b) —
 
 
(i)
the words from “make representations” to the end become
5
 
sub-paragraph (i);
 
 
(ii)
after that sub-paragraph insert “, and
 
 
“(ii)
where section 206 (2) of FA 2026 applies,
 
 
provide a declaration made under that
 
 
subsection substantiating those
10
 
representations.”;
 
 
(c)
in subsection (6) , after “representations” insert “and any declaration”.
 
212
Commencement
 
 
(1)
Subject to subsection (2) , sections 206 to 211 have effect from the day on
 
 
which this Act is passed.
15
 
(2)
The amendments made by section 211 have effect only in relation to conduct
 
 
occurring on or after the day on which this Act is passed.
 

Disclosure of tax avoidance schemes: consequences for failure to comply

 
213
Penalties for non-disclosure of tax avoidance schemes
 
 
(1)
In TMA 1970 —
20
 
(a)
omit section 98C (notifications under Part 7 of FA 2004);
 
 
(b)
in section 100 (2) (determination of penalties by an officer of the Board),
 
 
omit paragraph (f) ;
 
 
(c)
in section 103A (interest on penalties), omit “(other than section 98C)”.
 
 
(2)
In Part 7 of FA 2004 (disclosure of tax avoidance schemes)—
25
 
(a)
in section 313 (4) , for “98C of the Taxes Management Act 1970”
 
 
substitute “315”;
 
 
(b)
for section 315 substitute—
 
“315
Penalties
 
 
(1)
A person who fails to comply with a duty imposed by a
30
 
provision mentioned in the first column of the table is liable
 
 
to a penalty not exceeding the amount specified in relation to
 
 
that provision in the second column.
 
 
Provision
 
 
Maximum penalty amount
 
 
Section 308(1) or (3)
35
 
The applicable rate for each day on
35
 
(promoter’s duty to
 
 
which the person fails to comply or,
 
 
notify)
 
 
if subsection (3) applies, £1 million
 
 
Section 309(1)
 
 
The applicable rate for each day on
 
 
(client’s duty to
 
 
which the person fails to comply or,
 
 
notify: no UK
 
 
if subsection (3) applies, £1 million
 
 
promoter)
5
 
Section 310 (client’s
 
 
The applicable rate for each day on
 
 
duty to notify: no
 
 
which the person fails to comply or,
 
 
promoter)
 
 
if subsection (3) applies, £1 million
 
 
Section 310A (duty
 
 
The applicable rate for each day on
 
 
to provide further
10
 
which the person fails to comply or,
10
 
information)
 
 
if subsection (3) applies, £1 million
 
 
Section 310C
 
 
£5,000
 
 
(promoter’s duty to
 
 
update
 
 
information)
15
 
Section 311C (duty
 
 
The applicable rate for each day on
 
 
to provide further
 
 
which the person fails to comply or,
 
 
information: section
 
 
if subsection (3) applies, £1 million
 
 
311(3) case)
 
 
Section 312(2)
20
 
£5,000
20
 
(promoter’s duty to
 
 
notify client of
 
 
SRN)
 
 
Section 312ZA(2)
 
 
£5,000
 
 
(duty to notify
25
 
client of SRN:
 
 
section 311(3) case)
 
 
Section 312A(2) or
 
 
£5,000
 
 
(2A) (client’s duty
 
 
to notify other
30
 
persons of SRN)
 
 
Section 312B
 
 
£5,000
 
 
(client’s duty to
 
 
provide client
 
 
information to
35
 
promoter or service
 
 
provider)
 
 
Section 313(1) or
 
 
The amount specified in subsection (4)
 
 
regulations under
 
 
section 313(3)
40
 
(other party’s duty
 
 
to provide
 
 
information)
 
 
Section 313ZA
 
 
£5,000
 
 
(promoter’s or
5
 
service provider’s
 
 
duty to provide
 
 
client information)
 
 
Section 313ZB
 
 
£5,000
 
 
(service provider’s
10
 
duty to provide
 
 
other party’s
 
 
information)
 
 
Section 313ZC
 
 
£5,000
 
 
(employer’s duty to
15
 
provide employee
 
 
information)
 
 
Section 313A (duty
 
 
£5,000
 
 
to provide
 
 
statement on
20
 
notifiability)
 
 
Section 313B (duty
 
 
£5,000
 
 
to provide
 
 
supporting
 
 
evidence on
25
 
notifiability)
 
 
Section 313C
 
 
£5,000
 
 
(introducer’s duty
 
 
to provide other
 
 
person’s
30
 
information)
 
 
Section 316A (duty
 
 
£5,000
 
 
to provide
 
 
information in
 
 
addition to SRN to
35
 
client or other
 
 
persons)
 
 
(2)
The “applicable rate” means—
 
 
(a)
£600, or
 
 
(b)
where an order has been made under section 306A or
40
 
314A (orders about notifiability) in respect of the
 

Page 194

 
arrangements or proposal in relation to which the
 
 
person fails to comply—
 
 
(i)
£600 for each day falling before the end of the
 
 
period of ten days beginning with the day on
 
 
which the order was made, and
5
 
(ii)
£5,000 for each day falling after the end of that
 
 
period.
 
 
(3)
This subsection applies where an authorised officer considers
 
 
that the amount otherwise specified in relation to the provision
 
 
is inappropriately low.
10
 
(4)
The amount specified for section 313(1) or regulations under
 
 
section 313(3) is—
 
 
(a)
£10,000, if the person has failed to comply with the
 
 
section or regulations on two or more other occasions
 
 
during the period of 36 months ending with the date
15
 
of the current failure,
 
 
(b)
£7,500, if the person has failed to comply with the
 
 
section or regulations on one other occasion during the
 
 
period of 36 months ending with the date of the current
 
 
failure, or
20
 
(c)
£5,000, in any other case.
 
 
(5)
In subsection (1) , a reference to a day on which a person fails
 
 
to comply with a duty is a reference to a day that—
 
 
(a)
begins after the day by which the person was required
 
 
to comply with the duty, and
25
 
(b)
ends before the earlier of—
 
 
(i)
the day on which the person complies with the
 
 
duty,
 
 
(ii)
the day on which any reference number is
 
 
allocated to the arrangements or proposed
30
 
arrangements concerned in the circumstances
 
 
described in subsection (6) , and
 
 
(iii)
the day on which a penalty under subsection
 
 
(1) is imposed in relation to the failure.
 
 
(6)
The circumstances are—
35
 
(a)
the duty referred to in subsection (5) is a duty imposed
 
 
by section 308(1) or (3), 309(1) or 310, and
 
 
(b)
it is a case within section 311(3).
 
315A
Further penalties
 
 
(1)
If—
40
 
(a)
a penalty under section 315 is imposed in relation to a
 
 
person’s failure to comply with a duty, and
 

Page 195

 
(b)
after the penalty has been imposed, the person continues
 
 
to fail to comply with the duty,
 
 
the person is liable to a further penalty not exceeding the
 
 
applicable rate (as defined in section 315 (2) ) for each day on
 
 
which the failure continues.
5
 
(2)
Subsection (1) does not apply to a failure to comply with a
 
 
duty imposed by section 313(1) or regulations under section
 
 
313(3).
 
315B
Determination of penalties
 
 
(1)
A penalty under this Part is to be treated as a penalty under
10
 
a provision of the Taxes Acts and, accordingly, is a penalty to
 
 
be determined and imposed by an authorised officer under
 
 
section 100(1) of TMA 1970.
 
 
(2)
In determining an amount of a specified penalty (including
 
 
considering whether an amount is inappropriately low under
15
 
section 315 (3) ), the authorised officer must have regard to all
 
 
relevant considerations, including—
 
 
(a)
the desirability of the penalty being set at a level which
 
 
appears appropriate for deterring the person, or other
 
 
persons, from similar failures to comply on future
20
 
occasions;
 
 
(b)
the amount of any fees received, or likely to have been
 
 
received, by the person in connection with the proposal
 
 
or arrangements concerned;
 
 
(c)
in the case of a person entering into the arrangements,
25
 
the amount of any advantage gained, or sought to be
 
 
gained, by that person.
 
 
(3)
In this section, a “specified penalty” is a penalty under section
 
 
315 that is imposed in relation to a person’s failure to comply
 
 
with a duty imposed by section 308(1) or (3), 309(1), 310, 310A
30
 
or 311C.
 
315C
Failure to comply with time limit
 
 
A failure to do anything required to be done within a limited
 
 
period of time does not give rise to liability to a penalty under
 
 
section 315 or 315A if the person did it within such further
35
 
time, if any, as an officer of Revenue and Customs or the
 
 
tribunal may have allowed.
 
315D
Other exemptions from liability to a penalty
 
 
(1)
A person is deemed not to have failed to comply with a duty
 
 
imposed by a provision mentioned in the first column of the
40

Page 196

 
table in section 315 (1) if the person had a reasonable excuse
 
 
for the failure and—
 
 
(a)
the reasonable excuse continues to apply, or
 
 
(b)
the reasonable excuse has ceased to apply, but the
 
 
person complied with the duty without unreasonable
5
 
delay after the cessation.
 
 
(2)
Where an order is made under section 306A or 314A—
 
 
(a)
the order is not evidence that a person either does or
 
 
does not have a reasonable excuse for non-compliance
 
 
before the order was made, and
10
 
(b)
the person identified in the order as the promoter
 
 
cannot rely on doubt as to notifiability as a reasonable
 
 
excuse for a failure to comply with section 308.
 
 
(3)
Where a person fails to comply with—
 
 
(a)
section 309 and the promoter for the purposes of that
15
 
section is a monitored promoter, or
 
 
(b)
section 310 and the arrangements for the purposes of
 
 
that section are arrangements of a monitored promoter,
 
 
then any legal advice which was given or procured by that
 
 
monitored promoter and which the person took into account
20
 
is to be disregarded in determining whether the person has a
 
 
reasonable excuse for the failure.
 
 
(4)
In determining whether or not a person who is a monitored
 
 
promoter has a reasonable excuse for a failure to do anything
 
 
required to be done, reliance on legal advice does not constitute
25
 
a reasonable excuse if either—
 
 
(a)
the advice was not based on a full and accurate
 
 
description of the facts, or
 
 
(b)
the conclusions in the advice that the person relied on
 
 
were unreasonable.
30
 
(5)
For the purposes of this section, “monitored promoter” has the
 
 
meaning given by section 244(5) of FA 2014.
 
315E
Regulations to vary amounts
 
 
(1)
The Treasury may by regulations make provision for the
 
 
purpose of varying any of the amounts specified in section 315
35
 
or 315A .
 
 
(2)
Regulations under this section—
 
 
(a)
must be made by statutory instrument, and
 
 
(b)
may not be made unless a draft has been laid before
 
 
and approved by resolution of the House of Commons.”;
40

Page 197

 
(c)
in section 318 , in the appropriate places insert—
 
 
““authorised officer” means an officer of Revenue and Customs
 
 
authorised by His Majesty’s Revenue and Customs for the
 
 
purposes of this Part or, as the case may be, section 100 of
 
 
TMA 1970;
5
 
“Taxes Acts” has the same meaning as in TMA 1970 (see section
 
 
118(1) of that Act);”.
 
 
(3)
In Part 2 of Schedule 17 to F(No.2)A 2017 (disclosure of tax avoidance schemes:
 
 
VAT and other indirect taxes)—
 
 
(a)
in the cross heading before paragraph 39 omit “(apart from paragraph
10
 
26)”;
 
 
(b)
for paragraphs 39 to 44 substitute—
 
 
“39
(1)
A person who fails to comply with a duty imposed by a
 
 
provision of Part 1 of this Schedule mentioned in the first
 
 
column of the table is liable to a penalty not exceeding the
15
 
amount specified in relation to that provision in the second
 
 
column.
 
 
Provision
 
 
Maximum penalty amount
 
 
Paragraph 11(1) or
 
 
The applicable rate for each day on
 
 
12(1) (promoter’s
20
 
which the person fails to comply or,
20
 
duty to notify)
 
 
if sub-paragraph (3) applies, £1 million
 
 
Paragraph 17(2)
 
 
The applicable rate for each day on
 
 
(client’s duty to
 
 
which the person fails to comply or,
 
 
notify: no UK
 
 
if sub-paragraph (3) applies, £1 million
 
 
promoter)
25
 
Paragraph 18(2)
 
 
The applicable rate for each day on
 
 
which the person fails to comply or,
 
 
(client’s duty to
 
 
if sub-paragraph (3) applies, £1 million
 
 
notify: no
 
 
promoter)
 
 
Paragraph 19
30
 
The applicable rate for each day on
30
 
(duty to provide
 
 
which the person fails to comply or,
 
 
further
 
 
if sub-paragraph (3) applies, £1 million
 
 
information)
 
 
Paragraph 21
 
 
£5,000
 
 
(promoter’s duty
35
 
to update
 
 
information)
 
 
Paragraph 22C
 
 
The applicable rate for each day on
 
 
(duty to provide
 
 
which the person fails to comply or,
 
 
further
40
 
if sub-paragraph (3) applies, £1 million
40
 
information:
 
 
paragraph 22(3)
 
 
case)
 
 
Paragraph 23(2)
 
 
£5,000
 
 
(promoter’s duty
5
 
to notify client of
 
 
SRN)
 
 
Paragraph 23A(2)
 
 
£5,000
 
 
(duty to notify
 
 
client of SRN:
10
 
paragraph 22(3)
 
 
case)
 
 
Paragraph 24(3)
 
 
£5,000
 
 
(client’s duty to
 
 
notify other
15
 
persons of SRN)
 
 
Paragraph 25(2)
 
 
£5,000
 
 
(client’s duty to
 
 
provide client
 
 
information to
20
 
promoter or
 
 
service provider)
 
 
Paragraph 26(1) or
 
 
The amount specified in sub-paragraph
 
 
regulations under
 
 
(4)
 
 
paragraph 26(3)
25
 
(other party’s duty
 
 
to provide
 
 
information)
 
 
Paragraph 27(3)
 
 
£5,000
 
 
(promoter’s or
30
 
service provider’s
 
 
duty to provide
 
 
client information)
 
 
Paragraph 28
 
 
£5,000
 
 
(service provider’s
35
 
duty to provide
 
 
other party’s
 
 
information)
 
 
Paragraph 29
 
 
£5,000
 
 
(duty to provide
40
 
statement on
 
 
notifiability)
 
 
Paragraph 30
 
 
£5,000
 
 
(duty to provide
 
 
supporting
 
 
evidence on
5
 
notifiability)
 
 
Paragraph 31
 
 
£5,000
 
 
(introducer’s duty
 
 
to provide other
 
 
person’s
10
 
information)
 
 
Paragraph 33
 
 
£5,000
 
 
(duty to provide
 
 
information in
 
 
addition to SRN to
15
 
client or other
 
 
persons)
 
 
(2)
The “applicable rate” means—
 
 
(a)
£600, or
 
 
(b)
where an order has been made under paragraph 4
20
 
or 5 (orders about notifiability) in respect of the
 
 
arrangements or proposal in relation to which the
 
 
person fails to comply—
 
 
(i)
£600 for each day falling before the end of the
 
 
period of eleven days beginning with the day
25
 
on which the order was made, and
 
 
(ii)
£5,000 for each day falling after the end of
 
 
that period.
 
 
(3)
This sub-paragraph applies where an authorised officer
 
 
considers that the amount otherwise specified in relation to
30
 
the provision is inappropriately low.
 
 
(4)
The amount specified for paragraph 26(1) or regulations
 
 
under paragraph 26(3) is—
 
 
(a)
£10,000, if the person has failed to comply with the
 
 
paragraph or regulations on two or more other
35
 
occasions during the period of 36 months ending
 
 
with the date of the current failure,
 
 
(b)
£7,500, if the person has failed to comply with the
 
 
paragraph or regulations on one other occasion
 
 
during the period of 36 months ending with the date
40
 
of the current failure, or
 
 
(c)
£5,000, in any other case.
 

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(5)
In sub-paragraph (1) , a reference to a day on which a person
 
 
fails to comply with a duty is a reference to a day that—
 
 
(a)
begins after the day by which the person was
 
 
required to comply with the duty, and
 
 
(b)
ends before the earlier of—
5
 
(i)
the day on which the person complies with
 
 
the duty,
 
 
(ii)
the day on which any reference number is
 
 
allocated to the arrangements or proposed
 
 
arrangements concerned in the circumstances
10
 
described in sub-paragraph (6) , and
 
 
(iii)
the day on which a penalty under
 
 
sub-paragraph (1) is imposed in relation to
 
 
the failure.
 
 
(6)
The circumstances are—
15
 
(a)
the duty referred to in sub-paragraph (5) is a duty
 
 
imposed by paragraph 11(1), 12(1), 17(2) or 18(2), and
 
 
(b)
it is a case within paragraph 22(3).
 
 
(7)
In this paragraph “authorised officer” means an officer of
 
 
Revenue and Customs authorised by HMRC for the purposes
20
 
of this paragraph.
 
 
40
(1)
If—
 
 
(a)
a penalty under paragraph 39 is imposed in relation
 
 
to a person’s failure to comply with a duty, and
 
 
(b)
after the penalty has been imposed, the person
25
 
continues to fail to comply with the duty,
 
 
the person is liable to a further penalty not exceeding the
 
 
applicable rate (as defined in paragraph 39 (2) ) for each day
 
 
on which the failure continues.
 
 
(2)
Sub-paragraph (1) does not apply to a failure to comply with
30
 
a duty imposed by paragraph 26(1) or regulations under
 
 
paragraph 26(3).
 
 
41
(1)
In assessing the amount of a specified penalty (including
 
 
considering whether an amount is inappropriately low under
 
 
paragraph 39 (3) ), an authorised officer must have regard to
35
 
all relevant considerations, including—
 
 
(a)
the desirability of the penalty being set at a level
 
 
which appears appropriate for deterring the person,
 
 
or other persons, from similar failures to comply on
 
 
future occasions;
40
 
(b)
the amount of any fees received, or likely to have
 
 
been received, by the person in connection with the
 
 
proposal or arrangements concerned;
 

Page 201

 
(c)
in the case of a person entering into the arrangements,
 
 
the amount of any advantage gained, or sought to
 
 
be gained, by that person.
 
 
(2)
In this paragraph—
 
 
(a)
“authorised officer” means an officer of Revenue and
5
 
Customs authorised by HMRC for the purposes of
 
 
this paragraph;
 
 
(b)
a “specified penalty” is a penalty under paragraph
 
 
39 that is imposed in relation to a person’s failure to
 
 
comply with a duty imposed by paragraph 11(1),
10
 
12(1), 17(2), 18(2), 19 or 22C.
 
 
42
(1)
The Treasury may by regulations make provision for the
 
 
purpose of varying any of the amounts specified in
 
 
paragraph 39 or 40 .
 
 
(2)
Regulations under this paragraph may include incidental or
15
 
transitional provision.”;
 
 
(c)
omit paragraph 45 and the cross heading before paragraph 45;
 
 
(d)
in the italic cross heading before paragraph 46, omit “under paragraph
 
 
39(1)(b) or 44”;
 
 
(e)
in paragraph 46 (1) , for “39(1)(b) or 44” substitute “ 39 or 40 ”;
20
 
(f)
in paragraph 49 (2) (a) , for “prescribed period mentioned in paragraph
 
 
41” substitute “period mentioned in paragraph 39 (2) (b) ”.
 
214
Removal of time limits on publication by HMRC
 
 
(1)
In Part 7 of FA 2004 (disclosure of tax avoidance schemes), in section 316C
 
 
(publication by HMRC), omit subsections (6A) and (6B) .
25
 
(2)
In Part 1 of Schedule 17 to F(No.2)A 2017 (disclosure of tax avoidance schemes:
 
 
VAT and other indirect taxes), in paragraph 36 (publication by HMRC), omit
 
 
sub-paragraphs (7) and (8) .
 
215
Consequential amendments
 
 
(1)
In paragraph 5 of Schedule 34 to FA 2014 (promoters of tax avoidance schemes:
30
 
threshold conditions)—
 
 
(a)
in sub-paragraph (3) (a) , for “the tribunal” substitute “an authorised
 
 
officer”;
 
 
(b)
in sub-paragraph (4) (a) —
 
 
(i)
at the beginning insert “on appeal, ”;
35
 
(ii)
for “section 118(2) of TMA 1970” substitute “section 315D (1)
 
 
of FA 2004”;
 
 
(c)
for sub-paragraph (6) substitute—
 
 
“(6)
For the purposes of this paragraph—
 
 
“appeal period” means—
40

Page 202

 
(a)
the period during which an appeal could be
 
 
brought against the determination of an
 
 
authorised officer or the tribunal, as
 
 
applicable, or
 
 
(b)
where an appeal mentioned in paragraph (a)
5
 
has been brought, the period during which
 
 
that appeal has not been finally determined,
 
 
withdrawn or otherwise disposed of;
 
 
“authorised officer” means an officer of Revenue and
 
 
Customs who is, or is a member of a class of officers
10
 
who are, authorised by HMRC for the purposes of
 
 
the provision concerned.”.
 
 
(2)
In paragraph 5 of Schedule 13 to FA 2020 (joint and several liability of
 
 
company directors), for sub-paragraph (6)(a) substitute—
 
 
“(a)
sections 315 and 315A of FA 2004 (penalties for non-disclosure
15
 
of tax avoidance schemes);”.
 
 
(3)
In section 132A (2) of the Social Security Administration Act 1992 (disclosure
 
 
of contributions avoidance arrangements)—
 
 
(a)
in paragraph (a) , at the end insert “or to a penalty under that Part”;
 
 
(b)
in paragraph (b) —
20
 
(i)
for “section 98C of the Taxes Management Act 1970 (penalties
 
 
for failure to comply with Part 7 of the Finance Act 2004) and
 
 
any other” substitute “any”;
 
 
(ii)
for “that section” substitute “Part 7 of the Finance Act 2004”.
 
 
(4)
In FA 2022 —
25
 
(a)
in section 90 (3) (freezing orders: interpretation etc)—
 
 
(i)
omit paragraph (a) ;
 
 
(ii)
omit paragraph (d) ;
 
 
(b)
in Schedule 13 (penalties for facilitating avoidance schemes involving
 
 
non-resident promoters), in paragraph 1 (4) , for paragraph (a)
30
 
substitute—
 
 
“(a)
section 315 or 315A of FA 2004 (disclosure of tax
 
 
avoidance schemes);”.
 
216
Commencement
 
 
The amendments made by sections 213 and 215 do not have effect in relation
35
 
to a penalty for which proceedings have been commenced under section 100C
 
 
TMA or paragraph 45 of Schedule 17 to F(No.2)A 2017 before sections 213
 
 
and 215 come into force.
 

Page 203

Construction industry scheme: amendments

 
217
Construction industry scheme: amendments
 
 
(1)
Chapter 3 of Part 3 of FA 2004 (construction industry scheme) is amended
 
 
as follows.
 
 
(2)
After section 62 insert—
5
 
“Liability for things done in the knowledge of deliberate failures to comply
 
62A
Payments made in the knowledge of deliberate failures to comply
 
 
(1)
This section applies to a person who—
 
 
(a)
has made a payment under a construction contract, and
 
 
(b)
before making a payment, knew or should have known that a
10
 
connected party had deliberately failed, or would deliberately
 
 
fail, to comply with a requirement to—
 
 
(i)
deduct a sum under section 61,
 
 
(ii)
pay a sum to the Commissioners under section 62, or
 
 
(iii)
deduct or pay an amount to His Majesty’s Revenue and
15
 
Customs under PAYE regulations.
 
 
(2)
If this section applies, an officer of Revenue and Customs may
 
 
determine that the person is liable to pay to the Commissioners an
 
 
amount equal to 20% of the payment referred to in subsection (1) .
 
 
(3)
In this section, a “connected party” is
20
 
(a)
another party to the construction contract referred to in
 
 
subsection (1) (a) , or
 
 
(b)
a party to another construction contract relating to the same
 
 
construction operations as the construction contract referred
 
 
to in subsection (1) (a) .
25
62B
Returns made in the knowledge of deliberate failures to comply
 
 
(1)
This section applies to a person who—
 
 
(a)
makes a return which treats a sum as deducted and paid on
 
 
account of the person’s liabilities under section 62(2) or (3),
 
 
and
30
 
(b)
before doing so, knew or should have known that the sum—
 
 
(i)
had not been deducted, or
 
 
(ii)
had deliberately not been, or would deliberately not be,
 
 
paid on account of the person’s liabilities.
 
 
(2)
If this section applies, an officer of Revenue and Customs may
35
 
determine that the person is liable to pay to the Commissioners an
 
 
amount equal to the sum which the return treats as paid on account
 
 
of the person’s liabilities.
 

Page 204

62C
Regulations
 
 
The Commissioners may make regulations with respect to the
 
 
determination, collection and recovery of amounts described in sections
 
 
62A (2) and 62B (2) .”.
 
 
(3)
In section 66 —
5
 
(a)
after subsection (3) insert—
 
 
“(3A)
The Commissioners may at any time make a determination
 
 
cancelling a person’s registration for gross payment if—
 
 
(a)
section 62A (payments made in the knowledge of
 
 
deliberate failures to comply), or
10
 
(b)
section 62B (returns made in the knowledge of
 
 
deliberate failures to comply),
 
 
applies to the person.”;
 
 
(b)
in subsection (4) —
 
 
(i)
for “the Board” substitute “the Commissioners”;
15
 
(ii)
after “subsection (3)” insert “or subsection (3A) ”;
 
 
(c)
in subsection (6) —
 
 
(i)
the words from “the person must” to the end become paragraph
 
 
(a);
 
 
(ii)
after that paragraph insert “, and
20
 
“(b)
the person may not, within the period of one
 
 
year beginning with the day on which the
 
 
cancellation takes effect (see subsection (2) and
 
 
section 67(5)), apply for registration for gross
 
 
payment.”;
25
 
(d)
in subsection (7) —
 
 
(i)
after “subsection (3)” insert “or subsection (3A) ”;
 
 
(ii)
for the words from “the person may” to the end substitute—
 
 
“(a)
the person may, if the Commissioners think fit,
 
 
be registered for payment under deduction, and
30
 
(b)
the person may not, within the period of five
 
 
years beginning with the day on which the
 
 
cancellation takes effect (see subsection (4)),
 
 
apply for registration for gross payment.”;
 
 
(e)
omit subsection (8) .
35
 
(4)
In section 72 , in the heading, at the end insert “: false statements and
 
 
documentation”.
 
 
(5)
After section 72 insert—
 
“72A
Penalties: deliberate failures to comply
 
 
(1)
A person is liable to a penalty not exceeding 30% of any amount that
40
 
they are determined to be liable to pay under section 62A (payments
 

Page 205

 
made in the knowledge of deliberate failures to comply) or 62B (returns
 
 
made in the knowledge of deliberate failures to comply).
 
 
(2)
A penalty under this section may not be determined more than three
 
 
years after the date on which the determination under section 62A or
 
 
62B becomes final.
5
 
(3)
For the purposes of subsection (2) and section 72B (3) , a determination
 
 
becomes final at the time when the period for any appeal or further
 
 
appeal relating to the determination expires or, if later, when any
 
 
appeal or final appeal relating to the penalty is finally determined.
 
 
(4)
Section 103(4) TMA 1970 (time limits) does not apply to a penalty
10
 
under this section.
 
72B
Penalties under section
 
 
(1)
Where—
 
 
(a)
a company is liable to a penalty under section 72A , and
 
 
(b)
the actions of the company which give rise to that liability were
15
 
attributable to an officer of the company,
 
 
the officer is liable to pay such portion of the penalty (which may be
 
 
equal to or less than 100%) as the Commissioners may specify in a
 
 
notice given to the officer (a “decision notice”).
 
 
(2)
Before giving the officer a decision notice, the Commissioners must—
20
 
(a)
inform the officer that they are considering doing so, and
 
 
(b)
afford the officer the opportunity to make representations about
 
 
whether a decision notice should be given or the portion that
 
 
should be specified.
 
 
(3)
A decision notice—
25
 
(a)
may not be given before the amount of the penalty due from
 
 
the company has been determined (but it may be given
 
 
immediately after that has happened), and
 
 
(b)
may not be given more than three years after the date on which
 
 
the determination mentioned in section 72A (1) becomes final.
30
 
(4)
Where the Commissioners have specified a portion of the penalty in
 
 
a decision notice given to the officer—
 
 
(a)
the officer must pay the specified portion before the end of the
 
 
period of 30 days beginning with the day on which the notice
 
 
is given,
35
 
(b)
the specified portion shall be recoverable as if it were tax due
 
 
from the officer, and
 
 
(c)
a further decision notice may be given in respect of a portion
 
 
of any additional penalty for which the company is determined
 
 
to be liable.
40

Page 206

 
(5)
The Commissioners may not recover more than 100% of the penalty
 
 
through issuing decision notices in relation to two or more persons.
 
 
(6)
A person is not liable to pay an amount by virtue of this section if
 
 
the actions of the company concerned are attributable to the person
 
 
by reference to conduct for which the person has been convicted of
5
 
an offence.
 
 
In this subsection “conduct” includes omissions.
 
 
(7)
In this section and section 72C —
 
 
“company” means a body corporate or unincorporated association;
 
 
“officer” means—
10
 
(a)
in relation to a body corporate other than one whose
 
 
affairs are managed by its members—
 
 
(i)
a director, manager, secretary or other similar
 
 
officer of the body, or a person purporting to
 
 
act in such a capacity, or
15
 
(ii)
a shadow director within the meaning of section
 
 
251 of the Companies Act 2006 ;
 
 
(b)
in relation to a limited liability partnership or other
 
 
body corporate whose affairs are managed by its
 
 
members—
20
 
(i)
a member who exercises management functions
 
 
with respect to it, or purports to do so, or
 
 
(ii)
in the case of a limited liability partnership, a
 
 
shadow member;
 
 
(c)
in relation to an unincorporated association, a person
25
 
who exercises functions of management with respect
 
 
to it, or purports to do so;
 
 
“shadow member” means a person in accordance with whose
 
 
directions or instructions the members of a limited liability
 
 
partnership are accustomed to act, save that a person is not a
30
 
shadow member by reason only of the fact that the members
 
 
act on advice given by that person in a professional capacity.
 
72C
Appeals in relation to a decision notice under section
 
 
(1)
An officer may appeal—
 
 
(a)
the decision to give a decision notice under section 72B
35
 
, including on the grounds that the company is not liable to the
 
 
penalty under section 72A to which the decision notice relates;
 
 
(b)
the amount of the specified portion.
 
 
(2)
Notice of an appeal must—
 
 
(a)
state the ground of appeal, and
40
 
(b)
be given in writing to HMRC before the end of the period of
 
 
30 days beginning with the day on which the decision notice
 
 
was given to the officer.
 

Page 207

 
(3)
The provisions of Part 5 of TMA 1970 relating to appeals have effect
 
 
in relation to appeals under this section as they have effect in relation
 
 
to an appeal against an assessment to income tax.”
 
 
(6)
In section 75, at the end insert—
 
 
“(4)
In this Chapter “the Commissioners” means the Commissioners for
5
 
His Majesty’s Revenue and Customs.”.
 
218
Construction industry scheme regulations: amendments
 
 
(1)
The Income Tax (Construction Industry Scheme) Regulations 2005 (S.I.
 
 
2005/2045) are amended as follows.
 
 
(2)
After regulation 13 insert—
10
 
“Determination of amounts payable as a result of things done in the
 
 
knowledge of deliberate failures to comply and appeal against determination
 
 
13A.
(1)
This regulation applies if a determination is made under section
 
 
62A (2) (payments made in the knowledge of deliberate failures to comply)
 
 
or 62B (2) (returns made in the knowledge of deliberate failures to comply)
15
 
of the Act.
 
 
(2)
An officer of Revenue and Customs must serve notice of the
 
 
determination on the person to whom it relates.
 
 
(3)
The determination may cover one or more amounts the person is liable
 
 
to pay under section 62A (2) or 62B (2) of the Act.
20
 
(4)
The determination is subject to Parts 4, 5, 5A and 6 of TMA (assessment,
 
 
appeals, collection and recovery) as if—
 
 
(a)
the determination were an assessment, and
 
 
(b)
the amount determined were income tax charged on the person,
 
 
and those Parts of that Act apply accordingly with any necessary
25
 
modifications, except that the amount determined is due and payable 14 days
 
 
after the determination is made.”
 
 
(3)
In regulation 16 —
 
 
(a)
in paragraph (1) —
 
 
(i)
the words from “a contractor” to the end become paragraph
30
 
(a) ;
 
 
(ii)
after that paragraph insert “, or
 
 
“(b)
a person is liable to pay under regulation 13A(2).”;
 
 
(b)
in paragraph (3) , in Table 1, in the first row, for “and 13(2)” substitute
 
 
“, 13(2) and 13A(2)”.
35

Page 208

219
Commencement
 
 
(1)
Subject to subsection (2) , the amendments made by sections 217 and 218 have
 
 
effect from 6 April 2026.
 
 
(2)
The amendments made by section 217 (3) (d) (ii) and 217 (3) (e) have effect in
 
 
relation to a determination under section 66(3) of FA 2004 if the determination
5
 
is made by reference to behaviour occurring on or after 6 April 2026.
 

Part 7

 

Tax advisers

 

Chapter 1

 

Registration

10

Prohibition against unregistered tax advisers interacting with HMRC

 
220
Prohibition against unregistered tax advisers interacting with HMRC
 
 
(1)
A tax adviser may not interact with HMRC in relation to the tax affairs of a
 
 
client unless—
 
 
(a)
the adviser is registered under this Chapter, or
15
 
(b)
an exception in Schedule 19 (exceptions) applies.
 
 
(2)
A person interacts with HMRC if the person does or attempts to do any of
 
 
the following—
 
 
(a)
contact HMRC by telephone, post or email;
 
 
(b)
send a message to HMRC through a website or internet portal;
20
 
(c)
file a return, claim, notice or other document with HMRC (whether
 
 
electronically or otherwise);
 
 
(d)
communicate with HMRC in any other way.
 
 
(3)
Subsection (1) applies even if the tax adviser or the client (or both) are outside
 
 
the United Kingdom.
25
 
(4)
Where an individual—
 
 
(a)
works for a tax adviser, and
 
 
(b)
interacts with HMRC in the course of a business carried on by that
 
 
tax adviser,
 
 
the interaction is to be regarded as being carried out by that tax adviser.
30
221
Meaning of “tax adviser” and “client”
 
 
(1)
In this Chapter “tax adviser” means—
 
 
(a)
an organisation that, in the course of a business carried on by it, assists
 
 
other persons with their tax affairs, or
 

Page 209

 
(b)
an individual who, in the course of a business carried on by the
 
 
individual as a sole trader, assists other persons with their tax affairs.
 
 
(2)
An organisation or individual assists another person with their tax affairs if
 
 
the organisation or individual does any of the following—
 
 
(a)
advises the other person in relation to tax;
5
 
(b)
acts or purports to act as an agent on behalf of the other person in
 
 
relation to tax;
 
 
(c)
provides assistance with any document that is likely to be relied on
 
 
by HMRC to determine the other person’s tax position.
 
 
(3)
A person can be a tax adviser even if they are appointed indirectly (for
10
 
example, at the request of someone other than their client).
 
 
(4)
In this Chapter “client”, in relation to a tax adviser, means a person who the
 
 
adviser, in the course of a business carried on by the adviser, assists with
 
 
their tax affairs.
 

Application process

15
222
Application for registration
 
 
(1)
A tax adviser may apply to HMRC to be registered under this Chapter.
 
 
(2)
An application must be made in the form and manner specified in a notice
 
 
published by HMRC.
 
 
(3)
An application must contain the following—
20
 
(a)
the name and address of the tax adviser;
 
 
(b)
if the tax adviser is an organisation, the name of each of the tax
 
 
adviser’s relevant individuals (see section 223 (meaning of “relevant
 
 
individual” etc));
 
 
(c)
a statement—
25
 
(i)
that the tax adviser meets the registration conditions (see section
 
 
224 (registration conditions)), or
 
 
(ii)
explaining why those conditions are not met;
 
 
(d)
any other information or evidence relating to the tax adviser or the
 
 
registration conditions that may be specified in a notice published by
30
 
HMRC.
 
 
(4)
A notice under subsection (3) (d) may, in particular, specify different types of
 
 
information or evidence for different descriptions of tax advisers (for example,
 
 
for tax advisers who are established in, or who otherwise have a connection
 
 
with, a territory outside the United Kingdom).
35
223
Meaning of “relevant individual” and “officer”
 
 
(1)
For the purposes of this Chapter “relevant individual”, in relation to a tax
 
 
adviser that is an organisation with fewer than six officers, means—
 

Page 210

 
(a)
each individual who works for the tax adviser and who plays a
 
 
significant role in—
 
 
(i)
the making of decisions about how the whole or a substantial
 
 
part of the tax adviser activities of the organisation are to be
 
 
managed or organised, or
5
 
(ii)
the actual managing or organising of the whole or a substantial
 
 
part of those activities, and
 
 
(b)
each officer of the tax adviser who is not within paragraph (a).
 
 
(2)
For the purposes of this Chapter “relevant individual”, in relation to a tax
 
 
adviser that is an organisation with six or more officers, means—
10
 
(a)
each individual who works for the tax adviser and who plays a
 
 
significant role in—
 
 
(i)
the making of decisions about how the whole or a substantial
 
 
part of the tax adviser activities of the organisation are to be
 
 
managed or organised, or
15
 
(ii)
the actual managing or organising of the whole or a substantial
 
 
part of those activities, and
 
 
(b)
if the organisation has fewer than five officers within paragraph (a)
 
 
, each officer of the tax adviser nominated by the adviser to be a relevant
 
 
individual (see section 224 (4) (registration conditions)).
20
 
(3)
In this Chapter “officer” means—
 
 
(a)
in relation to a company, a director;
 
 
(b)
in relation to a body corporate whose affairs are managed by its
 
 
members, a member who exercises functions of management with
 
 
respect to it;
25
 
(c)
in relation to a body corporate not within paragraph (a) or (b) , an
 
 
officer of the body whose functions correspond to those of a director
 
 
of a company;
 
 
(d)
in relation to a partnership, a partner;
 
 
(e)
in relation to any other organisation, a person who exercises functions
30
 
of management with respect to it.
 
224
Registration conditions
 
 
(1)
A reference in this Chapter to the registration conditions is to the following
 
 
three conditions.
 
 
(2)
The first registration condition is that the tax adviser and, if the adviser is an
35
 
organisation, each of the adviser’s relevant individuals—
 
 
(a)
does not have a relevant amount overdue or a relevant return
 
 
outstanding,
 
 
(b)
is not subject to a decision by HMRC to refuse to deal with them,
 
 
(c)
is not subject to a relevant anti-avoidance measure,
40
 
(d)
has not, in the previous 12 months, had a relevant anti-avoidance
 
 
penalty imposed on them,
 

Page 211

 
(e)
is not subject to a relevant suspension or a relevant ineligibility order,
 
 
(f)
is not disqualified under the directors disqualification legislation or
 
 
subject to a similar disqualification in a territory outside the United
 
 
Kingdom,
 
 
(g)
does not have an insolvency practitioner acting in relation to them,
5
 
and
 
 
(h)
does not have an unspent conviction for a relevant offence (see section
 
 
226 (offences)).
 
 
(3)
The second registration condition is that the adviser—
 
 
(a)
is registered with a supervisory authority for the purposes of
10
 
anti-money laundering supervision, or
 
 
(b)
meets such conditions about applying to register with a supervisory
 
 
authority for those purposes as may be specified in a notice published
 
 
by HMRC.
 
 
(4)
The third registration condition is that, if the adviser is an organisation within
15
 
section 223 (2) (b) (organisations with six or more officers etc), the adviser has
 
 
nominated as many officers to be relevant individuals as are necessary to
 
 
ensure that the adviser has at least five relevant individuals who are officers.
 
225
Registration conditions: interpretation
 
 
(1)
In section 224 and this section, “relevant amount”, other than in relation to
20
 
a person within subsection (2) , means an amount of—
 
 
(a)
tax payable to HMRC;
 
 
(b)
national insurance contributions;
 
 
(c)
devolved tax corresponding to an amount within paragraph (a) or (b) ;
 
 
(d)
a civil penalty relating to a tax mentioned in paragraph (a) or (c) or
25
 
to national insurance contributions, including a relevant anti-avoidance
 
 
penalty;
 
 
(e)
interest on an amount within paragraphs (a) to (d) .
 
 
(2)
A person is within this subsection if, in the previous 12 months, the person—
 
 
(a)
was not liable to pay an amount within subsection (1) (a) to (e) , and
30
 
(b)
was liable to pay an amount corresponding to an amount within
 
 
subsection (1) (a) to (e) under the law of a territory outside the United
 
 
Kingdom.
 
 
(3)
In relation to a person within subsection (2) , “relevant amount” means an
 
 
amount corresponding to an amount within subsection (1) (a) to (e) that the
35
 
person is liable to pay—
 
 
(a)
under the law of the territory mentioned in subsection (2) (b) , or
 
 
(b)
if the person was, during the 12-month period, liable to pay such an
 
 
amount under the law of more than one territory outside the United
 
 
Kingdom, under whichever of those territories the person earned the
40
 
most income in relation to tax adviser activities during the 12-month
 
 
period.
 

Page 212

 
(4)
For the purposes of section 224 (2) (a) —
 
 
(a)
a relevant amount is overdue if the amount has become due and
 
 
payable but the amount has not been paid;
 
 
(b)
a relevant return is outstanding if the return is required to have been
 
 
made or delivered but it has not been made or delivered.
5
 
(5)
But a relevant amount is not overdue if it is subject to a time to pay agreement
 
 
that has not been broken.
 
 
(6)
For the purposes of section 224 (2) (c) , a person is subject to a “relevant
 
 
anti-avoidance measure” if—
 
 
(a)
the person is subject to a stop notice given under section 236A of FA
10
 
2014 (power to give stop notices);
 
 
(b)
the person is subject to a monitoring notice given under section 244
 
 
of FA 2014 (monitoring notices: content and issuing);
 
 
(c)
information about the person has been published under paragraph 46
 
 
of Schedule 16 of F(No.2)A 2017 (penalties for enablers of defeated
15
 
tax avoidance) and the information has not been withdrawn;
 
 
(d)
information identifying or about the person has been published under
 
 
section 86(1) of FA 2022 (publication by HMRC of information about
 
 
tax avoidance schemes) and the information has not been withdrawn.
 
 
(7)
In section 224 and this section “relevant anti-avoidance penalty” means a
20
 
penalty under any of the following—
 
 
(a)
section 315(1) of FA 2004 in respect of a failure to comply with section
 
 
308(1) or (3) of that Act (promoter’s duty to notify);
 
 
(b)
paragraph 2(1) of Schedule 35 to FA 2014 in respect of a failure to
 
 
comply with section 236B(1) of that Act (stop notices);
25
 
(c)
paragraph 1 of Schedule 16 to F(No.2)A 2017 (penalties for enablers
 
 
of defeated tax avoidance);
 
 
(d)
paragraph 39(1) of Schedule 17 to F(No.2)A 2017 in respect of a failure
 
 
to comply with paragraph 11(1) or 12(1) of that Schedule (promoter’s
 
 
duty to notify);
30
 
(e)
section 159 (ban on promotion of certain tax arrangements).
 
 
(8)
For the purposes of section 224 (2) (d) , if a relevant anti-avoidance penalty is
 
 
imposed on a person and the penalty is at any time subsequently set aside
 
 
or otherwise cancelled, the penalty is to be treated from that time as if it was
 
 
not imposed on the person.
35
 
(9)
For the purposes of section 224 (2) (e) , a person is subject to a relevant
 
 
suspension if the person’s registration under this Chapter is suspended under
 
 
section 229 (suspension of registration).
 
 
(10)
In section 224 and this section—
 
 
“devolved tax” means a devolved tax within the meaning of the Scotland
40
 
Act 1998 (see section 80A of that Act) or the Government of Wales
 
 
Act 2006 (see section 116A of that Act);
 

Page 213

 
“disqualified under the directors disqualification legislation” has the
 
 
same meaning as in the Companies Act 2006 (see section 159A of that
 
 
Act);
 
 
“insolvency practitioner” means—
 
 
(a)
a person who acts as an insolvency practitioner within the
5
 
meaning of section 388 of the Insolvency Act 1986 or article 3
 
 
of the Insolvency (Northern Ireland) Order 1989, or
 
 
(b)
a person in a territory outside the United Kingdom who
 
 
exercises functions similar to those of a person mentioned in
 
 
paragraph (a) ;
10
 
“relevant ineligibility order” means a temporary or permanent ineligibility
 
 
order issued under section 233 or 234 (ineligibility orders);
 
 
“relevant return” means a return relating to a relevant amount;
 
 
“supervisory authority” means—
 
 
(a)
a supervisory authority within the meaning given by regulation
15
 
3(1) of the Money Laundering, Terrorist Financing and Transfer
 
 
of Funds (Information on the Payer) Regulations 2017 (S.I.
 
 
2017/692), or
 
 
(b)
an authority in a territory outside the United Kingdom which
 
 
exercises functions similar to those of an authority mentioned
20
 
in paragraph (a) ;
 
 
“time to pay agreement” means an agreement between HMRC and a
 
 
person that payment of an amount may, subject to the person
 
 
complying with any conditions determined by HMRC, be deferred
 
 
for a period.
25
226
Registration conditions: offences
 
 
(1)
The reference in section 224 (2) (h) to a relevant offence is to any of the
 
 
following offences—
 
 
(a)
an offence under section 20BB of TMA 1970 (falsification of documents);
 
 
(b)
an offence under CEMA 1979;
30
 
(c)
an offence under section 112 (false representations for obtaining benefit)
 
 
or section 114 (offences relating to contributions) of the Social Security
 
 
Administration Act 1992;
 
 
(d)
an offence under VATA 1994;
 
 
(e)
an offence under section 35 of the Tax Credits Act 2002 (offence of
35
 
fraud);
 
 
(f)
an offence under CRCA 2005;
 
 
(g)
an offence under section 45 or 46 of the Criminal Finances Act 2017
 
 
(failure to prevent facilitation of tax evasion offences);
 
 
(h)
an offence at common law of cheating the public revenue;
40
 
(i)
an offence under the law of any part of the United Kingdom consisting
 
 
of being knowingly concerned in, or in taking steps with a view to,
 
 
the fraudulent evasion of tax;
 

Page 214

 
(j)
an offence of aiding, abetting, counselling or procuring the commission
 
 
of an offence mentioned in paragraphs (a) to (i) ;
 
 
(k)
an offence under the law of a territory outside the United Kingdom
 
 
which would be an offence otherwise referred to in this section if the
 
 
conduct constituting that offence was carried out in any part of the
5
 
United Kingdom.
 
 
(2)
For the purposes of subsection (1) (k) , an act punishable under the law of a
 
 
territory outside the United Kingdom constitutes an offence under that law,
 
 
however it is described in that law.
 
227
Registration of tax advisers etc
10
 
(1)
Where a tax adviser applies to be registered under this Chapter in accordance
 
 
with section 222 (application for registration), an officer of Revenue and
 
 
Customs must—
 
 
(a)
decide whether to approve the application;
 
 
(b)
notify the tax adviser of the decision and—
15
 
(i)
where the application is approved, of the date from which the
 
 
registration has effect, and
 
 
(ii)
where the application is not approved, of the reasons for the
 
 
decision.
 
 
(2)
The officer must approve the application if satisfied that the tax adviser meets
20
 
the registration conditions.
 
 
(3)
The officer may otherwise approve the application only if—
 
 
(a)
the tax adviser fails to meet the registration conditions solely by virtue
 
 
of the adviser, or a relevant individual of the adviser, not meeting the
 
 
condition in section 224 (2) (a) (amount of tax etc overdue), and
25
 
(b)
having regard to the relevant amount that is overdue or (as the case
 
 
may be) the circumstances of the outstanding relevant return, the
 
 
officer considers it appropriate to approve the application.
 
 
In this subsection “relevant amount” and “relevant return” have the same
 
 
meaning as in section 224 (registration conditions).
30
 
(4)
An officer of Revenue and Customs may cancel the registration of a registered
 
 
tax adviser if—
 
 
(a)
the adviser requests the cancellation, or
 
 
(b)
the tax adviser has been wound up or dissolved or has died.
 

Monitoring of registration conditions and suspension of registration

35
228
Monitoring of registration conditions
 
 
An officer of Revenue and Customs may by notice require a registered tax
 
 
adviser to provide such information or evidence as the officer reasonably
 

Page 215

 
requires for the purpose of monitoring whether the tax adviser meets the
 
 
registration conditions.
 
229
Suspension of registration
 
 
(1)
An authorised officer of Revenue and Customs may, by notice, suspend the
 
 
registration of a registered tax adviser if the officer is not satisfied that the
5
 
adviser meets the registration conditions.
 
 
(2)
An authorised officer of Revenue and Customs may, by notice, suspend the
 
 
registration of a registered tax adviser for a period of up to 12 months if the
 
 
officer considers that the adviser has, in the course of interacting with HMRC,
 
 
behaved in a manner which falls below the standards that might reasonably
10
 
be expected of a tax adviser in their interactions with HMRC.
 
 
(3)
In considering whether a tax adviser has behaved as described in subsection
 
 
(2) , the officer may in particular have regard to any provisions of a relevant
 
 
HMRC standard that relate to interactions between tax advisers and HMRC.
 
 
In this subsection “relevant HMRC standard” means a standard published
15
 
by HMRC that is specified for the purposes of this section in a notice
 
 
published by HMRC.
 
 
(4)
Before suspending the registration of a registered tax adviser under this
 
 
section, the officer must—
 
 
(a)
notify the adviser of the fact that the officer considers subsection (1)
20
 
or (2) to apply, and
 
 
(b)
allow the adviser a period of—
 
 
(i)
30 days, or
 
 
(ii)
if subsection (5) applies, 60 days,
 
 
beginning with the date of the notification, to take action to meet the
25
 
conditions or to make representations to HMRC.
 
 
(5)
This subsection applies where—
 
 
(a)
the tax adviser is an individual and the officer considers subsection
 
 
(1) to apply solely by virtue of the adviser not meeting the condition
 
 
in section 224 (2) (a) (amount of tax etc overdue), or
30
 
(b)
the tax adviser is an organisation and the officer considers subsection
 
 
(1) to apply solely by virtue of a relevant individual of the adviser
 
 
not meeting the condition in section 224 (2) (a) (amount of tax etc
 
 
overdue).
 
 
(6)
A notice suspending the registration of a registered tax adviser under this
35
 
section must state the following—
 
 
(a)
the date on which it is issued;
 
 
(b)
the date on which the suspension has effect, which must not be before
 
 
the end of the period of 30 days beginning with the date mentioned
 
 
in paragraph (a) ;
40
 
(c)
in a case within subsection (2) , the period of the suspension;
 
 
(d)
details of—
 

Page 216

 
(i)
in a case within subsection (1) , which of the registration
 
 
conditions the officer is not satisfied that the adviser meets;
 
 
(ii)
in a case within subsection (2) , the behaviour mentioned in
 
 
that subsection;
 
 
(e)
the period within which an appeal against the decision to suspend
5
 
the registration of the adviser may be made.
 
 
(7)
An authorised officer of Revenue and Customs must, by notice, lift a
 
 
suspension imposed under subsection (1) if satisfied that the adviser meets
 
 
the registration conditions.
 

Compliance notice

10
230
Compliance notice
 
 
(1)
Where a tax adviser contravenes section 220 (1) (prohibited interaction with
 
 
HMRC), an authorised officer of Revenue and Customs may give a notice (a
 
 
“compliance notice”) to the adviser.
 
 
For provision about the effect of a compliance notice, see sections 231 (1) (a)
15
 
and 232 (1) (a) (financial penalties for prohibited interaction with HMRC) .
 
 
(2)
A compliance notice must state the following—
 
 
(a)
the date on which it is issued;
 
 
(b)
the contravention to which the notice relates;
 
 
(c)
the period within which an appeal against the notice may be made.
20
 
(3)
An authorised officer of Revenue and Customs may withdraw a compliance
 
 
notice at any time; and if they do so, they must notify the tax adviser.
 
 
(4)
A compliance notice is to be treated as withdrawn if subsection (5) or (6)
 
 
applies.
 
 
(5)
This subsection applies if—
25
 
(a)
the tax adviser was not registered under this Chapter at the time of
 
 
the contravention mentioned in subsection (1) , and
 
 
(b)
the tax adviser subsequently registers under this Chapter.
 
 
(6)
This subsection applies if—
 
 
(a)
the tax adviser’s registration was suspended under section 229
30
 
(suspension of registration) at the time of the contravention mentioned
 
 
in subsection (1) , and
 
 
(b)
the suspension is subsequently lifted under section 229 (7) or expires.
 
 
(7)
Before giving a compliance notice under this section, the authorised officer
 
 
must—
35
 
(a)
notify the adviser of the fact that the officer considers subsection (1)
 
 
to apply, and
 
 
(b)
allow the adviser a period of 30 days, beginning with the date of the
 
 
notification, to make representations to HMRC.
 

Page 217

Financial penalties

 
231
Financial penalties for prohibited interaction with HMRC
 
 
(1)
This section applies where—
 
 
(a)
a tax adviser has been given a compliance notice under section 230
 
 
that has not been withdrawn,
5
 
(b)
the tax adviser subsequently contravenes section 220 (1) (prohibited
 
 
interaction with HMRC), and
 
 
(c)
if the tax adviser is an organisation, an authorised officer of Revenue
 
 
and Customs does not consider that the contravention is attributable
 
 
to a relevant individual of the tax adviser (see section 232 (liability of
10
 
relevant individuals)).
 
 
(2)
The tax adviser is liable in respect of the contravention to a penalty of—
 
 
(a)
£5,000, or
 
 
(b)
if subsection (3) or (4) applies, £10,000.
 
 
(3)
This subsection applies if—
15
 
(a)
in the period of two years ending with the date of the contravention,
 
 
the tax adviser has been assessed to a penalty under this section or
 
 
section 232 on four or more occasions, and
 
 
(b)
subsection (4) does not apply.
 
 
(4)
This subsection applies if the contravention takes place at a time when the
20
 
tax adviser is subject to—
 
 
(a)
a temporary ineligibility order issued under this Chapter, or
 
 
(b)
a permanent ineligibility order issued under this Chapter.
 
 
(5)
For the purposes of subsection (3) (a) , if a tax adviser is assessed to a penalty
 
 
under this section or section 232 and the penalty is, at any time, subsequently
25
 
set aside or otherwise cancelled, the penalty is to be treated from that time
 
 
as if it was not assessed on the adviser.
 
 
232
Financial penalties for prohibited interaction with HMRC: liability of relevant
 

individuals

 
 
(1)
This section applies where—
30
 
(a)
a tax adviser that is an organisation has been given a compliance
 
 
notice under section 230 that has not been withdrawn,
 
 
(b)
the tax adviser subsequently contravenes section 220 (1) (prohibited
 
 
interaction with HMRC), and
 
 
(c)
an authorised officer of Revenue and Customs considers that the
35
 
contravention is attributable to a relevant individual of the tax adviser.
 
 
(2)
The individual is liable in respect of the contravention to a penalty of—
 
 
(a)
£5,000, or
 
 
(b)
if subsection (3) or (4) applies, £10,000.
 

Page 218

 
(3)
This subsection applies if—
 
 
(a)
in the period of two years ending with the date of the contravention,
 
 
the relevant individual has been assessed to a penalty under this
 
 
section or section 231 on four or more occasions, and
 
 
(b)
subsection (4) does not apply.
5
 
(4)
This subsection applies if the contravention takes place at a time when the
 
 
relevant individual is subject to—
 
 
(a)
a temporary ineligibility order issued under this Chapter, or
 
 
(b)
a permanent ineligibility order issued under this Chapter.
 
 
(5)
For the purposes of subsection (3) (a) , if a relevant individual is assessed to
10
 
a penalty under this section or section 231 and the penalty is, at any time,
 
 
subsequently set aside or otherwise cancelled, the penalty is to be treated
 
 
from that time as if it was not assessed on the individual.
 
 
(6)
In this section references to a relevant individual of a tax adviser include a
 
 
former relevant individual of the tax adviser.
15

Ineligibility orders

 
233
Tax advisers: ineligibility orders
 
 
(1)
Where an authorised officer of Revenue and Customs assesses a tax adviser
 
 
to a penalty under section 231 (2) (b) (financial penalties for prohibited
 
 
interaction with HMRC) in a case where section 231 (3) applies (repeated
20
 
contravention), the officer must issue a temporary ineligibility order to the
 
 
tax adviser.
 
 
For provision about the effect of a temporary ineligibility order, see in
 
 
particular section 224 (2) (e) (registration conditions) and sections 231 (4) and
 
 
232 (4) (financial penalties for prohibited interaction with HMRC).
25
 
(2)
A temporary ineligibility order issued under subsection (1) has effect for a
 
 
period of 12 months from the end of the period of 30 days beginning with
 
 
the date on which the order was issued to the person.
 
 
(3)
Where an authorised officer of Revenue and Customs assesses a tax adviser
 
 
to a penalty under section 231 (2) (b) (financial penalties for prohibited
30
 
interaction with HMRC) in a case where section 231 (4) (a) applies
 
 
(contravention while subject to temporary ineligibility order), the officer
 
 
must—
 
 
(a)
issue a permanent ineligibility order to the tax adviser, and
 
 
(b)
in a case where the adviser’s registration is suspended under section
35
 
229 , cancel the adviser’s registration.
 
 
For provision about the effect of a permanent ineligibility order, see in
 
 
particular section 224 (2) (e) (registration conditions) and sections 231 (4) and
 
 
232 (4) (financial penalties for prohibited interaction with HMRC).
 

Page 219

 
(4)
A permanent ineligibility order issued under subsection (3) has effect
 
 
indefinitely from the end of the period of 30 days beginning with the date
 
 
on which the order was issued to the person.
 
 
(5)
Before issuing an order to a person under subsection (1) or (3) , the authorised
 
 
officer must—
5
 
(a)
notify the person of the fact that the officer considers subsection (1)
 
 
or (3) (as the case may be) to apply, and
 
 
(b)
allow the person a period of 30 days, beginning with the date of the
 
 
notification, to make representations to HMRC.
 
 
(6)
An order under subsection (1) or (3) must state—
10
 
(a)
the date on which it is issued, and
 
 
(b)
the period within which an appeal against the decision to issue the
 
 
order may be made.
 
234
Relevant individuals: ineligibility orders
 
 
(1)
Where an authorised officer of Revenue and Customs assesses a tax adviser
15
 
to a penalty under section 231 (2) (b) (financial penalties for prohibited
 
 
interaction with HMRC), the officer may—
 
 
(a)
in a case where section 231 (3) applies (repeated contravention), issue
 
 
a temporary ineligibility order to any relevant individual of the tax
 
 
adviser;
20
 
(b)
in a case where section 231 (4) applies (contravention while subject to
 
 
an ineligibility order), issue a permanent ineligibility order to any
 
 
relevant individual of the tax adviser.
 
 
(2)
Where an authorised officer of Revenue and Customs assesses a relevant
 
 
individual of a tax adviser to a penalty under section 232 (2) (b) (liability of
25
 
relevant individuals) in a case where section 232 (3) applies (repeated
 
 
contravention), the officer must issue a temporary ineligibility order to the
 
 
individual.
 
 
(3)
Where an authorised officer of Revenue and Customs assesses a relevant
 
 
individual of a tax adviser to a penalty under section 232 (2) (b) (liability of
30
 
relevant individuals) in a case where section 232 (4) (a) applies (contravention
 
 
while subject to temporary ineligibility order), the officer must issue a
 
 
permanent ineligibility order to the individual.
 
 
(4)
For provision about the effect of a temporary or a permanent ineligibility
 
 
order, see in particular section 224 (2) (e) (registration conditions) and sections
35
 
231 (4) and 232 (4) (financial penalties for prohibited interaction with HMRC).
 
 
(5)
A temporary ineligibility order issued under subsection (1) (a) or (2) has effect
 
 
for a period of 12 months from the end of the period of 30 days beginning
 
 
with the date on which the order was issued to the person.
 

Page 220

 
(6)
A permanent ineligibility order issued under subsection (1) (b) or (3) has effect
 
 
indefinitely from the end of the period of 30 days beginning with the date
 
 
on which the order was issued to the person.
 
 
(7)
Before issuing an order to a relevant individual under subsection (1) , (2) or
 
 
(3) , the authorised officer must—
5
 
(a)
notify the relevant individual and the tax adviser of the fact that the
 
 
officer considers subsection (1) , (2) or (3) (as the case may be) to apply,
 
 
and
 
 
(b)
allow the relevant individual and the tax adviser a period of 30 days,
 
 
beginning with the date of the notification, to make representations
10
 
to HMRC.
 
 
(8)
An order under subsection (1) , (2) or (3) must state—
 
 
(a)
the date on which it is issued, and
 
 
(b)
the period within which an appeal against the decision to issue the
 
 
order may be made.
15
 
(9)
Where an authorised officer of Revenue and Customs issues an order to a
 
 
relevant individual under this section, the officer must also notify the tax
 
 
adviser in question.
 
 
(10)
In this section references to a relevant individual of a tax adviser include a
 
 
former relevant individual of the tax adviser.
20

Requirement for tax adviser to notify clients of suspension or ineligibility orders

 
 
235
Requirement for tax adviser to notify clients of suspension or ineligibility
 

orders

 
 
(1)
Where a registered tax adviser’s registration has been suspended under section
 
 
229 (1) (suspension of registration: registration conditions) for a period of more
25
 
than 30 days, the adviser must take reasonable steps to notify each of their
 
 
clients about the suspension within the period of 30 days beginning with the
 
 
31st day of the suspension.
 
 
(2)
Where a registered tax adviser’s registration has been suspended under section
 
 
229 (2) (suspension of registration: behaviour of adviser), the adviser must
30
 
take reasonable steps to notify each of their clients about the suspension
 
 
within the period of 30 days beginning with the day on which the suspension
 
 
first has effect.
 
 
(3)
Where a registered tax adviser is issued with a temporary or permanent
 
 
ineligibility order under this Chapter, the adviser must take reasonable steps
35
 
to notify each of their clients about the issuing of the order within the period
 
 
of 30 days beginning with the day on which the order first has effect.
 
 
(4)
A notification to a client under subsection (1) , (2) or (3) must be in the form
 
 
and manner set out in a notice published by HMRC.
 

Page 221

 
(5)
If a tax adviser contravenes subsection (1) , (2) or (3) the adviser is liable to a
 
 
penalty of £5,000.
 
 
(6)
Where the contravention relates to more than one client, the tax adviser is
 
 
liable to a penalty under this section in respect of each client.
 

Reasonable excuse

5
236
Reasonable excuse
 
 
(1)
A person is not liable to a penalty under section 231 , 232 or 235 if the person
 
 
satisfies an authorised officer of Revenue and Customs or, on an appeal to
 
 
the tribunal, the tribunal that there is a reasonable excuse for the contravention.
 
 
(2)
If a person had a reasonable excuse for a contravention but the excuse has
10
 
ceased, the person is to be treated as having continued to have the excuse if
 
 
the contravention is remedied without unreasonable delay after the excuse
 
 
ceased.
 

Extension of period for making representations

 
237
Extension of period for making representations
15
 
Where a provision of this Chapter requires an authorised officer of Revenue
 
 
and Customs to allow a specified period of time for a person to make
 
 
representations, the officer may, by notice to the person, extend that period.
 

Assessment of financial penalties etc

 
238
Assessment of financial penalties
20
 
(1)
Where a person becomes liable to a penalty under section 231 , 232 or 235 , an
 
 
authorised officer of Revenue and Customs must—
 
 
(a)
assess the penalty, and
 
 
(b)
notify the person.
 
 
(2)
A notice under subsection (1) may relate to more than one contravention by
25
 
the person.
 
 
(3)
A notice under subsection (1) must state—
 
 
(a)
the date on which it is issued;
 
 
(b)
each contravention in respect of which the penalty is assessed;
 
 
(c)
the amount of the penalty;
30
 
(d)
the period within which an appeal against the assessment may be
 
 
made.
 
 
(4)
Before assessing a tax adviser to a penalty under section 231 , 232 or 235 , the
 
 
authorised officer must—
 

Page 222

 
(a)
notify the person of the fact that the officer considers the person is
 
 
liable to the penalty, and
 
 
(b)
allow the person a period of 30 days, beginning with the date of the
 
 
notification, to make representations to HMRC.
 
239
Time limits and treatment of financial penalties
5
 
(1)
An assessment of a penalty under section 231 or 232 must be made within
 
 
the period of 12 months beginning with the day on which the person became
 
 
liable to the penalty.
 
 
(2)
An assessment of a penalty under section 235 must be made within the period
 
 
of 12 months beginning with the day on which the contravention first came
10
 
to the attention of an officer of Revenue and Customs.
 
 
(3)
A penalty assessed under section 231 , 232 or 235 is due and payable at the
 
 
end of the period of 30 days beginning with the day on which the notice of
 
 
assessment of the penalty is issued.
 
 
(4)
A penalty assessed under section 231 , 232 or 235 is, subject to subsection (3)
15
 
, to be treated for all purposes as if it were tax charged in an assessment and
 
 
due and payable.
 
240
Double jeopardy
 
 
A person is not liable to a financial penalty under this Chapter in respect of
 
 
anything in respect of which the person has been convicted of an offence.
20

Reviews and appeals

 
241
Reviews and appeals
 
 
Schedule 20 contains provision about reviews and appeals.
 

Disclosure of information

 
242
Disclosure of information
25
 
(1)
HMRC may disclose information acquired under, or held in connection with,
 
 
this Chapter to a person for the purpose of facilitating the exercise by the
 
 
person of a function relating to the regulation or supervision of—
 
 
(a)
tax advisers, or
 
 
(b)
the tax system.
30
 
(2)
A person to whom HMRC discloses information under this section—
 
 
(a)
may use it only for the purpose for which it was disclosed, and
 
 
(b)
may not further disclose it without the consent of HMRC (which may
 
 
be general or specific).
 

Page 223

 
(3)
Where a person contravenes subsection (2) (b) by disclosing information relating
 
 
to a person whose identity—
 
 
(a)
is specified in the disclosure, or
 
 
(b)
can be deduced from it,
 
 
section 19 of CRCA 2005 (offence of wrongful disclosure) applies in relation
5
 
to the disclosure as it applies in relation to a disclosure in contravention of
 
 
section 20(9) of that Act.
 
 
(4)
Nothing in this section limits the circumstances in which information may
 
 
be disclosed under section 18(2) of CRCA 2005 or under any other enactment
 
 
or rule of law.
10

Power to publish information

 
243
Power to publish information
 
 
(1)
An authorised officer of Revenue and Customs may publish information
 
 
about a person if—
 
 
(a)
the person is assessed to a financial penalty under this Chapter, or
15
 
(b)
the person is issued with a relevant ineligibility order.
 
 
(2)
The information that may be published under this section is—
 
 
(a)
the person’s name, including any trading name, previous name or
 
 
pseudonym;
 
 
(b)
the postcode of any address used by person;
20
 
(c)
any other information the authorised officer considers appropriate to
 
 
publish in order to make clear the person's identity;
 
 
(d)
the amount of the financial penalty or (as the case may be) the type
 
 
of the relevant ineligibility order issued.
 
 
(3)
Before publishing information under this section, the authorised officer must—
25
 
(a)
notify the person that they are considering doing so,
 
 
(b)
allow the person a period of 30 days, beginning with the date of the
 
 
notification, to make representations to HMRC, and
 
 
(c)
after considering any such representations, notify the person of the
 
 
authorised officer’s decision as to whether to publish the information.
30
 
(4)
Information may be published under this section in any manner that the
 
 
authorised officer considers appropriate.
 
 
(5)
No information may be published under this section before the day on which
 
 
the financial penalty or relevant ineligibility order becomes final.
 
 
(6)
No information may be published under this section for the first time after
35
 
the end of the period of one year beginning with the day on which the penalty
 
 
or relevant ineligibility order becomes final.
 
 
(7)
Where—
 

Page 224

 
(a)
information has been published under this section on a government
 
 
website, and
 
 
(b)
the information remains accessible on the website after the end of the
 
 
period of one year beginning with the day on which it was first
 
 
published,
5
 
an authorised officer of HMRC must take steps to remove the information
 
 
from the website.
 
 
(8)
But subsection (7) does not apply in a case where the information was
 
 
published under subsection (1) (b) by virtue of the person being issued with
 
 
a permanent ineligibility order under section 233 or 234 (ineligibility orders).
10
 
(9)
For the purposes of this section a financial penalty or ineligibility order
 
 
becomes “final” if—
 
 
(a)
the time for bringing any appeal or further appeal relating to it expires
 
 
(ignoring any possibility of an appeal being brought out of time with
 
 
permission), or
15
 
(b)
if later, any appeal or final appeal (other than an appeal brought out
 
 
of time with permission) relating to it is finally determined.
 
 
(10)
In this section “relevant ineligibility order” means a temporary or permanent
 
 
ineligibility order issued under section 233 or 234 (ineligibility orders).
 

Power to amend

20
244
Power to amend
 
 
(1)
The Treasury may by regulations made by statutory instrument amend
 
 
Schedule 19 (exceptions) to make provision about exceptions for the purposes
 
 
of section 220 (1) (prohibited interaction with HMRC).
 
 
(2)
Regulations under this section may in particular—
25
 
(a)
add an exception, or
 
 
(b)
delete or amend an exception for the time being included in the
 
 
Schedule.
 
 
(3)
Regulations under this section may—
 
 
(a)
make different provision for different purposes;
30
 
(b)
make transitional or saving provision.
 
 
(4)
A statutory instrument containing regulations under this section is subject to
 
 
annulment in pursuance of a resolution of the House of Commons.
 

Interpretation

 
245
Interpretation of Chapter
35
 
(1)
In this Chapter—
 

Page 225

 
“authorised officer” means an officer of Revenue and Customs who is,
 
 
or is a member of a class of officers who are, authorised by the
 
 
Commissioners for the purposes of this Chapter;
 
 
“Commissioners” means the Commissioners for His Majesty’s Revenue
 
 
and Customs;
5
 
“HMRC” means His Majesty’s Revenue and Customs;
 
 
“organisation” means a body corporate, partnership or other organisation
 
 
carrying on a business;
 
 
“registered tax adviser” means a tax adviser who is registered under this
 
 
Chapter;
10
 
“tribunal” means the First-tier Tribunal or, where determined by or under
 
 
the Tribunal Procedure Rules, the Upper Tribunal.
 
 
(2)
A reference in this Chapter to working for an organisation includes being a
 
 
director, partner or member of an organisation.
 

Commencement

15
246
Commencement
 
 
(1)
This section comes into force on the day on which this Act is passed.
 
 
(2)
The rest of this Chapter comes into force on such day as the Treasury may
 
 
by regulations appoint.
 
 
(3)
Different days may be appointed for different purposes.
20
 
(4)
The Treasury may by regulations make transitional or saving provision in
 
 
connection with the coming into force of any provision of this Chapter.
 
 
(5)
The power to make regulations under subsection (4) includes power to make
 
 
different provision for different purposes.
 
 
(6)
Regulations under this section are to be made by statutory instrument.
25

Chapter 2

 

Conduct etc

 

Conduct of tax advisers

 
247
Conduct of tax advisers
 
 
(1)
Schedule 21 contains provision about the conduct of tax advisers.
30
 
(2)
Schedule 21 comes into force on 1 April 2026 and has effect in relation to acts
 
 
or omissions on or after that date.
 
 
(3)
The Treasury may by regulations make transitional or saving provision in
 
 
connection with the coming into force of any provision of Schedule 21 .
 

Page 226

 
(4)
The power to make regulations under subsection (3) includes power to make
 
 
different provision for different purposes.
 
 
(5)
Regulations under this section are to be made by statutory instrument.
 

Power to publish information about tax advisers etc

 
248
Power to publish information
5
 
(1)
An authorised officer may publish information about a tax adviser if—
 
 
(a)
in consequence of the tax adviser’s behaviour or conduct, HMRC has
 
 
made a decision to—
 
 
(i)
refuse to deal with the adviser (whether temporarily or
 
 
permanently), or
10
 
(ii)
suspend the adviser’s access to HMRC’s online services for tax
 
 
agents or tax advisers, and
 
 
(b)
the officer considers that publication would be in the public interest.
 
 
(2)
The information that may be published under subsection (1) is—
 
 
(a)
the tax adviser’s name, including any trading name, previous name
15
 
or pseudonym;
 
 
(b)
the postcode of any address used by the tax adviser;
 
 
(c)
any other information the authorised officer considers appropriate to
 
 
publish in order to make clear the tax adviser's identity;
 
 
(d)
details of the decision mentioned in subsection (1) (a) made in respect
20
 
of the tax adviser, including the reasons why it was made and its
 
 
effect on the tax adviser.
 
 
(3)
If, in acting as a tax adviser, an individual works or worked for a person
 
 
carrying on a business, subsection (2) (c) includes power to publish such
 
 
information about that person as the authorised officer considers appropriate
25
 
in order to make clear the individual's identity.
 
 
(4)
Before publishing information under subsection (1) , the authorised officer
 
 
must—
 
 
(a)
notify the tax adviser and, in a case within subsection (3) , the person
 
 
mentioned in that subsection that they are considering doing so,
30
 
(b)
give the tax adviser and (as the case may be) the person a period of
 
 
at least 30 days, beginning with the date of the notification mentioned
 
 
in paragraph (a) , to make representations about whether the
 
 
information should be published, and
 
 
(c)
after considering any such representations, notify the adviser and (as
35
 
the case may be) the person of the authorised officer’s decision as to
 
 
whether to publish the information.
 
 
(5)
Subsection (6) applies if—
 
 
(a)
information about a tax adviser is published under subsection (1) , and
 
 
(b)
the tax adviser is a body corporate controlled by another person.
40

Page 227

 
(6)
An authorised officer may, if they consider that publication would be in the
 
 
public interest, publish—
 
 
(a)
the other person’s name, including any trading name, previous name
 
 
or pseudonym;
 
 
(b)
the postcode of any address used by the other person;
5
 
(c)
any other information about the other person that the authorised officer
 
 
considers appropriate to publish in order to make clear the other
 
 
person’s identity;
 
 
(d)
details of the relationship between the tax adviser and the other person.
 
 
(7)
Before publishing information under subsection (6) , the authorised officer
10
 
must—
 
 
(a)
notify the tax adviser and the person that they are considering doing
 
 
so,
 
 
(b)
give the tax adviser and the person a period of at least 30 days,
 
 
beginning with the date of the notification mentioned in paragraph
15
 
(a) , to make representations about whether the information should be
 
 
published, and
 
 
(c)
after considering any such representations, notify the tax adviser and
 
 
the person of the authorised officer’s decision as to whether to publish
 
 
the information.
20
 
(8)
Information may be published under this section in any manner that the
 
 
authorised officer considers appropriate.
 
249
Power to publish information: change of circumstances
 
 
(1)
Where—
 
 
(a)
information has been published under section 248 or this section, and
25
 
(b)
an authorised officer considers that there has been a material change
 
 
in the circumstances of the tax adviser or (as the case may be) the
 
 
person mentioned in section 248 (3) or (6) ,
 
 
the authorised officer must publish such information about the change as the
 
 
authorised officer considers appropriate.
30
 
(2)
Before publishing information under this section, the authorised officer must,
 
 
so far as is reasonably practicable, notify the tax adviser and (as the case may
 
 
be) the person mentioned in section 248 (3) or (6) of the information that is
 
 
going to be published and of the expected date of publication.
 
 
(3)
Where—
35
 
(a)
information has been published under section 248 or this section on
 
 
a government website,
 
 
(b)
the information remains accessible on the website, and
 
 
(c)
any of the circumstances mentioned in subsection (4) apply,
 
 
an authorised officer of HMRC must take steps to remove the information
40
 
from the website.
 

Page 228

 
(4)
The circumstances are that—
 
 
(a)
the decision mentioned in section 248 (1) (a) made in respect of the tax
 
 
adviser in question has expired or been withdrawn by HMRC;
 
 
(b)
an authorised officer becomes aware that the tax adviser in question—
 
 
(i)
has ceased to be a tax adviser for a period of at least five years,
5
 
or
 
 
(ii)
has died;
 
 
(c)
an authorised officer considers that publication of the information is
 
 
no longer in the public interest.
 
 
(5)
Information may be published under this section in any manner that the
10
 
authorised officer considers appropriate.
 
250
Power to publish information: interpretation and commencement
 
 
(1)
In this section and sections 248 and 249 —
 
 
“authorised officer” means an officer of Revenue and Customs who is,
 
 
or is a member of a class of officers who are, authorised by the
15
 
Commissioners for the purposes of sections 248 and 249 ;
 
 
“Commissioners” means the Commissioners for His Majesty’s Revenue
 
 
and Customs;
 
 
“control” has the same meaning as in the Corporation Tax Acts (see
 
 
section 1124 of CTA 2010);
20
 
“HMRC” means His Majesty’s Revenue and Customs;
 
 
“tax adviser” has the same meaning as in Schedule 38 to FA 2012 (see
 
 
paragraph 2 of that Schedule).
 
 
(2)
Sections 248 and 249 come into force on 1 April 2026.
 

Part 8

25

Miscellaneous and final

 

Fiscal mandate assessments by the OBR

 
251
Fiscal mandate assessments prepared by the Office for Budget Responsibility
 
 
(1)
In section 4 of the Budget Responsibility and National Audit Act 2011 (main
 
 
duty of the Office for Budget Responsibility)—
30
 
(a)
in subsection (3) (matters to be prepared on at least two occasions for
 
 
each financial year), omit paragraph (b) (assessment of the fiscal
 
 
mandate) and the “and” before it, and
 
 
(b)
in subsection (4) (matters to be prepared on at least one occasion for
 
 
each financial year), before paragraph (a) insert—
35
 
“(za)
an assessment of the extent to which the fiscal mandate
 
 
has been, or is likely to be, achieved,”.
 

Page 229

 
(2)
In consequence of the amendments made by subsection (1), in section 4A of
 
 
that Act (announcement of fiscally significant measures), in subsection (7),
 
 
in the definition of a “section 4(3) report”, omit “and an assessment”.
 
 
(3)
The amendments made by this section have effect in relation to the financial
 
 
year beginning with April 2025 and subsequent financial years.
5

Provision of data by third parties

 
252
Data-gathering
 
 
Schedule 22 contains provision about requiring data-holders to provide data
 
 
to His Majesty’s Revenue and Customs on an ongoing basis.
 

Making tax digital

10
253
Persons on whom digital reporting requirements may be imposed
 
 
(1)
Schedule A1 to TMA 1970 (as inserted by section 60 of F(No.2)A 2017) is
 
 
amended as follows.
 
 
(2)
For the heading of Part 1 substitute “Introduction”.
 
 
(3)
For paragraphs 1 to 4 and the cross-heading before paragraph 1 substitute—
15
 
“Overview
 
 
A1
(1)
This Schedule confers powers on the Commissioners to make
 
 
regulations requiring or authorising certain persons and certain
 
 
partnerships (“relevant persons” and “relevant partnerships”) to
 
 
take certain steps relating to digital reporting and record-keeping.
20
 
(2)
This Part of this Schedule contains introductory provision, in
 
 
particular explaining what is meant by a “relevant person” and a
 
 
“relevant partnership”.
 
 
(3)
Part 2 of this Schedule contains the powers to make regulations and
 
 
sets out the penalties for non-compliance with certain obligations
25
 
which may be imposed by the regulations.
 
 
(4)
Part 3 of this Schedule contains provision about exempting relevant
 
 
persons or relevant partnerships from requirements imposed by the
 
 
regulations.
 
 
(5)
Part 4 of this Schedule contains supplementary provision.
30
 
Interpretation: relevant persons
 
 
1
(1)
For the purposes of this Schedule a person is a “relevant person”
 
 
if the person is carrying on or has carried on a relevant activity.
 
 
(2)
A “relevant activity”, in relation to a person, means any activity
 
 
which may give rise to profits or other income for which the person
35

Page 230

 
would be liable to income tax chargeable under Part 2 or Part 3 of
 
 
ITTOIA 2005 if the person were UK resident.
 
 
(3)
But the following activities are not relevant activities—
 
 
(a)
any activity carried on in partnership;
 
 
(b)
any activity carried on by the trustees of a charitable trust
5
 
or the trustees of an exempt unauthorised unit trust (within
 
 
the meaning of the Unauthorised Unit Trusts (Tax)
 
 
Regulations 2013 (S.I. 2013/2819));
 
 
(c)
the underwriting business of a member of Lloyd's (within
 
 
the meaning of section 184 of the Finance Act 1993);
10
 
(d)
holding shares in respect of which a distribution may be
 
 
made which is chargeable to income tax under Part 3 of
 
 
ITTOIA 2005 by virtue of section 548(6) of CTA 2010
 
 
(distributions to shareholders in real estate investment trusts);
 
 
(e)
participating in an open-ended investment company which
15
 
may make distributions chargeable to income tax under Part
 
 
3 of ITTOIA 2005 by virtue of regulation 69Z18 of the
 
 
Authorised Investment Funds (Tax) Regulations 2006 (S.I.
 
 
2006/964) (property income distributions).
 
 
Interpretation: relevant partnerships
20
 
2
(1)
For the purposes of this Schedule a partnership is a “relevant
 
 
partnership” if one or more of the partners is an individual, unless
 
 
all of the activities of the partnership which may give rise to profits
 
 
or income are activities falling within sub-paragraph (2) .
 
 
(2)
The following activities fall within this sub-paragraph—
25
 
(a)
the underwriting business of a Lloyd's partnership (as
 
 
defined in section 184(1) of the Finance Act 1993);
 
 
(b)
holding shares in respect of which a distribution may be
 
 
made which is chargeable to income tax under Part 3 of
 
 
ITTOIA 2005 by virtue of section 548(6) of CTA 2010
30
 
(distributions to shareholders in real estate investment trusts);
 
 
(c)
participating in an open-ended investment company which
 
 
may make distributions chargeable to income tax under Part
 
 
3 of ITTOIA 2005 by virtue of regulation 69Z18 of the
 
 
Authorised Investment Funds (Tax) Regulations 2006 (S.I.
35
 
2006/964) (property income distributions).”
 
 
(4)
For paragraph 6 (interpretation) substitute—
 
 
“6
In this Part of this Schedule “business”—
 
 
(a)
in relation to a relevant person (see paragraph 1 ), means the
 
 
relevant activity or activities that the person is carrying on
40
 
or has carried on, and
 

Page 231

 
(b)
in relation to a relevant partnership (see paragraph 2 ), means
 
 
the activity or activities of the partnership that may give rise
 
 
to profits or income and do not fall within paragraph 2 (2) .”
 
 
(5)
In paragraph 7 (periodic updates), in sub-paragraph (1), for “person or
 
 
partnership to whom this Schedule applies” substitute “relevant person or
5
 
relevant partnership”.
 
 
(6)
In paragraph 10 (partnership return), in sub-paragraph (1), for “partnership
 
 
to which this Schedule applies” substitute “relevant partnership”.
 
 
(7)
In paragraph 11 (record-keeping), in sub-paragraph (1), for “person or
 
 
partnership to whom this Schedule applies” substitute “relevant person or
10
 
relevant partnership”.
 
 
(8)
In paragraph 18 (regulations), in sub-paragraph (3) for “person or partnership
 
 
to whom this Schedule applies” substitute “relevant person or relevant
 
 
partnership”.
 
 
(9)
The amendments made by this section come into force on the same day as
15
 
section 60 of F(No.2)A 2017 comes into force.
 
254
Exemptions from digital reporting requirements
 
 
(1)
Part 3 of Schedule A1 to TMA 1970 (as inserted by section 60 of F(No.2)A
 
 
2017) is amended as follows.
 
 
(2)
In paragraph 14 (exemption for the digital excluded), after sub-paragraph (1)
20
 
insert—
 
 
“(1A)
The regulations may provide that where the Commissioners are
 
 
satisfied that a person or partnership is digitally excluded, prior
 
 
requirements imposed on the person or partnership are to be treated
 
 
as never having been imposed.
25
 
(1B)
In sub-paragraph (1A) “prior requirements” means requirements
 
 
imposed by regulations under paragraphs 7, 9 and 11 which are
 
 
required to be complied with before the date on which the
 
 
Commissioners are satisfied that the person or partnership is
 
 
digitally excluded.”
30
 
(3)
In paragraph 15 (further exemptions)—
 
 
(a)
in sub-paragraph (1), at the end insert “, including exemptions the
 
 
conditions of which are to be taken to be satisfied only where the
 
 
Commissioners are satisfied as to specified matters”;
 
 
(b)
after sub-paragraph (2) insert—
35
 
“(3)
The regulations may provide that where the conditions of a
 
 
further exemption are met by a person or partnership, prior
 
 
requirements imposed on the person or partnership are to
 
 
be treated as never having been imposed.
 

Page 232

 
(4)
In sub-paragraph (3) “prior requirements”, in relation to a
 
 
further exemption, means requirements imposed by
 
 
regulations under paragraphs 7, 9 and 11 which are required
 
 
to be complied with before the date on which the conditions
 
 
of the further exemption are met.
5
 
(5)
The regulations may allow any exemption for which the
 
 
regulations may provide to be given by means of a specific
 
 
or general direction given by the Commissioners.”
 
 
(4)
The amendments made by this section come into force on the same day as
 
 
section 60 of F(No.2)A 2017 comes into force.
10
255
Returns to be delivered by electronic communications etc.
 
 
(1)
Schedule A1 to TMA 1970 (digital reporting and record-keeping) (as inserted
 
 
by section 60 of F(No.2)A 2017) is amended as follows.
 
 
(2)
Omit paragraph 8.
 
 
(3)
For paragraph 9 and the cross-heading before it substitute—
15
 
“Personal or trustee return etc.
 
 
9
The Commissioners may by regulations require or authorise the use
 
 
of electronic communications for the delivery by a relevant person
 
 
of —
 
 
(a)
a return required by section 8(1)(a) or 8A(1)(a) of this Act;
20
 
(b)
any accounts, statements and documents required by section
 
 
8(1)(b) or 8A(1)(b) of this Act;
 
 
(c)
a notice amending a return under section 9ZA of this Act.”
 
 
(4)
In paragraph 13 (electronic communications and records: supplementary
 
 
powers)—
25
 
(a)
in sub-paragraph (1), omit “, 8”;
 
 
(b)
in sub-paragraph (2), before paragraph (a) insert—
 
 
“(za)
as to the means of electronic communication to be used
 
 
for providing information;”.
 
 
(5)
In paragraph 14 (exemptions for the digitally excluded), in sub-paragraph
30
 
(1)(a), for “8” substitute “9”.
 
 
(6)
Schedule 14 to F(No.2)A 2017 is repealed.
 
 
(7)
In consequence of the repeal made by subsection (6) , in section 61 of F(No.2)A
 
 
2017—
 
 
(a)
omit subsection (1);
35
 
(b)
in subsection (2), omit “or Schedule 14”;
 
 
(c)
in subsection (6)—
 
 
(i)
for “(1)” substitute “(2)”;
 

Page 233

 
(ii)
omit “and Schedule 14”.
 
 
(8)
The amendments made by subsections (2) to (5) come into force on the same
 
 
day as section 60 of F(No.2)A 2017 comes into force.
 
256
Penalties: amendments consequential on section
 
 
(1)
Schedule 24 to FA 2021 (penalties for failure to make returns etc) is amended
5
 
as follows.
 
 
(2)
In paragraph 2 (returns), in the Table—
 
 
(a)
in the entry in item 1, in columns A and B—
 
 
(i)
in paragraph (1), for “return under section 8” substitute “return,
 
 
accounts, statements or documents required under section 8”;
10
 
(ii)
omit paragraph (2);
 
 
(b)
in the entry in item 2, in columns A and B—
 
 
(i)
in paragraph (1), for “return under section 8A” substitute
 
 
“return, accounts, statements or documents required under
 
 
section 8A”;
15
 
(ii)
omit paragraph (2);
 
 
(c)
in the entries in item 1 and 2, in column B, omit paragraph (3);
 
 
(d)
in the entry in item 3, in column A—
 
 
(i)
in paragraph (1), for “return under section 12AA(2)(a) or (3)(a)”
 
 
substitute “return, accounts, statements or documents required
20
 
under section 12AA(2) or (3)”;
 
 
(ii)
omit paragraph (2).
 
 
(3)
In paragraph 2 (returns), omit sub-paragraphs (3) and (4).
 
 
(4)
In paragraph 5 (liability to penalty points)—
 
 
(a)
in sub-paragraph (2)—
25
 
(i)
in the opening words for “the following groups of returns”
 
 
substitute “group 4A, 4B or 4C”;
 
 
(ii)
omit paragraphs (a) and (b);
 
 
(b)
omit sub-paragraph (4).
 
 
(5)
In paragraph 6 (award of penalty points), in sub-paragraph (3)(b), omit “(3)
30
 
or”.
 
 
(6)
In paragraph 15, omit sub-paragraph (6).
 
 
(7)
In paragraph 17 (time limit for assessments), in sub-paragraph (1)(b), omit
 
 
“(3) or”.
 
 
(8)
In Schedule 25 to FA 2021 (penalties for deliberately withholding information),
35
 
in paragraph 1—
 
 
(a)
in the Table—
 
 
(i)
for “section 8(1AB)(b)” substitute “section 8(1)(b)”
 
 
(ii)
for “section 8A(1AB)(b)” substitute “section 8A(1)(b)”;
 

Page 234

 
(b)
omit sub-paragraphs (3) and (4).
 
 
(9)
The amendments made by subsections (2) (c) , (3) and (8) (b) come into force
 
 
on the day on which this Act is passed.
 
 
(10)
The other amendments made by this section come into force—
 
 
(a)
for the purposes for which the Schedule being amended is in force
5
 
immediately before 1 April 2026, on 1 April 2026, and
 
 
(b)
for any other purposes, at the same time as the Schedule being
 
 
amended comes into force for those purposes.
 
257
Powers relating to electronic communications: directions
 
 
(1)
In section 132 of FA 1999 (power to provide for use of electronic
10
 
communications), in subsection (5)(a)—
 
 
(a)
for “or requirement” substitute “, requirement or other provision (other
 
 
than provision under subsection (6)(a) or (b))”;
 
 
(b)
for “or imposed” substitute “, imposed or made”.
 
 
(2)
In section 135 of FA 2002 (e-filing), in subsection (4)(a)—
15
 
(a)
for “or requirement” substitute “, requirement or other provision (other
 
 
than provision under subsection (7)(a) to (ba))”;
 
 
(b)
for “or imposed” substitute “, imposed or made”.
 
258
Power to require digital contact details
 
 
(1)
The Commissioners may by regulations require persons who use an online
20
 
service provided by HMRC—
 
 
(a)
to provide specified digital contact details,
 
 
(b)
to inform HMRC if they cease to use specified digital contact details,
 
 
and
 
 
(c)
if they cease to use specified digital contact details, to provide
25
 
alternative specified digital contact details.
 
 
(2)
Regulations under this section may—
 
 
(a)
make complying with requirements by virtue of this section a condition
 
 
of using an online service provided by HMRC;
 
 
(b)
provide for a failure to comply with a requirement by virtue of this
30
 
section to attract a penalty of a specified amount not exceeding £1,000;
 
 
(c)
provide that specified enactments relating to penalties imposed for
 
 
the purposes of any taxation matter (including enactments relating to
 
 
assessments, review and appeal) are to apply, with or without
 
 
modifications, in relation to penalties for failures to comply with a
35
 
requirement by virtue of this section;
 
 
(d)
specify the way in which a person must provide digital contact details,
 
 
and inform HMRC if the person ceases to use a digital contact detail,
 
 
as required by virtue of this section;
 

Page 235

 
(e)
allow anything for which the regulations may provide, other than
 
 
provision under paragraph (b) , to be provided by means of a specific
 
 
or general direction given by the Commissioners.
 
 
(3)
Regulation under this section may—
 
 
(a)
make provision in relation to any specified case or description of case;
5
 
(b)
make provision subject to specified exceptions;
 
 
(c)
make different provision for different purposes;
 
 
(d)
make supplementary, incidental and consequential provision;
 
 
(e)
make transitional or transitory provision and savings.
 
 
(4)
The power to make regulations under this section is exercisable by statutory
10
 
instrument subject to annulment in pursuance of a resolution of the House
 
 
of Commons.
 
 
(5)
Where digital contact details have been provided to HMRC in compliance
 
 
with a requirement by virtue of this section, the functions in connection with
 
 
which the Revenue and Customs may under section 17 of CRCA 2005 use
15
 
the digital contact details include any function relating to an online service
 
 
provided by HMRC, including any function in relation to which provision is
 
 
made by virtue of section 132 of FA 1999 or section 135 of FA 2002 (electronic
 
 
communications).
 
 
(6)
In this section—
20
 
“the Commissioners” means the Commissioners for His Majesty’s Revenue
 
 
and Customs;
 
 
“digital contact detail” means email address, mobile telephone number
 
 
or any other contact detail for the purpose of communicating by digital
 
 
means;
25
 
“HMRC” means His Majesty’s Revenue and Customs;
 
 
“the Revenue and Customs” has the meaning given by section 17 of
 
 
CRCA 2005;
 
 
“taxation matter” means anything the collection and management of
 
 
which is the responsibility of the Commissioners.
30
 
(7)
References in this section to an online service provided by HMRC include an
 
 
online service provided on behalf of HMRC.
 
 
(8)
In relation to an online service provided on behalf of HMRC—
 
 
(a)
references in this section to providing digital contact details include
 
 
providing those details to the person providing the service, and
35
 
(b)
reference in this section to informing HMRC include informing the
 
 
person providing the service.
 

Page 236

Penalties

 
259
Penalty points and late submission penalties (power to cancel etc)
 
 
(1)
Schedule 24 to FA 2021 (penalties for failure to make returns etc) is amended
 
 
as follows.
 
 
(2)
In paragraph 6, in sub-paragraph (2), for the words from “, and state in the
5
 
notice” to the end substitute “and, in the notice—
 
 
“(a)
state the failure (or failures) in respect of which the penalty
 
 
point is awarded, and
 
 
(b)
include sufficient information for the person to be able to
 
 
identify the group of returns for which the penalty point is
10
 
awarded.”
 
 
(3)
After paragraph 6 insert—
 
 
“Cancellation of individual penalty points
 
 
6A
(1)
HMRC may cancel a penalty point awarded under paragraph 6.
 
 
(2)
Where HMRC cancel a penalty point after a notice under paragraph
15
 
6(2) in respect of the penalty point is given, they must notify the
 
 
person and, in the notice—
 
 
(a)
state the failure (or failures) in respect of which the penalty
 
 
point was awarded, and
 
 
(b)
include sufficient information for the person to be able to
20
 
identify the group of returns for which the penalty point
 
 
was awarded.
 
 
(3)
Where HMRC cancel a penalty point before a notice under
 
 
paragraph 6(2) in respect of the penalty point is given, HMRC is
 
 
not required to give the notice under paragraph 6(2).
25
 
(4)
Where HMRC cancel a penalty point, any assessment of a penalty
 
 
under this Schedule for which the person is liable by virtue of the
 
 
penalty point ceases to have effect (and is to be taken as never
 
 
having had any effect).
 
 
(5)
The cancellation of a penalty point does not prevent HMRC from
30
 
subsequently awarding a penalty point for the failure (or failures)
 
 
in respect of which the cancelled penalty point was awarded.
 
 
(6)
Sub-paragraph (7) applies if—
 
 
(a)
HMRC cancel a penalty point,
 
 
(b)
after that penalty point was given by HMRC and before it
35
 
was cancelled, the person failed to make a return on or
 
 
before the due date, and
 
 
(c)
at the time the failure occurred, the person already had the
 
 
maximum number of penalty points for the group of returns
 
 
to which that return belongs (see paragraph 5(8)).
40

Page 237

 
(7)
HMRC may award a penalty point in respect of the failure before
 
 
the end of the period of 12 months beginning with the day after
 
 
HMRC cancel the penalty point (and paragraph 6(3) does not
 
 
apply).”
 
 
(4)
In paragraph 8 (expiry of all penalty points for a group of returns)—
5
 
(a)
in sub-paragraph (1)—
 
 
(i)
the words from “at the beginning” to the end become paragraph
 
 
(a);
 
 
(ii)
after that paragraph insert “, or
 
 
“(b)
if HMRC notify the person before that time that
10
 
HMRC have decided the points should expire,
 
 
at the beginning of the day specified in the
 
 
notice (which may be before the day on which
 
 
the notice is given).”;
 
 
(b)
in sub-paragraph (6) for “this paragraph” substitute “paragraph (1)(a)”;
15
 
(c)
after sub-paragraph (6) insert—
 
 
“(7)
For the purposes of this paragraph, where—
 
 
(a)
a person fails to make a return, and
 
 
(b)
by virtue of paragraph 19(1) (reasonable excuse) no
 
 
liability to a penalty point or penalty in respect of the
20
 
failure arises under this Schedule,
 
 
the person is to be treated as if they made the return on or
 
 
before the due date.”
 
 
(5)
After paragraph 16 insert—
 
 
“Withdrawal of assessments
25
 
16A
(1)
This paragraph applies where HMRC have assessed a penalty for
 
 
which a person is liable under this Schedule in respect of a failure
 
 
(or failures) to make a return.
 
 
(2)
HMRC may withdraw the assessment by notice to the person.
 
 
(3)
The withdrawn assessment ceases to have effect (and is to be taken
30
 
as never having had any effect).
 
 
(4)
But the withdrawal of the assessment does not prevent HMRC from
 
 
subsequently assessing a penalty for the failure (or failures)
 
 
mentioned in sub-paragraph (1) .”
 
 
(6)
In paragraph 24, in sub-paragraph (4)—
35
 
(a)
in paragraph (a)(ii), omit “, for a group of returns,”;
 
 
(b)
in paragraph (b), omit “in the same group”;
 
 
(c)
in paragraph (c), for “that group of returns” substitute “the group of
 
 
returns to which that return belongs”.
 
 
(7)
For the purposes for which Schedule 24 to FA 2021 is in force immediately
40
 
before 1 April 2026—
 

Page 238

 
(a)
the amendment made by subsection (4) (c) is treated as always having
 
 
been in force, and
 
 
(b)
the other amendments made by this section come into force on 1 April
 
 
2026.
 
 
(8)
For the purposes for which the amendments made by this section come into
5
 
force by virtue of subsection (7) —
 
 
(a)
the amendments made by subsections (2) , (3) and (6) have effect in
 
 
relation to penalty points awarded on or after 1 April 2026;
 
 
(b)
the amendments made by subsection (4) (a) and (b) have effect in
 
 
relation to penalty points whenever awarded;
10
 
(c)
the amendment made by subsection (5) has effect in relation to
 
 
penalties assessed on or after 1 April 2026.
 
 
(9)
The amendments made by this section come into force for any other purposes
 
 
at the same time as Schedule 24 to FA 2021 comes into force for those other
 
 
purposes.
15
260
Assessments of late payment penalties etc.
 
 
(1)
Schedule 26 to FA 2021 (penalties for failure to pay tax) is amended as follows.
 
 
(2)
In paragraph 16 (assessments), in sub-paragraph (3)(c), for “the period to
 
 
which the penalty relates” substitute “, where the penalty is assessed under
 
 
paragraph 8, the period by reference to which the penalty has been calculated”.
20
 
(3)
After paragraph 17 insert—
 
 
“17A
(1)
This paragraph applies where HMRC has assessed a penalty for
 
 
which a person is liable under this Schedule in respect of a failure
 
 
to pay the tax due.
 
 
(2)
HMRC may withdraw the assessment by notice to the person.
25
 
(3)
The withdrawn assessment ceases to have effect (and is to be taken
 
 
as never having had any effect).
 
 
(4)
But the withdrawal of the assessment does not prevent HMRC from
 
 
subsequently assessing a penalty for the failure mentioned in
 
 
sub-paragraph (1) .”
30
 
(4)
In paragraph 18 (time limit for assessments), in sub-paragraph (2), omit the
 
 
words from “(that is to say” to the end.
 
 
(5)
In section 16 of the Social Security Contributions and Benefits Act 1992
 
 
(application of Income Tax Acts and destination of Class 4 contributions), in
 
 
subsection (1)(f), for the words from “and 25” to the end substitute “to 26 to
35
 
the Finance Act 2021 (penalties)”.
 
 
(6)
The amendments made by subsections (2) to (4) come into force on 1 April
 
 
2026 for the purposes for which Schedule 26 to FA 2021 is in force immediately
 
 
before 1 April 2026 and have effect in relation to penalties assessed on or
 
 
after 1 April 2026.
40

Page 239

 
(7)
The amendments made by subsections (2) to (4) come into force for any other
 
 
purposes at the same time as Schedule 26 to FA 2021 comes into force for
 
 
those other purposes.
 
 
(8)
The amendment made by subsection (5) comes into force—
 
 
(a)
for the purposes for which paragraph 13 of Schedule 27 to FA 2021
5
 
is in force immediately before 1 April 2026, on 1 April 2026;
 
 
(b)
for any other purposes, at the same time as that paragraph comes into
 
 
force for those other purposes.
 
261
Penalties for failure to pay tax due on further appeal
 
 
(1)
In paragraph 1 of Schedule 56 to FA 2009 (penalty for failure to make
10
 
payments on time), in item 18 of the Table—
 
 
(a)
in column 3, after “under section 55” insert “or 56(3)(b)”;
 
 
(b)
in column 4, after “or (9)” insert “or section 56(3)(b)”.
 
 
(2)
In paragraph 1(1) of Schedule 26 to FA 2021 (penalties for failure to pay tax),
 
 
in item 1 of the table relating to income tax or capital gains tax, in columns
15
 
2 and 3, after “section 55” insert “or 56(3)(b)”.
 
 
(3)
The amendment made by subsection (1) has effect in relation to amounts that
 
 
become payable on or after 1 April 2026.
 
 
(4)
The amendment made by subsection (2) comes into force—
 
 
(a)
for the purposes for which the table relating to income tax or capital
20
 
gains tax in paragraph 1(1) of Schedule 26 to FA 2021 (penalties for
 
 
failure to pay tax) is in force immediately before 1 April 2026, on 1
 
 
April 2026;
 
 
(b)
for any other purposes, at the same time as that table comes into force
 
 
for those other purposes.
25
262
Failure to deliver company tax returns
 
 
(1)
In paragraph 17 of Schedule 18 to FA 1998 (failure to deliver company tax
 
 
return: flat-rate penalty)—
 
 
(a)
in sub-paragraph (2)—
 
 
(i)
in paragraph (a), for “£100” substitute “£200”;
30
 
(ii)
in paragraph (b), for “£200” substitute “£400”;
 
 
(b)
in sub-paragraph (3), in the opening words—
 
 
(i)
for “£500” substitute “£1000”;
 
 
(ii)
for “£1000” substitute “£2000”;
 
 
(c)
after sub-paragraph (4) insert—
35
 
“(5)
The Commissioners for His Majesty’s Revenue and Customs
 
 
may by regulations amend sub-paragraph (2) or (3) so as to
 
 
increase or decrease the amount of a penalty for the time
 
 
being specified in those sub-paragraphs.
 

Page 240

 
(6)
Regulations under sub-paragraph (5) may include transitional
 
 
and saving provision.
 
 
(7)
A statutory instrument containing regulations under
 
 
sub-paragraph (5) which increase the amount of a penalty
 
 
by more than is necessary to reflect changes in the value of
5
 
money may not be made unless a draft of the instrument
 
 
has been laid before and approved by a resolution of the
 
 
House of Commons.”
 
 
(2)
The amendments made by subsection (1) (a) and (b) have effect in relation to
 
 
a failure to deliver a company tax return for which the filing date is on or
10
 
after 1 April 2026.
 

Advance tax clearances

 
263
Clearances
 
 
(1)
An HMRC officer may, on the application of a qualifying person and if the
 
 
officer considers it appropriate, give a clearance (an “advance tax clearance”)
15
 
on how HMRC would decide, in relation to a qualifying investment project,
 
 
questions relating to—
 
 
(a)
corporation tax;
 
 
(b)
value added tax;
 
 
(c)
stamp duty land tax;
20
 
(d)
income tax;
 
 
(e)
the PAYE Regulations;
 
 
(f)
the construction industry scheme.
 
 
(2)
An investment project is a “qualifying investment project” if it is expected to
 
 
result in at least £1 billion of UK expenditure.
25
 
(3)
The reference here to “UK expenditure” is to expenditure on—
 
 
(a)
goods, intangible assets, or services (other than the provision of
 
 
financing), which are used or consumed in, or
 
 
(b)
immovable property in,
 
 
the United Kingdom or the UK sector of the continental shelf.
30
 
(4)
Any apportionment of expenditure between expenditure that is and is not
 
 
UK expenditure is to be made on a just and reasonable basis.
 
 
(5)
A person is a “qualifying person”, in relation to a qualifying investment
 
 
project, if the person will incur (or is incurring) the UK expenditure for the
 
 
purpose of the project or if the person—
35
 
(a)
controls, or will control, such a person,
 
 
(b)
is a member of a consortium which owns, or will own, such a person,
 
 
(c)
jointly controls, or will jointly control, a company that is a joint venture
 
 
and such a person, or
 

Page 241

 
(d)
is a partner in a partnership and those partners together control, or
 
 
will control, such a person.
 
 
(6)
Where there is more than one qualifying person in relation to an investment
 
 
project, an application under this section must be made by one only of them
 
 
with the agreement in writing of the other qualifying persons in relation to
5
 
the project in existence at the time the application is made.
 
 
(7)
In this section —
 
 
“company” has the meaning given by section 1121 of CTA 2010;
 
 
“construction industry scheme” means Chapter 3 of Part 3 of FA 2004
 
 
and provision made under or in connection with that Chapter;
10
 
“control” has the meaning given by section 1124 of CTA 2010;
 
 
“intangible asset” means an asset which falls to be treated as an intangible
 
 
asset in accordance with generally accepted accountancy practice
 
 
(within the meaning given by section 1127 of CTA 2010);
 
 
“partnership” includes an entity established under the law of a country
15
 
or territory outside the United Kingdom of a similar nature to a
 
 
partnership;
 
 
“the PAYE Regulations” means the Income Tax (Pay As You Earn)
 
 
Regulations 2003 (S.I. 2003/2682);
 
 
“the UK sector of the continental shelf” means the areas designated by
20
 
Order in Council under section 1(7) of the Continental Shelf Act 1964;
 
 
“United Kingdom” includes the territorial sea adjacent to the United
 
 
Kingdom.
 
 
(8)
For the purposes of this section—
 
 
(a)
a person is a member of a consortium if it is a member of a consortium
25
 
within the meaning of Part 5 of CTA 2010, and
 
 
(b)
references to a person jointly controlling a company that is a joint
 
 
venture are to be read in accordance with those provisions of
 
 
international accounting standards which relate to joint ventures.
 
264
Binding effect
30
 
(1)
An advance tax clearance binds HMRC for a period of 5 years, beginning
 
 
with the day on which the clearance is given as regards—
 
 
(a)
the investment project, as described in the clearance, and
 
 
(b)
the qualifying person or persons specified or described in the clearance
 
 
only.
35
 
(2)
But HMRC is not bound so far as—
 
 
(a)
a change in the law, or
 
 
(b)
a decision of an appeal court that has become final,
 
 
alters how HMRC must decide a question.
 
 
(3)
In this section, “appeal court” means—
40
 
(a)
the Upper Tribunal;
 

Page 242

 
(b)
the Court of Appeal in England and Wales;
 
 
(c)
the Court of Session;
 
 
(d)
the Court of Appeal in Northern Ireland;
 
 
(e)
the Supreme Court.
 
 
(4)
For the purposes of this section, a decision of an appeal court is “final” if it
5
 
is—
 
 
(a)
a ruling of the Supreme Court, or
 
 
(b)
a ruling of another appeal court in circumstances where—
 
 
(i)
no appeal may be made against the ruling,
 
 
(ii)
if an appeal may be made against the ruling with permission
10
 
(or, in Northern Ireland, leave), the time limit for applications
 
 
has expired and either no application has been made or
 
 
permission (or leave) has been refused,
 
 
(iii)
if such permission (or leave) to appeal against the ruling has
 
 
been granted or is not required, no appeal has been made
15
 
within the time limit for appeals, or
 
 
(iv)
if an appeal was made, it was abandoned or otherwise disposed
 
 
of before it was determined by the court or tribunal to which
 
 
it was addressed.
 
265
Extension
20
 
(1)
An HMRC officer may, on the application of the nominated person and if
 
 
the officer considers it appropriate, extend (or further extend) by up to 5
 
 
years the period for which an advance tax clearance binds HMRC.
 
 
(2)
The “nominated person” is—
 
 
(a)
the qualifying person who made the application for the clearance, or
25
 
(b)
a qualifying person notified to HMRC by the person who is for the
 
 
time being the nominated person.
 
266
Modification
 
 
(1)
If a decision is taken to change an aspect of an investment project for which
 
 
an advance tax clearance binds HMRC from how it is described in the
30
 
clearance, or if anything which is set out in the clearance and is material to
 
 
it ceases to be accurate—
 
 
(a)
the nominated person must notify an HMRC officer as soon as
 
 
reasonably practicable after the decision was taken or the thing ceased
 
 
to be accurate, and
35
 
(b)
an HMRC officer may, if the officer considers it appropriate, modify
 
 
or revoke the clearance.
 
 
(2)
A modification under subsection (1) —
 
 
(a)
may—
 
 
(i)
revoke any part of the clearance;
40

Page 243

 
(ii)
otherwise adapt the clearance;
 
 
(b)
does not alter the period for which a clearance binds HMRC.
 
 
(3)
An HMRC officer may also modify a clearance so that it specifies a person
 
 
as regards whom it is binding instead of describing the person.
 
 
(4)
A modification or revocation under subsection (1) or (3) —
5
 
(a)
may be made on the application of the nominated person or by an
 
 
HMRC officer on the officer’s own initiative;
 
 
(b)
takes effect from such time (which may be any time at or after the
 
 
time at which the clearance was given) as the HMRC officer may
 
 
determine.
10
 
(5)
A nominated person is liable to a penalty of £5,000 if the person fails to
 
 
comply with the duty under subsection (1) (a) .
 
267
Information
 
 
(1)
An HMRC officer may require a qualifying person to provide, within such
 
 
period as the officer may specify, such information as may reasonably be
15
 
required in connection with an, or an application for an, advance tax clearance.
 
 
(2)
If a qualifying person fails to comply with a duty imposed under this section
 
 
in connection with a clearance, an HMRC officer may revoke the clearance
 
 
or any part of it.
 
 
(3)
The effect of a revocation under this section is that the clearance, or (as the
20
 
case may be) the part of the clearance, is treated as never having been given.
 
 
(4)
A qualifying person is liable to a penalty of £5,000 if the person fails to comply
 
 
with a duty imposed under this section.
 
268
Misrepresentation
 
 
(1)
If a qualifying person has provided an HMRC officer with information which
25
 
is false or misleading—
 
 
(a)
in, or in connection with, an application for an advance tax clearance,
 
 
or
 
 
(b)
otherwise in connection with such a clearance,
 
 
an HMRC officer may revoke the clearance.
30
 
(2)
The effect of a revocation under subsection (1) is that the clearance is treated
 
 
as never having been given.
 
 
(3)
A person is liable to a penalty of £10,000 if the person carelessly or deliberately
 
 
makes a false or misleading statement to an HMRC officer—
 
 
(a)
in, or in connection with, an application for or in relation to an advance
35
 
tax clearance, or
 
 
(b)
otherwise in connection with such a clearance.
 

Page 244

269
Commissioners notice
 
 
(1)
The Commissioners may set out in a notice published by them—
 
 
(a)
matters on which an HMRC officer may not give an advance tax
 
 
clearance;
 
 
(b)
things that an HMRC officer must, may or may not take into
5
 
consideration in deciding whether it is appropriate to—
 
 
(i)
give or modify an advance tax clearance in relation to a
 
 
qualifying investment project or any particular question relating
 
 
to such a project, or
 
 
(ii)
extend the period for which an advance tax clearance binds
10
 
HMRC;
 
 
(c)
provision about who an HMRC officer must, may or may not include
 
 
in an advance tax clearance, if given, as the qualifying person or
 
 
persons as regards whom the clearance is binding;
 
 
(d)
steps qualifying persons must take before an HMRC officer may give
15
 
an advance tax clearance;
 
 
(e)
how to make, the information to be provided in and the documents
 
 
to be supplied with applications and notifications under sections 263
 
 
to 266 .
 
 
(2)
Unless it is prohibited by a notice under this section, nothing in such a notice
20
 
prevents an HMRC officer taking into consideration things not mentioned in
 
 
the notice in deciding whether it is appropriate to—
 
 
(a)
give, or modify, an advance tax clearance, or
 
 
(b)
extend the period for which such a clearance binds HMRC.
 
 
(3)
A notice published by the Commissioners under this section may be amended
25
 
or withdrawn by a further notice.
 
270
Powers
 
 
(1)
The Treasury may by regulations made by statutory instrument—
 
 
(a)
amend section 263 (1) —
 
 
(i)
to add a tax, or a matter relating to tax, to the matters in
30
 
relation to which an HMRC officer may give an advance tax
 
 
clearance, or
 
 
(ii)
to remove a matter in relation to which an HMRC officer may
 
 
give such a clearance;
 
 
(b)
amend section 263 (2) to (4) (definition of qualifying investment project).
35
 
(2)
Regulations under subsection (1)—
 
 
(a)
may make transitional and saving provision;
 
 
(b)
may make incidental or consequential provision amending sections
 
 
263 to 269 and 271 .
 

Page 245

 
(3)
A statutory instrument containing regulations under subsection (1) may not
 
 
be made unless a draft of the instrument has been laid before and approved
 
 
by a resolution of the House of Commons.
 
 
(4)
The Treasury may by regulation made by statutory instrument provide that
 
 
specified enactments relating to penalties imposed in connection with tax
5
 
(including enactments relating to assessments, review and appeal) are to
 
 
apply, with or without modifications, in relation to penalties imposed under
 
 
section 266 , 267 or 268 .
 
 
(5)
A statutory instrument containing regulations under subsection (4) is subject
 
 
to annulment in pursuance of a resolution of the House of Commons.
10
271
Interpretation
 
 
(1)
In sections 263 to 270 —
 
 
“advance tax clearance” means a clearance under section 263 ;
 
 
“HMRC” means His Majesty’s Revenue and Customs;
 
 
“HMRC officer” means an officer of Revenue and Customs;
15
 
“nominated person” has the meaning given by section 265 (2) ;
 
 
“qualifying investment project” has the meaning given by section 263 (2) ;
 
 
“qualifying person” has the meaning given by section 263 (5) .
 

Cryptoasset reporting framework

 
272
Cryptoasset reporting: users and controlling persons resident in the UK
20
 
(1)
The duty under regulation 6 of the Reporting Cryptoasset Service Providers
 
 
(Due Diligence and Reporting Requirements) Regulations 2025 (S.I. 2025/744)
 
 
(“the Regulations”) to make a report to HMRC applies to UK reporting
 
 
cryptoasset service providers in respect of information relating to cryptoasset
 
 
users resident in the United Kingdom, or who have controlling persons that
25
 
are resident in the United Kingdom, as it applies in respect of cryptoasset
 
 
users that are reportable users or that have controlling persons that are
 
 
reportable persons.
 
 
(2)
The duty under regulation 8 of the Regulations (notification to reportable
 
 
users and reportable persons) applies where, by virtue of subsection (1), a
30
 
UK reporting cryptoasset service provider must make a report to HMRC
 
 
under regulation 6 of the Regulations that will include information relating
 
 
to a cryptoasset user resident in the United Kingdom, or who has a controlling
 
 
person that is resident in the United Kingdom, as it applies where such a
 
 
service provider must make a report under regulation 6 of the Regulations
35
 
that will include information relating to a reportable user or a reportable
 
 
person, but—
 
 
(a)
reading references in regulation 8 of the Regulations to a reportable
 
 
user or a reportable person as references to the cryptoasset user
 

Page 246

 
resident in the United Kingdom, or who has a controlling person that
 
 
is resident in the United Kingdom, and
 
 
(b)
as if regulation 8(1)(b) of the Regulations were omitted.
 
 
(3)
For the purposes of this section—
 
 
(a)
regulation 2 of the Regulations (interpretation) applies as it applies
5
 
for the purposes of the Regulations,
 
 
(b)
“resident” means resident for income tax purposes or corporation tax
 
 
purposes.
 
 
(4)
For the purposes of this section, and the Regulations as they apply for the
 
 
purposes of this section, regulation 3 of the Regulations (UK reporting
10
 
cryptoasset service provider) is to be read as if the reference in regulation
 
 
3(1)(b) to Section I(C) to (H) of the rules were a reference to Section I(C) to
 
 
(G) of the rules.
 
273
International cryptoasset reporting framework: connected matters
 
 
The reference in section 349 of F(No. 2)A 2023 (international arrangements
15
 
for exchanging information) to making regulations in connection with
 
 
international tax compliance arrangements includes, in the case of any
 
 
provision of the OECD Crypto-Asset Reporting Framework, published in
 
 
2022, such regulations making provision which—
 
 
(a)
is similar or connected to regulations under that section giving effect
20
 
to the provision of the Framework, and
 
 
(b)
is for cases to which the provision of the Framework does not apply.
 

Miscellaneous

 
274
Stamp duty: piloting of digital service etc
 
 
(1)
The Treasury may by regulations make provision for the purpose of enabling
25
 
or facilitating the testing by HMRC of modern stamp tax procedures by
 
 
applying such procedures to relevant transfers on sale.
 
 
(2)
A transfer on sale is “relevant” for the purposes of this section if—
 
 
(a)
the transfer is executed in a prescribed period,
 
 
(b)
the purchaser—
30
 
(i)
is a designated person, and
 
 
(ii)
does not determine that the transfer is to be excluded from the
 
 
procedures mentioned in subsection (1) ,
 
 
(c)
stamp duty is, or would but for an exemption or other relief be,
 
 
chargeable on the transfer, and
35
 
(d)
the transfer meets any other conditions that may be prescribed.
 
 
(3)
“Modern stamp tax procedures” means any procedure, technology, system
 
 
or process that could be used for the payment, collection, recovery or other
 

Page 247

 
administration of a future tax replacing stamp duty under which the purchaser
 
 
in relation to a transfer on sale is liable to the tax.
 
 
(4)
Regulations under this section may—
 
 
(a)
provide that, if a designated person complies with prescribed
 
 
requirements in relation to a relevant transfer on sale, a prescribed
5
 
step required or contemplated by any legislation relating to stamp
 
 
duty is to be treated as having been carried out;
 
 
(b)
make further provision about designations under subsection (2) (b) (i);
 
 
(c)
treat designated persons as liable to stamp duty on any relevant
 
 
transfers on sale in respect of which they are the purchaser;
10
 
(d)
confer functions on HMRC, including functions involving the exercise
 
 
of a discretion.
 
 
(5)
Regulations under this section may—
 
 
(a)
enable the claiming by designated persons of reliefs or refunds in
 
 
respect of relevant transfers on sale;
15
 
(b)
make provision about the keeping of records;
 
 
(c)
make provision about the time at which payments of stamp duty are
 
 
to be made and the methods of payment;
 
 
(d)
require any person liable by virtue of this section to pay stamp duty
 
 
on a relevant transfer—
20
 
(i)
to notify HMRC and submit a self-assessed return;
 
 
(ii)
to comply with any request of HMRC to provide information
 
 
in connection with the relevant transfer;
 
 
(e)
make provision about enforcement (including provision for the
 
 
imposition of civil penalties or other sanctions for a failure to comply
25
 
with requirements under the regulations);
 
 
(f)
include provision about—
 
 
(i)
the information to be included in a self-assessed return;
 
 
(ii)
the form of, and method of submitting, such a return;
 
 
(g)
require designated persons to use a prescribed facility for the making
30
 
of payments or the submission of returns;
 
 
(h)
provide for Schedule 36 to FA 2008 (information and inspection
 
 
powers) to have effect as if in paragraph 63(1) of that Schedule
 
 
(meaning of "tax"), after paragraph (g) there were inserted—
 
 
“(ga)
stamp duty on a relevant transfer on sale (as defined
35
 
in section 274 (2) of FA 2026),”.
 
 
(6)
Regulations under this section may provide for any provisions of TMA 1970
 
 
specified in the regulations to apply in relation to stamp duty on relevant
 
 
transfers as they apply in relation to a tax within the meaning of that Act,
 
 
subject to any modifications that may be prescribed.
40
 
(7)
Regulations under this section may—
 
 
(a)
disapply or otherwise modify any enactment;
 
 
(b)
make different provision for different purposes;
 

Page 248

 
(c)
make incidental, supplementary or consequential provision.
 
 
(8)
In the case of a transfer on sale executed by two or more joint purchasers,
 
 
the reference in subsection (2) (b) to the purchaser is to be read as a reference
 
 
to the purchaser who is first named on the transfer.
 
 
(9)
In this section—
5
 
“designated person” means a person designated by HMRC with the
 
 
person’s consent;
 
 
“HMRC” means His Majesty’s Revenue and Customs;
 
 
“prescribed” means prescribed in regulations under this section.
 
 
(10)
A power to make regulations under this section is exercisable by statutory
10
 
instrument subject to annulment in pursuance of a resolution of the House
 
 
of Commons.
 
275
Oversight of HMRC tax enforcement functions in Northern Ireland
 
 
(1)
After section 28 of CRCA 2005 (complaints and misconduct relating to England
 
 
and Wales) insert—
15
“28A
Complaints and misconduct: Northern Ireland
 
 
(1)
The Commissioners for His Majesty’s Revenue and Customs and the
 
 
Police Ombudsman for Northern Ireland may enter into an agreement
 
 
to establish procedures which correspond to, or are similar to, any of
 
 
those established by virtue of Part 7 of the Police (Northern Ireland)
20
 
Act 1998.
 
 
(2)
An agreement under this section must only relate to the exercise, in
 
 
Northern Ireland, of functions of enforcement relating to tax by the
 
 
Commissioners and officers of Revenue and Customs.
 
 
(3)
Where no procedures as mentioned in subsection (1) are in force in
25
 
relation to His Majesty’s Revenue and Customs, the Treasury may by
 
 
regulations establish such procedures.
 
 
(4)
An agreement under this section may be varied or terminated by a
 
 
further agreement entered into by the Commissioners and the
 
 
Ombudsman.
30
 
(5)
Nothing in any other statutory provision prevents the Commissioners
 
 
and officers of Revenue and Customs from carrying into effect
 
 
procedures established by virtue of this section.
 
 
(6)
In this section, “tax” includes any other obligation to pay an amount
 
 
to His Majesty’s Revenue and Customs.
35
 
(7)
Regulations under subsection (3) are to be made by statutory
 
 
instrument and are subject to annulment in pursuance of a resolution
 
 
of the House of Commons.
 

Page 249

 
(8)
Section 72(2) of the Police (Northern Ireland) Act 1998 applies in
 
 
relation to regulations under this section as it applies in relation to
 
 
regulations under that Act (reading the reference to the Secretary of
 
 
State as a reference to the Treasury).”
 
 
(2)
In section 18(2) of that Act (exceptions to confidentiality), after paragraph (g)
5
 
insert—
 
 
“(ga)
which is made to the Police Ombudsman for Northern Ireland,
 
 
or a person acting on the Ombudsman’s behalf, for the purpose
 
 
of a procedure established by virtue of section 28A ,”.
 
 
(3)
In section 29 of that Act (confidentiality etc), after subsection (3) insert—
10
 
“(3A)
Where the Police Ombudsman of Northern Ireland or a person acting
 
 
on the Ombudsman’s behalf obtains information from the
 
 
Commissioners or an officer of Revenue and Customs in the course
 
 
of a procedure established by virtue of section 28A —
 
 
(a)
the Ombudsman or person may not disclose it without the
15
 
consent of the Commissioners, and
 
 
(b)
the Ombudsman or person may not use the information for
 
 
any purpose other than the procedure.”
 
276
Repeal of obsolete provision in FA 1925 concerning Dominion Governments
 
 
Section 25 of FA 1925 (which refers to the liability of Dominion Governments
20
 
to taxation in respect of trading operations and which is obsolete) is repealed.
 
277
Repeal of other obsolete provisions and correction of wrong cross-references
 
 
(1)
In Table A in section 660 of ITEPA 2003 (taxable UK benefits), omit the entry
 
 
relating to bereavement allowance (which is no longer payable).
 
 
(2)
In Table B in section 677 of that Act (UK social security benefits wholly exempt
25
 
from tax), omit the following entries to benefits that are no longer payable—
 
 
“back to work bonus”,
 
 
“bereavement payment”,
 
 
“child’s special allowance “,
 
 
“council tax benefit”,
30
 
“health in pregnancy grant”,
 
 
“in-work credit”,
 
 
“in-work emergency discretion fund payment”, and
 
 
“return to work credit”.
 
 
(3)
In the Table in paragraph 1(4) of Schedule 24 to FA 2007—
35
 
(a)
in the entry relating to general betting duty, for “paragraph 2 of
 
 
Schedule 1 to BGDA 1981” substitute “section 166 of FA 2014”,
 
 
(b)
in the entry relating to pool betting duty, for “paragraph 2A of
 
 
Schedule 1 to BGDA 1981” substitute “section 166 of FA 2014”, and
 

Page 250

 
(c)
in the entry relating to remote gaming duty, for “section 26K of BGDA
 
 
1981” substitute “section 166 of FA 2014”.
 
 
(4)
In the Table in paragraph 1 of Schedule 41 to FA 2008, in the entry relating
 
 
to alcohol duty which refers to section 88 of F(No. 2)A 2023, for “section 88”
 
 
substitute “section 82”.
5

Final

 
278
Interpretation
 
 
In this Act the following abbreviations are references to the following Acts—
 
 
CAA 2001
 
 
Capital Allowances Act 2001
 
 
CEMA 1979
10
 
Customs and Excise Management Act 1979
10
 
CRCA 2005
 
 
Commissioners for Revenue and Customs Act
 
 
2005
 
 
CTA 2009
 
 
Corporation Tax Act 2009
 
 
CTA 2010
 
 
Corporation Tax Act 2010
 
 
FA followed by a year
15
 
Finance Act of that year
15
 
F(No.2)A followed by a year
 
 
Finance (No.2) Act of that year
 
 
IHTA 1984
 
 
Inheritance Tax Act 1984
 
 
ITA 2007
 
 
Income Tax Act 2007
 
 
ITEPA 2003
 
 
Income Tax (Earnings and Pensions) Act 2003
 
 
ITTOIA 2005
20
 
Income Tax (Trading and Other Income) Act
20
 
2005
 
 
TCGA 1992
 
 
Taxation of Chargeable Gains Act 1992
 
 
TCTA 2018
 
 
Taxation (Cross-border Trade) Act 2018
 
 
TIOPA 2010
 
 
Taxation (International and Other Provisions)
 
 
Act 2010
25
 
TMA 1970
 
 
Taxes Management Act 1970
 
 
TPDA 1979
 
 
Tobacco Products Duty Act 1979
 
 
VATA 1994
 
 
Value Added Tax Act 1994
 
 
VERA 1994
 
 
Vehicle Excise and Registration Act 1994
 

Page 251

279
Short title
 
 
This Act may be cited as the Finance Act 2026.
 

Page 252

Schedules

 
 
Schedule 1
Section 6
 

Property and savings rates of income tax: consequential amendments

 

Part 1

 

Amendments of

5
 
1
ITA 2007 is amended as follows.
 
 
2
In section 6 (3) (other rates of income tax)—
 
 
(a)
in paragraph (zb) , for “Welsh basic, higher and additional rates”
 
 
substitute “the Welsh rates”,
 
 
(b)
after paragraph (zc) insert—
10
 
“(zd)
section 6D (property basic, higher and additional
 
 
rates),”, and
 
 
(c)
in paragraph (c) , after “(trust rate” insert “, property trust rate,
 
 
savings trust rate”.
 
 
3
In section 6B (the Welsh basic, higher and additional amounts)—
15
 
(a)
after subsection (1) insert—
 
 
“(1A)
The Welsh property basic rate, the Welsh property higher
 
 
rate and the Welsh property additional rate for a tax year
 
 
are calculated as follows.
 
 
Take the property basic rate, property higher rate or property
 
 
additional rate.
 
 
Deduct 10 percentage points.
 
 
Add the Welsh rate (if any) set by Senedd Cymru for that
 
 
year for the purpose of calculating the Welsh basic rate, the
 
 
Welsh higher rate or the Welsh additional rate (as the case
 
 
may be).”, and
 
 
(b)
for the heading substitute “The Welsh rates”.
30
 
4
In section 9 (the trust and dividend trust rate)—
 
 
(a)
after subsection (1) insert—
 
 
“(1A)
The property trust rate is 47%.
 
 
(1B)
The savings trust rate is 47%.”, and
 

Page 253

 
(b)
in the heading, after “The trust rate” insert “, property trust rate,
 
 
savings trust rate”.
 
 
5
In section 9A (overview of sections 10 to 15), in the table—
 
 
(a)
after the second column, insert the following column—
 
 
“Rates payable on property income
5
 
Property rates
 
 
Scottish rates
 
 
Welsh property rates
 
 
Property rates
 
 
Property basic rate”, and
10
 
(b)
in the second column, in the final row, for “Default basic rate”
 
 
substitute “Savings basic rate”.
 
 
6
In section 10 (income charged at the basic, higher and additional rates:
 
 
individuals), in subsection (4) , after the entry relating to section 11C insert—
 
 
“section 11CA (income charged at the property basic, higher and
15
 
additional rates: individuals),
 
 
section 11CB (income charged at the Welsh property basic, higher
 
 
and additional rates: individuals),”.
 
 
7
In section 11 (income charged at the default basic rate: non-individuals),
 
 
in subsection (2) —
20
 
(a)
at the beginning insert—
 
 
“section 11CC (income charged at the property basic rate:
 
 
non-individuals),
 
 
section 11DA (income charged at the savings basic rate:
 
 
non-individuals),”, and
25
 
(b)
in the entry relating to Chapters 3 to 5 of Part 9, after “charged at”
 
 
insert “the property trust rate, the savings trust rate or”.
 
 
8
In section 11B (income charged at the Welsh basic, higher and additional
 
 
rates)—
 
 
(a)
in subsections (1) (a) , (2) (a) and (3) (a) , for “non-savings income”
30
 
substitute “neither property income nor savings income”,
 
 
(b)
omit subsection (4) , and
 
 
(c)
in subsection (6) —
 
 
(i)
for “Section 16 has” substitute “Sections 16 and 16A have”,
 
 
and
35
 
(ii)
for “non-savings income of a Welsh taxpayer” substitute
 
 
“income of a Welsh taxpayer which is neither property
 
 
income nor savings income”.
 

Page 254

 
9
In section 11C (income charged at the default basic, higher and additional
 
 
rates: non-UK resident individuals), in subsection (4) , before the entry
 
 
relating to section 11D insert—
 
 
“section 11CA (income charged at the property basic, higher and
 
 
additional rates: individuals),”.
5
 
10
After section 11CA , as inserted by section 6 (3) of this Act, insert—
 
 
“11CB
Income charged at the Welsh property basic, higher and additional
 
 
rates: individuals
 
 
(1)
Income tax is charged at the Welsh property basic rate on the income
 
 
of a Welsh taxpayer which—
10
 
(a)
is property income, and
 
 
(b)
would otherwise be charged at the Welsh basic rate.
 
 
(2)
Income tax is charged at the Welsh property higher rate on the
 
 
income of a Welsh taxpayer which—
 
 
(a)
is property income, and
15
 
(b)
would otherwise be charged at the Welsh higher rate.
 
 
(3)
Income tax is charged at the Welsh property additional rate on the
 
 
income of a Welsh taxpayer which—
 
 
(a)
is property income, and
 
 
(b)
would otherwise be charged at the Welsh additional rate.
20
 
(4)
This section is subject to any provisions of the Income Tax Acts
 
 
which provide for income to be charged at different rates of income
 
 
tax in some circumstances.
 
 
(5)
Sections 16 and 16A have effect for determining the extent to which
 
 
the property income of a Welsh taxpayer would otherwise be
25
 
charged at the Welsh basic, higher or additional rate.
 
11CC
Income charged at the property basic rate: non-individuals
 
 
(1)
Income tax is charged at the property basic rate on the income of
 
 
persons other than individuals which—
 
 
(a)
is property income,
30
 
(b)
would otherwise be charged at the default basic rate, and
 
 
(c)
is not relevant foreign income charged in accordance with
 
 
section 832 of ITTOIA 2005 (relevant foreign income charged
 
 
on the remittance basis).
 
 
(2)
This is subject to—
35
 
Chapters 3 to 5 of Part 9 (which provide for some income
 
 
of trustees to be charged at special trust rates), and
 
 
any other provisions of the Income Tax Acts (apart from
 
 
section 11) which provide for income of persons other than
 

Page 255

 
individuals to be charged at different rates of income tax in
 
 
some circumstances.”
 
 
11
In section 11D (income charged at the savings basic, higher and additional
 
 
rates), in the heading, at the end insert “: individuals”.
 
 
12
After that section insert—
5
“11DA
Income charged at the savings basic rate: non-individuals
 
 
(1)
Income tax is charged at the savings basic rate on the income of
 
 
persons other than individuals which—
 
 
(a)
is savings income,
 
 
(b)
would otherwise be charged at the default basic rate, and
10
 
(c)
is not relevant foreign income charged in accordance with
 
 
section 832 of ITTOIA 2005 (relevant foreign income charged
 
 
on the remittance basis).
 
 
(2)
This is subject to—
 
 
Chapters 3 to 5 of Part 9 (which provide for some income
15
 
of trustees to be charged at special trust rates), and
 
 
any other provisions of the Income Tax Acts (apart from
 
 
section 11) which provide for income of persons other than
 
 
individuals to be charged at different rates of income tax in
 
 
some circumstances.”
20
 
13
In section 12B (individual’s entitlement to a savings allowance), in
 
 
subsection (8) —
 
 
(a)
in paragraph (a) (i) and (iv) (which sets out what counts as
 
 
additional-rate income), after “the additional rate” insert “, property
 
 
additional rate”, and
25
 
(b)
in paragraph (b) (i) and (iv) (which sets out what counts as
 
 
higher-rate income), after “the higher rate” insert “, property higher
 
 
rate”.
 
 
14
In section 14 (income charged at the dividend ordinary rate: other
 
 
persons)—
30
 
(a)
in subsection (1) (b) , for “the basic rate” substitute “the default basic
 
 
rate”, and
 
 
(b)
in the heading, for “other persons” substitute “non-individuals”.
 
 
15
In section 15 (income charged at the trust rate and the dividend trust rate)—
 
 
(a)
after “charged at the trust rate” insert “, the property trust rate, the
35
 
savings trust rate”, and
 
 
(b)
in the heading, after “charged at the trust rate” insert “, the property
 
 
trust rate, the savings trust rate”.
 

Page 256

 
16
In section 16 (savings and dividend income to be treated as highest part
 
 
of total income), for subsection (1) (zb) substitute—
 
 
“(zb)
the rate at which income tax would be charged on the income
 
 
of a Welsh taxpayer which is neither property income nor
 
 
savings income apart from section 11B but taking into
5
 
account the effect of section 16A ,”.
 
 
17
In section 18 (meaning of “savings income”), in subsection (4)(b)—
 
 
(a)
after “personal representatives” insert “or trustees”, and
 
 
(b)
for “or 466” substitute “, 466 or 467”.
 
 
18
In section 31 (total income: supplementary), in subsection (2), after “the
10
 
basic rate,” insert “the property basic rate, the savings basic rate,”.
 
 
19
In section 55B (transferable tax allowance for married couples and civil
 
 
partners: entitlement to tax reduction), in subsection (2) (b) —
 
 
(a)
after “other than the basic rate,” insert “the property basic rate,”
 
 
and
15
 
(b)
after “the Welsh basic rate,” insert “the Welsh property basic rate,”.
 
 
20
In section 55C (transferable tax allowance for married couples and civil
 
 
partners: election to reduce personal allowance), in subsection (1) (c) —
 
 
(a)
after “other than the basic rate,” insert “the property basic rate,”
 
 
and
20
 
(b)
after “the Welsh basic rate,” insert “the Welsh property basic rate,”.
 
 
21
In section 399B (3) (which provides for relief for finance costs relating to
 
 
residential property to be given at the basic rate for property partnerships)—
 
 
(a)
for “BR”, in both places, substitute “PBR”, and
 
 
(b)
for “basic rate” substitute “property basic rate”.
25
 
22
In section 462 (overview of Part 9), in subsection (3) (which explains the
 
 
provision made by Chapter 3), after “charged at” insert “the property trust
 
 
rate, the savings trust rate or”.
 
 
23
In section 463 (general provision about settlements etc)—
 
 
(a)
in subsection (1) , in the definition of “other income” for the words
30
 
from “neither” to “nor” substitute “not property income, dividends
 
 
income or”, and
 
 
(b)
in subsection (2) , after “charged at” insert “the property trust rate,
 
 
the savings trust rate or”.
 
 
24
In section 479 (trustees’ accumulated or discretionary income to be charged
35
 
at special rates), after subsection (2) insert—
 
 
“(2A)
Income tax is charged on the income at the property trust rate so
 
 
far as the income is property income.
 
 
(2B)
Income tax is charged on the income at the savings trust rate so far
 
 
as the income is savings income.”
40

Page 257

 
25
In section 481 (other amounts to be charged at special rates for trustees),
 
 
after subsection (3) insert—
 
 
“(3A)
If the amount is within Type 2, 6 or 7 as set out in section 482,
 
 
income tax is charged on the amount at the savings trust rate.
 
 
(3B)
If the amount is within Type 5 as set out in section 482, income tax
5
 
is charged on the amount at the property trust rate.”
 
 
26
In section 483 (sums paid by personal representatives to trustees), in
 
 
subsection (1) (b) , after “that income at” insert “the property trust rate, the
 
 
savings trust rate or”.
 
 
27
In section 486 (how allowable expenses are to be set against trust rate
10
 
income)—
 
 
(a)
in subsection (1) , in step 2, after “savings income” insert “, property
 
 
income”,
 
 
(b)
in that subsection , in step 5, in paragraph (a) , for “the basic rate”
 
 
substitute “the savings basic rate”,
15
 
(c)
in that subsection , after that step insert—
 
 
“If there are remaining expenses and there is property income—
 
 
(a)
gross up by reference to the property basic rate so much of
 
 
the remaining expenses as is necessary to give a result equal
20
 
to the amount of that income, or
 
 
(b)
if there are not enough remaining expenses to give that
 
 
result, gross them all up by reference to that rate.
 
 
For the purposes of this step “the remaining expenses” are the
 
 
allowable expenses so far as they have not been grossed up at Step
25
 
3, 4 or 5.”, and
 
 
(d)
in that subsection , in step 6, in the final sentence, for “or 5”
 
 
substitute “, 5 or 5A”.
 
 
28
In section 503 (how beneficiary’s income is reduced), in subsection (2) , omit
 
 
the “and” before “fourth” and for the entry relating to “fourth” substitute—
30
 
“fourth, reduce property income (if any), and
 
 
fifth, reduce other income (if any).”
 
 
29
In section 874 (duty to deduct from certain payments of yearly interest),
 
 
in subsection (2) , for “the basic rate” substitute “the savings basic rate”.
 
 
30
In section 889 (payments in respect of building society securities), in
35
 
subsection (4), for “the basic rate” substitute “the savings basic rate”.
 
 
31
In section 919 (manufactured interest on UK securities: payments by UK
 
 
residents etc), in subsection (2), for “the basic rate” substitute “the savings
 
 
basic rate”.
 

Page 258

 
32
In section 939 (duty to retain bonds where issue treated as payment of
 
 
interest), in subsection (2), for “the basic rate” substitute “the savings basic
 
 
rate”.
 
 
33
In section 974 (Real Estate Investment Trusts: regulations under section
 
 
973), in subsection (1) (a) , for “the basic rate” substitute “the property basic
5
 
rate”.
 
 
34
In section 975A (statements about certain payments of interest), in subsection
 
 
(4)(b), for “the basic rate” substitute “the savings basic rate”.
 
 
35
In section 989 (definitions), at the appropriate places insert—
 
 
““property additional rate” means the rate of income tax of that name
10
 
determined pursuant to section 6D ,”;
 
 
““property basic rate” means the rate of income tax of that name
 
 
determined pursuant to section 6D ,”;
 
 
““property higher rate” means the rate of income tax of that name
 
 
determined pursuant to section 6D ,”;
15
 
““property income” has the meaning given by section 17A ,”;
 
 
““property trust rate” means the rate of income tax specified in section
 
 
9 (1A) ,”;
 
 
““savings trust rate” means the rate of income tax specified in section
 
 
9 (1B) ,”;
20
 
““Welsh property additional rate” means the rate of income tax of that
 
 
name determined pursuant to section 6B (1A) ,”;
 
 
““Welsh property basic rate” means the rate of income tax of that name
 
 
determined pursuant to section 6B (1A) ,”;
 
 
““Welsh property higher rate” means the rate of income tax of that
25
 
name determined pursuant to section 6B (1A) ,”.
 

Page 259

 
36
In Schedule 4 (index of defined expressions), at the appropriate places
 
 
insert—
 
 
“property additional rate
 
 
section 6D (as applied by section 989)”;
 
 
“property basic rate
 
 
section 6D (as applied by section 989)”;
 
 
“property higher rate
5
 
section 6D (as applied by section 989)”;
5
 
“property income
 
 
section 17A (as applied by section 989)
 
 
“property trust rate
 
 
section 9 (1A) (as applied by section 989)
 
 
“savings trust rate
 
 
section 9 (1B) (as applied by section 989)”;
 
 
“Welsh property additional rate
 
 
section 6B (1A) (as applied by section
 
 
989)”;
10
 
“Welsh property basic rate
 
 
section 6B (1A) (as applied by section
 
 
989)”;
 
 
“Welsh property higher rate
 
 
section 6B (1A) (as applied by section
 
 
989)”.
 

Part 2

15

Amendments of other tax legislation

 
Amendments

No amendments available.