'Legislation Day' (L-Day) was on Monday, 21 July 2025. The Government published draft clauses for Finance Bill 2025-26, along with accompanying explanatory notes, tax information, impact notes, responses to consultations and other supporting documents. This is our freeview summary of the announcements and publications.
SUBSCRIBERS: see Legislation Day 2025 (subscribers) for your detailed version of this summary.
The Government reaffirmed its commitment to, where possible, publishing most tax legislation in draft for technical consultation before the relevant Finance Bill is introduced in Parliament.
The consultation on the draft Finance Bill 2025-26 clauses is designed to make sure that the legislation works as intended. Consultation closes on 15 September 2025.
Index to sections below, summarising Legislation Day 2025 publications
- Companies
- Compliance & Administration
- Employers
- Gift Aid and Charities
- Income Tax
- Inheritance Tax (IHT)
- Large corporates
- Overseas & Residence
- Other announcements
Making Tax Digital (MTD) for Corporation Tax (CT): update
- HMRC have confirmed that they "do not intend to introduce MTD for CT but are developing an approach to the future administration of CT that is suited to the varying needs of the diverse CT population".
Research and Development (R&D): clarifying the scope of the overseas restriction: draft legislation
For claims made on or after 30 October 2024:
- Draft legislation in Finance Bill 2025-26 makes amendments to clarify that the exemption from the restrictions for relief on contracted out R&D and the cost of externally provided workers for R&D taking place outside the UK, for companies with a registered office in Northern Ireland that claim Enhanced R&D Intensive Support (ERIS), only applies to ERIS claimants.
Land Remediation Relief: consultation
- A consultation has been published on Land Remediation Relief (LRR), aiming to review its effectiveness, determine whether it is still meeting its objective of boosting development of brownfield land, and obtain a greater understanding of how robust LRR is against abuse.
- The consultation closes on 15 September 2025.
See Land Remediation Relief consultation
Modernising and mandating tax adviser registration with HMRC: draft legislation
From 1 April 2026 (with a transitional period of at least 3 months):
- Draft legislation in Finance Bill 2025-26 will introduce a legal requirement for tax advisers who interact with HMRC on behalf of their clients to register with HMRC and meet minimum standards.
- There will be limited exceptions from registration.
Tackling tax advisers facilitating non-compliance: consultation outcome
The Government has published the outcome of its consultation 'Enhancing HMRC's ability to tackle tax advisers facilitating non-compliance'.
- Several changes are proposed, bringing into scope only those who deliberately facilitate non-compliance; they do not target tax advisers who make genuine, one-off, accidental errors or differences of legal interpretation
- Draft legislation has been published for technical consultation (see below) to test if it meets the stated policy objectives.
See Consultation approves strengthening HMRC powers on non-compliance
Enhancing HMRC’s powers: tackling tax adviser facilitated non-compliance: draft legislation
From 1 April 2026:
- Draft legislation in Finance Bill 2025-26 will amend schedule 38 of the Finance Act 2012. The changes include:
- Allowing HMRC to obtain information from tax advisers using a file access notice where there is reasonable suspicion that they have facilitated non-compliance in their clients’ tax affairs.
- Introducing a new penalty framework for where HMRC establishes that a tax adviser has deliberately facilitated non-compliance in their clients’ tax affairs.
- Introducing new powers to publish information about tax advisers where HMRC has used relevant sanctions.
Closing in on promoters of tax avoidance: consultation outcome
The Government has published the outcome of its consultation 'Closing in on promoters of tax avoidance'.
- Draft legislation has been published (see below) for those proposals that would require primary legislation.
- Further comments on the detail of the legislation, especially on areas such as how to better target the DOTAS criminal offence, are welcomed.
See Criminal sanctions warranted for promoters of tax avoidance
Proposals to close in on promoters of marketed tax avoidance: draft legislation
From Royal Assent to the Finance Bill:
- Draft legislation in Finance Bill 2025-26 will make a number of changes to the current legislation that targets those who promote or enable marketed tax avoidance.
- A criminal offence for the failure of a promoter of tax avoidance arrangements to notify arrangements to HMRC will be introduced.
- The Disclosure Of Tax Avoidance Schemes (DOTAS) and Disclosure Of Tax Avoidance Schemes for VAT and Other Indirect Taxes (DASVOIT) civil penalty regimes will be updated so that HMRC may directly issue DOTAS/DASVOIT penalties instead of seeking tribunal approval.
- Universal Stop Notices (USNs), Promoter Action Notices (PANs), Connected Parties Information Notices (CPINs), and Promoter Financial Information Notices (PFINs) will be introduced.
- The scope of existing powers will be widened to ensure that HMRC can take targeted action against the small number of legal professionals that facilitate the promotion of avoidance schemes, by allowing the publication of legal professionals’ details under certain additional circumstances.
Better use of new and improved third-party data: consultation outcome
The Government has published the outcome of its consultation 'Better use of new and improved third-party data'.
- Draft legislation has been published (see below), with a series of alterations to the policy to reflect the feedback in the consultation.
- The Government welcomes comments on the legislation to ensure it functions as intended.
See Card data will provide digital nudges for small businesses
Better use of new and improved third-party data: draft legislation
From no earlier than 6 April 2027:
- Draft legislation in Finance Bill 2025-26 will implement the first phase of the Government’s reforms to HMRC’s bulk data gathering powers and safeguards.
- The draft legislation focuses on improving the provision of two key datasets already reported to HMRC: financial account information and card sales.
Benefit In Kind (BIK) on Plug-in Hybrid Electric Vehicles (PHEVs)
- The Department for Transport will, in due course, consult on introducing the Euro 6e emissions standard for cars and vans in Great Britain from April 2026.
- Subject to consultation outcome, the Government intends to legislate for an easement that will apply UK-wide between April 2026 (January 2025 in Northern Ireland) and April 2028 to help mitigate the BIK tax impact.
Employee Car Ownership Schemes (ECOS): draft legislation
From 6 October 2026:
- Draft legislation in Finance Bill 2025-26 will amend the Benefit In Kind rules so that vehicles provided through ECOS arrangements will be deemed to be taxable benefits when made available on restricted terms.
- This is to prevent ECOS arrangements from being used to provide a car for an employee’s private use in a way that circumvents the employee’s Income Tax liability and the Employer’s National Insurance (NI) liability.
Umbrella companies: tackling non-compliance: draft legislation
From 6 April 2026:
- Draft legislation in Finance Bill 2025-26 will make recruitment agencies accountable for PAYE on payments to workers supplied through umbrella companies.
- Regulations giving effect to this measure for National Insurance purposes will be laid separately.
Gift Aid and charities
Changes to the charity compliance measures: draft legislation
From 1 April 2026 for Corporation Tax and 6 April 2026 for Income Tax:
- Draft legislation in Finance Bill 2025-26 will amend the rules governing tainted donations, approved charitable investments and attributable income for charities and Community Amateur Sports Clubs (CASCs).
Making Tax Digital for Income Tax (MTD for IT) and penalty reform: draft legislation
Draft legislation in Finance Bill 2025-26 will make various amendments to the MTD for IT regime:
- Certain groups, such as ministers of religion, Lloyd’s underwriters and recipients of the Blind Person’s Allowance, will be deferred from MTD for IT until at least April 2029.
- Other groups, including individuals with power of attorney and non-UK resident entertainers with no other qualifying income, will be permanently exempt from MTD for IT.
- Technical and policy amendments are introduced to ensure effective implementation of MTD for IT and penalty reform, including the authority to cancel or reset late submission penalty points and cancel associated financial penalties.
- MTD for IT users will be required to submit their end-of-year tax return using MTD-compatible software.
- The qualifying income threshold to join MTD for IT will be reduced to £20,000 from tax year 2026-27 onwards (the year against which qualifying income is assessed for mandation in tax year 2028-29).
Reform of the tax treatment of carried interest: draft legislation
From 6 April 2026:
- Draft legislation in Finance Bill 2025-26 will introduce a revised tax regime for carried interest, which sits wholly within the Income Tax framework, with carried interest treated as deemed trading profits and subject to Income Tax and Class 4 National Insurance Contributions (NICs).
Private Intermittent Securities and Capital Exchange System (PISCES) tax implications: draft legislation
From 15 May 2025:
- Draft legislation in Finance Bill 2025-26 will allow Enterprise Management Incentive (EMI) and Company Share Option Plan (CSOP) option agreements entered into before Royal Assent of Finance Bill 2025-26 to be amended to allow options to be exercised, in the event that the shares are or become PISCES shares, provided the exercise happens immediately prior to the sale of the shares on a PISCES.
Reforms to IHT reliefs: consultation on property settled into trust, consultation outcome
The Government has published the outcome of its consultation 'Reforms to Inheritance Tax reliefs: consultation on property settled into trust'.
- The £1m allowance for Agricultural Property Relief (APR) and Business Property Relief (BPR) will be indexed in line with CPI, but will remain fixed up to and including tax year 2029-30.
- The proposed extension of the related property rules for qualifying property settled into multiple trusts will not proceed.
- Draft legislation has been published (see below).
See Consultation response on APR and BPR reforms for trusts
Reforms to APR and BPR: draft legislation
From 6 April 2026:
- Draft legislation in Finance Bill 2025-26 will make several amendments to APR and BPR.
- The rate of APR and BPR will remain at 100% up to a combined allowance of £1m.
- Where the value of business and agricultural property assets exceeds the £1m allowance, the rate of relief will be reduced to 50%.
- BPR will be reduced to 50% on shares designated as 'not listed' on the markets of recognised stock exchanges, such as the Alternative Investment Market (AIM).
- The rate of relief also reduces from 100% to 50% for qualifying shares listed on foreign exchanges which are not a recognised stock exchange.
- Transitional rules provide for transfers between 30 October 2024 and 6 April 2026, and for trusts existing before 30 October 2024.
- The method to calculate rates of IHT on trust exit charges will be standardised so that all exit charges will be calculated based on unrelieved values, regardless of whether the exit takes place before or after the first 10-year anniversary.
- The option to pay IHT by equal annual instalments over 10 years interest-free will be extended to all property which is eligible for APR or BPR.
IHT on pensions: liability, reporting and payment: consultation outcome
The Government has published the outcome of its consultation 'Inheritance Tax on pensions: liability, reporting and payment'.
- The proposed model of pension scheme administrators being liable for reporting and paying any IHT on the pension component of an estate will not proceed and, instead, these obligations will sit with the personal representatives from 6 April 2027.
- All death in service benefits payable from a registered pension scheme will be excluded from the value of an individual’s estate for IHT purposes, regardless of whether the scheme is discretionary or non-discretionary.
- Draft legislation has been published (see below).
See IHT on pensions consultation response
Reforming IHT: unused pension funds and death benefits: draft legislation
From 6 April 2027:
- Draft legislation in Finance Bill 2025-26 will bring unused pension funds and death benefits into the scope of IHT, regardless of whether the pension scheme administrators or scheme trustees have discretion over the payment of any death benefits.
Amendments to Multinational Top-up Tax (MTT) and Domestic Top-up Tax (DTT): draft legislation
For accounting periods beginning on or after 31 December 2025 (with some exceptions):
- Draft legislation in Finance Bill 2025-26 will make various amendments to MTT and DTT identified both from stakeholder consultation and as necessary to make sure that UK legislation remains consistent with the agreed GloBE rules, commentary and administrative guidance.
Offshore anti-avoidance legislation: call for evidence outcome
The Government has published the outcome of its call for evidence 'Personal Tax: Offshore Anti-Avoidance legislation'.
- The Government will consider how best to engage with relevant experts in shaping and taking forward further consultation in this area and provide an update in the Autumn.
- Any changes to legislation are not expected to be in place before the 2027-28 tax year, at the earliest.
See Offshore anti-avoidance legislation call for evidence response
Technical amendments to residence-based tax regime
- The Government will bring forward technical fixes to the legislation contained in Finance Act 2025 that replaced the special tax rules relating to domicile, to ensure that the legislation works as intended.
HMRC's Transformation Roadmap
HMRC has published its 'Transformation Roadmap' which outlines its plans to become a digital-first organisation by 2030, with 90% of taxpayer interactions taking place digitally.
The roadmap sets out more than 50 IT projects, services and measures, including:
- A new online Pay As You Earn (PAYE) service for taxpayers to check and update their income, allowances, reliefs and expenses. This will be available via the Personal Tax Account or through the HMRC app.
- Extending the rollout of the SMS confirmation service to Self Assessment appeals, complaint cases and some PAYE services.
- Improving the Self Assessment registration service and streamlining the exit process for those who no longer need to file a tax return.
- Expanding the rollout of the voice biometrics pilot to make taxpayer verification easier when calling HMRC’s helplines.
- A new service to give employed parents, who are newly liable for the High Income Child Benefit Charge, the choice to pay it directly through their tax code without needing to register for Self Assessment.
- Digitalising the Inheritance Tax service.
- Launching a new service to allow agents to digitally submit information which may impact their client’s tax code.
- Delivering a Digital Disclosure Service to allow taxpayers and intermediaries to correct mistakes, pay liabilities and penalties for all taxes and duties.
See HMRC's Transformation Roadmap
External links
Written statement to Parliament: Finance Bill: 2025-26 draft legislation and tax documents
HMRC: Finance Bill 2025-26