Hello,
The start of 2026 has proven to be busy in the world of tax. This week, our news includes a significant update on the imminent reform to Inheritance Tax (IHT), the date of the 2026 Spring Forecast, a decrease in HMRC’s late payment interest rates in time for the upcoming self-assessment payment deadline and its December Agent Update.
On 23 December, HM Treasury published welcome news for many farmers and other business owners. The previously announced £1m cap to the 100% rates of Agricultural Property Relief (APR) and Business Property Relief (BPR), which was due to be implemented from 6 April 2026, will be increased to £2.5m.
This announcement came less than a month after the Autumn Budget, in which it was confirmed that from 6 April 2026 the allowance (£1m at the time) would be transferable, following death, to a surviving spouse or civil partner.
Between them, these policy amendments will make a significant difference to many who would have been adversely impacted by the APR/BPR changes, particularly smaller family farms. Of course, this now creates a need to revisit both completed and in-progress IHT planning exercises to review their effectiveness in light of the latest iteration of the rules.
In other news, the Chancellor has announced that the 2026 Spring Forecast will be on 3 March 2026. The government reiterated its commitment to deliver one major fiscal event a year, at the Budget. As usual, rossmartin.co.uk will summarise all you need to know once the Spring Forecast is published.
We cover two cases this week, both from the Court of Appeal (CoA). For those advising on Stamp Duty Land Tax (SDLT), the decision in The Tower One St George Wharf Limited is important reading as the CoA examined and provided commentary on the market value rule in s.53 Finance Act 2003 as well as the anti-avoidance provision in s.75A.
More news, cases and updates below.
The rossmartin.co.uk tax team
Online PRACTICAL tax resources for accountants and tax advisers BY accountants and tax advisers.
Quick News
APR and BPR relief cap increases from £1m to £2.5m
The government has announced that the proposed cap to the 100% rates of Agricultural Property Relief (APR) and Business Property Relief (BPR), which is due to apply from 6 April 2026, will be increased to £2.5 million from the £1 million previously announced.
2026 Spring Forecast date announced
The Chancellor, Rachel Reeves, has asked the Office for Budget Responsibility (OBR) to prepare an economic and fiscal forecast for publication on 3 March 2026, the date of the 2026 Spring Forecast.
Agent Update 138: December 2025
HMRC have published their Agent Update for December 2025. We have summarised the key content, including an update on the mandatory payrolling of Benefits In Kind (BIKs), important reporting requirements for some trusts under the Automatic Exchange Of Information (AEOI) rules, the key changes agents should be aware of in relation to Making Tax Digital (MTD) for Income Tax and important considerations with regard to filing your clients' Self Assessment tax returns for the 2024-25 tax year.
HMRC's interest rate decreases again
Following the Bank of England’s announcement on 18 December 2025 that the base rate would decrease to 3.75%, HMRC's interest rates are also decreasing by 0.25%, to 7.75% for late payment interest and 2.75% for repayment interest, from 9 January 2026.
OECD Model Tax Convention updated
The OECD has released an updated version of the Model Tax Convention on Income and Capital, with clarification around remote working arrangements. The OECD Model incorporates the latest developments in international taxation and provides guidance on interpreting and applying bilateral tax treaties.
Consultation outcome on VAT treatment of business donations to charity
HM Treasury has released a summary of responses to its consultation 'VAT treatment of business donations of goods to charity'. The outcome of the consultation, announced at Autumn Budget 2025, is the introduction of a new VAT relief for business donations of goods to charity for onward distribution or use in the delivery of the charity's services.
One-to-many letters: Tracker
HMRC's latest one-to-many 'nudge' letters target excessive Business Asset Disposal Relief (BADR) claims, Research & Development (R&D) claims in the advertising agency sector, and unreported cryptoassets for Inheritance Tax (IHT) purposes.
Tax Cases
Fragmented consideration could not create tax losses
In Timothy Watts v HMRC [2025] EWCA Civ 1615, the Court of Appeal (CoA) found that Income Tax relief for losses on gilt strips was confined to real economic losses, and could not be generated by fragmenting consideration within a pre-planned avoidance scheme.
Lease transfer between group companies triggered anti-avoidance rules
In The Tower One St George Wharf Limited v HMRC [2025] EWCA Civ 1588, the Court of Appeal (CoA) found that a series of transactions involving the grant and transfer of a property lease amongst group companies triggered Stamp Duty Land Tax (SDLT) anti-avoidance provisions.
Editor's Choice
Top tips for last-minute tax returns
This guide is a summary of top tips for dealing with last-minute tax returns, what not to forget and how to protect against enquiries.
Annual Investment Allowance (AIA): Related companies
What restrictions to AIA apply to companies? What does common control mean? When are companies related?
Guides & Updates
Self-employed
Badges of Trade: Are you trading or not?
Are you trading, running a business or just buying and selling investments? Is your 'side-hustle' taxable? The 'Badges of Trade' are a set of indicators built over time by the courts to decide when an activity is a trading or investment activity.
Training and course fees (self-employed)
Can a self-employed trader claim tax relief on their costs of training and ongoing professional development? Are training fees capital by nature?
Partnerships
Partnership agreements: What should be considered?
Partnership agreements can be invaluable to clarify everyday matters and settle disputes within a partnership. What sort of things should be discussed for inclusion in a partnership agreement? Why are they important?
Directors & Companies
Loss relief (Income Tax) disposal of shares
Share Loss relief allows you to offset a loss made on the disposal of shares against income instead of following normal capital loss treatment.
Capital reduction: Tax treatment
The repayment of capital on a company capital reduction can be treated in different ways for a shareholder. This guide reviews the tax treatment of a capital reduction.
Employers
Loans: Employment-related (beneficial loans)
What is a beneficial loan? What are the tax and Benefit In Kind implications? Which loans are exempt? How is the value of the benefit calculated? How is the beneficial loan reported? What happens if the loan is written off?
Globally mobile employees: Pension contributions relief for overseas employees
Can non-UK resident employees contribute to a UK pension scheme? Can UK resident employees contribute to an overseas pension scheme? What UK tax relief is available? Can pension funds be transferred from a UK pension scheme to an overseas pension scheme? How are payments from non-UK pension schemes taxed?
Private Client & Estate Planning
CGT: Loans to traders relief
What is loans to traders relief? When can it be claimed? What are the conditions of the relief?
Personal allowance: Who is entitled to claim?
Am I entitled to the UK personal allowance? Are there circumstances when the personal allowance is not available?
Negligible value claims
What is a negligible value claim? When and how can a claim be made?
Land & Property
SDLT: Stamp Duty Land Tax, start here
What is SDLT? What are the SDLT rates? What is exempt from SDLT? What reliefs are available? When are returns due? When can you amend a return?
Capital Allowances
Structures & Buildings Allowance (SBA)
Who can claim the Structures and Buildings Allowance? What expenditure is eligible? How to make a claim?
VAT
Partial exemption & input VAT
How do you calculate the amount of input tax you can recover under the VAT partial exemption rules? What are the de minimis rules?
Continuing Professional Development (CPD)
Recent and upcoming webinars include:
- Inheritance Tax Planning for 2026/27 and Beyond
- Monthly Tax Update - December 2025
- Budget Update
- Practice Insight - December 2025 (free)
- Making Tax Digital for Income Tax - Roadmap to April 2026
Need Tax Support?
Virtual Tax Partner© Support
Have a tax query? Need a second option? Open a ticket and ask a question. A team of tax experts with a wide range of expertise: covering direct and indirect tax, as well as accounting, reorganisations and much more.
Missed the Last Tax Update?
Ross Martin Tax: SME Tax News 18 December 2025
- New trust registration deadline 31 December 2025
- Employer Bulletin: December 2025
- One-to-many letters: Tracker
- Why did the chicken go to the VAT tribunal?
- Income Tax repayment due was subject to IHT
- Flat maintenance trust services not VAT exempt
- Notice to file a tax return: section 8(1) TMA 1970
- Provisional and estimated figures in tax returns
- Discounts, Reward Schemes & Vouchers: VAT
- Client Briefing: Making gifts & IHT
- Issuing different classes of share: Family companies ...More
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