Finance Act 2026

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6D The property basic, higher and additional rates

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.

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11CA Income charged at the property basic, higher and additional rates: 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 basic rate.

(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.

(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.

(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 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 default additional rate.

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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 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.

(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 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),

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.

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17A Meaning of “property income”

(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),

(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 UK electric-line wayleaves), and

(e) chargeable under Chapter 10 of that Part (post-cessation receipts arising from a UK property business).

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(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.

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Meaning of “specified Northern Ireland company”

57F In the EMI code, a “specified Northern Ireland company” means a 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, wholesale trade or cross-border exchange of electricity.

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37A

(1) Sub-paragraph (2) applies if—

(a) on or after 26 November 2025, a fixed-date qualifying option 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 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 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

(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 Ireland company.

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(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 company and—

(i) not a specified Northern Ireland company, £10 million;

(ii) a specified Northern Ireland company, £5 million.

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(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;

(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.

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(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;

(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.

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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

(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.

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(a) if at that date the relevant 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 relevant company is not a knowledge-intensive company and—

(i) not a specified Northern Ireland company, £10 million;

(ii) a specified Northern Ireland company, £5 million.

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(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

(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.

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(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

(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.

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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—

(i) a trade in goods, or

(ii) the generation, transmission, distribution, supply, wholesale trade or cross-border exchange of electricity.

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116A Car or van made available with transfer of ownership

(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

(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;

(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 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 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—

(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, 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));

registered keeper means the person in whose name a vehicle is registered under VERA 1994.

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(5) Subsection (2) is also subject to section 138A (certain cars with a CO₂ emissions figure and an electric range figure).

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138A Certain cars with a CO₂ emissions figure and an electric range figure

(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 CO₂ emissions figure (as determined under section 136A) is 51 or more,

(c) the CO₂ emissions figure or (as the case may be) the CO₂ 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 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 CO₂ emissions figure of 1.

(3) In this section—

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 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 CO₂: OVC hybrid electric vehicles) (S.I. 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 procedures) values.

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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 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—

(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.

(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.

(4) In this section “for private purposes” and “excluded benefit” have the same meaning as in section 316.

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Flu vaccinations

320D Flu vaccinations

(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 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 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.

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360B Additional household expenses

(1) No deduction from earnings is allowed under this Chapter for additional household expenses which the employee incurs in the performance of the duties of the employment at home.

(2) In this section, “household expenses” has the same meaning as in section 316A.

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221A Payment for cancelled, moved or curtailed shift

(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—

(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 Act (charge to tax) to amounts treated as earnings under this section—

(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 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 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 if the shift had not been cancelled, moved or curtailed.

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38A Earnings relating to duties not performed

(1) This section applies for determining the extent to which general 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 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

Duties that were not performed

General earnings to which section 221A (cancelled, moved or curtailed shift) applies

The duties that it is reasonable to assume would have been performed during the shift but were not performed because of the shift’s cancellation, movement or curtailment

General earnings to which section 402B (termination payments etc) applies

The duties that it is reasonable to assume would have been performed during the post-employment notice period as defined by section 402E if the employee’s employment had not been terminated until the end of that period

General earnings which consist of a payment in lieu of notice to which Chapter 3 of Part 6 (termination payments etc). does not apply

The duties that it is reasonable to assume would have been performed during the notice period if the employee’s employment had not been terminated until the end of that period

Any other general earnings in respect of duties that an employee does not perform other than any general earnings for a period of absence from employment

The duties that the employee does not perform

(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 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 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.

(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.

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Chapter 11 — Umbrella companies

61Y Umbrella companies: joint and several liability

(1) Subsection (2) applies if—

(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”)—

(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

(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.

(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—

(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 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,

(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)—

(a) material interest, in relation to a company, means—

(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 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 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 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—

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);

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 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 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.

(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

(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) 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,

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—

(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,

(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 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 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.

(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 services the individual provides to the client,

(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,

(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 services having been provided to the individual in connection with finding the client with a view to the individual personally providing services to the client—

(i) by the purported umbrella company, or

(ii) where the provision of services to the client is as a result of a series of contracts, by one or more of the parties to those contracts.

(4) Case 3 is that—

(a) a company (“the purported umbrella company”) in which an 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,

(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 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 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 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 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 provides to the client,

(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 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 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),

(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 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)—

(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 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—

(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 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,

(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.

(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 (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 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

(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).

61Z2 Disclosures to liable persons

(1) Subsection (2) applies where an officer of Revenue and Customs considers that a person is, or may be, jointly and severally liable to pay an amount as a result of this Chapter.

(2) The officer may at any time disclose to the person such information as the officer considers appropriate (whether or not such a disclosure would otherwise be permitted under section 18(2)(a) of CRCA 2005 or any other enactment) for the purposes of informing the person about that liability (“the joint liability”) including—

(a) the identity of any person who is an umbrella company, a purported umbrella company or the worker in relation to the arrangements to which the joint liability relates, and

(b) information about the nature and extent of the liability of an umbrella company or a purported umbrella company that (by virtue of this Chapter) results, or may result, in the joint liability.

(3) Information disclosed in reliance on subsection (2) may not be further disclosed without the consent of the Commissioners for His Majesty’s Revenue and Customs (which may be general or specific).

(4) Where a person contravenes subsection (3) 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 to the disclosure as it applies in relation to a disclosure in contravention of section 20(9) of that Act.

(5) In this section “CRCA 2005” means the Commissioners for Revenue and Customs Act 2005.

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(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, that condition is to be treated as not met.

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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).

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(5A) Where a person is jointly and severally liable to pay an amount as a result of Chapter 11 of Part 2 of ITEPA 2003 (umbrella companies)—

(a) this regulation applies to that amount as it applies to an amount of tax payable by 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 treated as references to the person—

(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 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.

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section 45U

expenditure on plant or machinery in cases not falling within section 45S etc

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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,

(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

(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—

(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 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 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).

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Expenditure qualifying under section 45U (expenditure on plant or machinery in cases not falling within section 45S etc)

40%

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(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 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.

(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.

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(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 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.

(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.

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Calculation of expenditure credit where company previously benefiting from video 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

(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 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 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).

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“

(i) the adjusted VFX portion of Chapter 3 credits claimed in respect of the film or television programme, and

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(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—

(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.

(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 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 (4), ignore the reduction of any Chapter 3 credit resulting from the application of subsection (6A)(b).

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(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.

(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),

(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 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).

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(6) In this section, “the Commissioners” means the Commissioners for His Majesty’s Revenue and Customs.

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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—

(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—

(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 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.

Anti-avoidance

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(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 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).

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(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 required to make such a claim in order to obtain relief in respect of the disposal (despite section 6(6) of TIOPA 2010).

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Settlements: transitional protection where available protected income is increased 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.

(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 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).

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(2E) See subsections (7) and (8) of section 53 of FA 2026 (offshore income gains: savings relating to amendments made by section 52 of that Act) for special provision about income that is treated as arising under section 732 but that is not chargeable to income tax under subsection (3) of that section.

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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.

(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.

(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 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 (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 disposition of property.

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section 523A (legacies)

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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

(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 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.

(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

(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—

property includes rights and interests of any description;

will includes a testament, a codicil and any testamentary disposition of property.

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(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 allowable purpose, or

(b) that is not of a type listed in subsection (2) but that is approved under subsection (3).

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(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 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 other person).

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(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 under subsection (3).

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(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 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,

and is not made for the avoidance of tax (whether by the company or any other person).

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(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.

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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).

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(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.

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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).

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Carried interest

23I Tax treatment of carried interest

(1) This section applies where—

(a) an individual performs investment management services in 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.

(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 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.

(3) In subsection (2)(b)—

(a) the amount of the non-qualifying profits of the trade is—

(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 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 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 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 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 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 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 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.

(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 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 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 tax year.

23K Location of trade treated as carried on under section 23I etc

(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 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.

(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 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 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 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—

(a) the individual is a non-UK resident for the tax year, and

(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 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)—

(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—

(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));

(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;

(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 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 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 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 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 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 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 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—

(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.

(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

(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 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 of return,

(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 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).

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 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 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.

(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 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 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.

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

(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 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 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 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 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—

(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 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.

(6) Consequential adjustments in respect of the profits chargeable by virtue of section 23I or 23M must not have the effect that—

(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 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.

(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.

(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 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

(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 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;

“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—

(a) arrangements which permit an external investor to participate in investments acquired by the collective 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 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 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 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 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 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

(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 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 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

(b) on which external investors may reasonably be supposed to have relied or been able to rely.

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274ZZA Master Trust schemes

(1) In this Part “Master Trust scheme” means (subject to subsections (2) 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) 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).

(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 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) 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.

(6) In this section—

PSA 2017 means the Pension Schemes Act 2017;

PSA(NI) 2021 means the Pension Schemes Act (Northern Ireland) 2021.

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 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 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 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

(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 scheme.

(2) Regulations under this section—

(a) may make different provision for different cases;

(b) may include transitional or saving provision.

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(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.

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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 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 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 company—

(a) was a UK group company at a time during the period of account, and

(b) was not dormant throughout that period.

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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 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 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 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 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)).

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2

(1) A member of a worldwide group may revoke an appointment previously made under paragraph 1 in relation to a period of account.

(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—

(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 as the revocation, or later).

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(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.

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Penalty for submission of return where no reporting company appointed

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.

(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.

(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 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 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

(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, 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 and Customs of the circumstances mentioned in paragraph 11A(1), or

(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 ceased.

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(1A) Sub-paragraph (1) applies even if the company submitting the return 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.

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(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.

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1305B Avoidance schemes involving certain non-derecognition liabilities

(1) This section applies if—

(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

(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, 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 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 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;

(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—

(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 trust for the benefit of the relevant entity.

(5) In this section—

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 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 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

(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—

(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—

section 1122 of CTA 2010 (“connected” persons)

section 1139 of CTA 2010 (“tax advantage”).

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(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.

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210 Pension rights

(1) This section applies to any tax that is attributable to the value of notional pension property of a deceased member of a registered 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 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, or an exempt benefit, on the deceased’s death, and

(b) any property that is received by a person under the scheme as a benefit on the deceased’s death, other than an excluded benefit or an exempt benefit.

(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),

(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 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 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.

(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 administrator, or

(b) by virtue of subsection (5).

(7) In this Act “exempt benefit”, in relation to a pension scheme and a deceased member of the scheme, means a benefit paid under the scheme if and so far as the payment renders the transfer of value made on the deceased’s death an exempt transfer.

(8)

For provision under which a payment of a benefit renders the transfer of value on death an exempt transfer to the extent of the payment, see—

section 18 (transfers between spouses or civil partners);

section 23 (gifts to charities or registered clubs);

section 24 (gifts to political parties);

section 24A (gifts to housing associations);

section 25 (gifts for national purposes etc);

section 27 (maintenance funds for historic buildings etc).

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(3) If—

(a) personal representatives pay an amount of tax,

(b) the amount does not fall to be borne as part of the general testamentary and administration expenses of the estate,

(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 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.

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(4A) If—

(a) the personal representatives of a deceased person are given a 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 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.

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(3A) 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 as also attributable to any property that the person’s spouse or civil partner receives, or has a present or future right to 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 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.

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(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 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.

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(5) 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 as also attributable to any property that on the death of the member is given under the scheme to a political party qualifying for exemption under this section, and

(b) section 23(2) does not (despite subsection (3)) apply in relation to subsection (1).

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(4) 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 as also attributable to any land in the United Kingdom that on the death of the member is given under the scheme to a body falling within subsection (2), and

(b) section 23(2) does not (despite subsection (3)) apply in relation to subsection (1).

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(4) 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 as also attributable to any property that on the death of the member is given under the scheme—

(i) to a body within Schedule 3, or

(ii) in the circumstances described in paragraph 1 of Schedule 14 to the Finance Act 2012 (gifts to nation), and

(b) section 23(2) does not (despite subsection (2)) apply in relation to subsection (1).

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(3) 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 as also attributable to any property—

(i) that on the death of the member is given under the scheme to a person and becomes comprised in a settlement, and

(ii) in respect of which the condition in subsection (1)(a) or (b) is met, and

(b) section 23(2) does not (despite subsection (2)) apply in relation to subsection (1).

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218B Pensions: information powers

(1) The powers conferred on the Board by section 251 of the Finance Act 2004 (powers relating to the provision and preservation of information in connection with pensions) are exercisable for the purposes of this Act.

(2) Subsection (1) is without prejudice to the generality of that section of that Act.

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section 567B (deduction where inheritance tax is paid in respect of pension death benefit);

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567B Cases where inheritance tax is paid in respect of pension death benefit

(1) This section applies if—

(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 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 pension property,

(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, or

(iii) the scheme administrator pays (under section 226B of IHTA 1984) an amount of inheritance tax that is so attributable, and the payment meets the condition in subsection (2).

(2) A payment of an amount of inheritance tax meets the condition in this subsection if (and so far as)—

(a) in consequence of the payment, the scheme administrator makes an adjustment (under section 226B(5) of IHTA 1984) as a result of which the beneficiary’s entitlement to a benefit other than that mentioned in subsection (1) (“the other benefit”) is reduced, and

(b) disregarding that reduction, the other benefit would not give rise to taxable pension income for any tax year.

(3) A deduction is allowed from amount TPI equal to the lesser of—

(a) the amount of inheritance tax paid as mentioned in subsection (1)(d)(i) or (ii), less so much (if any) of that inheritance tax as has been deducted under this subsection in an earlier tax year, and

(b) so much of amount TPI as reflects the payment to the beneficiary of the benefit mentioned in subsection (1).

(4) Where the deceased was under 75 on death, and the benefit mentioned in subsection (1) is a relevant lump sum death benefit, a deduction is allowed from amount TPI equal to the lesser of—

(a) the amount of inheritance tax paid as mentioned in subsection (1)(d)(iii) so far as it meets the condition in subsection (2), less so much (if any) of that inheritance tax as has been deducted under this subsection in an earlier tax year, and

(b) so much of amount TPI as reflects the payment to the beneficiary of the benefit mentioned in subsection (1).

(5) Where a deduction is allowed under both of subsections (3) and (4), the deduction under subsection (4) is to be made first.

(6) 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 of inheritance tax, or

(b) the beneficiary reimburses the personal representatives that amount.

(7) In this section—

IHTA 1984 means the Inheritance Tax Act 1984;

inheritance tax includes interest on inheritance tax;

excluded benefit has the same meaning as in IHTA 1984;

notional pension property has the same meaning as in IHTA 1984;

relevant lump sum death benefit has the same meaning as in section 637S.

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579CB Refund of overpaid inheritance tax treated as pension

(1) This section applies if—

(a) an amount of inheritance tax that is attributable to the value of notional pension property of a deceased member of a registered pension scheme is paid,

(b) some or all of the inheritance tax paid—

(i) is repaid under section 241(1) of that Act to a person, other than a non-qualifying 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 representatives and passed on by the personal representatives to a beneficiary,

(c) in a case in which the payment of inheritance tax mentioned in paragraph (a) was made by the beneficiary or by the deceased’s personal representatives, a deduction is allowed under section 567B in respect of the payment, and

(d) the deceased was aged 75 or over at the date of their death.

(2) The relevant amount is treated for the purposes of this Part as though it were a pension paid under the registered pension scheme (and is treated as accruing in the tax year in which it is paid).

(3) In subsection (2) “the relevant amount” means—

(a) in a case in which the payment of inheritance tax mentioned in subsection (1)(a) is made by the scheme administrator, the amount of the payment made to the beneficiary mentioned in subsection (1)(b)(i) or (ii);

(b) in a case in which the payment of inheritance tax mentioned in subsection (1)(a) is made by a beneficiary or by the deceased’s personal representatives, the lesser of—

(i) the amount of the payment made to the beneficiary mentioned in subsection (1)(b)(i) or (ii), and

(ii) the deduction allowed under section 567B in respect of the payment of inheritance tax mentioned in subsection (1)(a).

(4) In this section—

inheritance tax includes interest on inheritance tax;

non-qualifying person has the same meaning as in section 206 of FA 2004 (special lump sum death benefit charge).

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(5) Where any inheritance tax is attributable to the value of the individual’s notional pension property, references in subsection (4) to the amount of a lump sum death benefit are to its IHT-adjusted amount.

(6) The “IHT-adjusted amount” of a lump sum death benefit paid to a person under a registered pension scheme is (subject to subsection (7)) the amount determined as follows —

Take the amount of the lump sum death benefit paid to the person.

Add the amount (if any) by which the person’s entitlement to the lump sum death benefit was reduced in consequence of an adjustment under section 226B(5) of IHTA 1984.

Deduct the amount (if any) of inheritance tax—

(a) that is attributable to the value of the individual’s notional pension property in relation to the scheme, and

(b) for which the person—

(i) is, or at any time was, liable under section 200(1)(c) of IHTA 1984, or

(ii) would at any time have been liable under that provision if the tax had not previously been paid by another person.

If the result is a negative amount, the IHT-adjusted amount of the lump sum death benefit is nil.

(7)

Where more than one lump sum death benefit is paid to the person under the scheme, the amount to be deducted under Step 3 is the following proportion of the amount of inheritance tax identified in that Step—

C / D

where—

C is the amount resulting from Step 2;

D is the aggregate of the amounts resulting from Step 2 in respect of each lump sum death benefit paid to the person under the scheme.

(8) In this section—

(a) “IHTA 1984” means the Inheritance Tax Act 1984;

(b) “notional pension property” has the same meaning as in IHTA 1984.

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(ea) payments of inheritance tax under section 226B of the Inheritance Tax Act 1984 (direct payment of tax by scheme administrator),

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206A Partial repayment of section 206 charge where IHT paid by recipient of benefit

(1) This section applies where—

(a) a registered pension scheme pays a lump sum death benefit in respect of a deceased member to a non-qualifying person,

(b) a liability to the lump sum death benefits charge arises in respect of the lump sum death benefit,

(c) at any time (whether before or after the payment of the lump sum death benefit)—

(i) the non-qualifying person pays an amount of inheritance tax that is attributable to the value of the deceased’s notional 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 non-qualifying person, and

(d) the non-qualifying person makes an application under this section for a reduction in the lump sum death benefits charge.

(2) Section 206 applies in relation to the lump sum death benefit as if the amount of the benefit that was paid to the non-qualifying person were the amount in fact paid, reduced by the amount of inheritance tax paid as mentioned in subsection (1)(c).

(3) If and to the extent that the amount of the lump sum death benefits charge paid in respect of the lump sum death benefit exceeds the amount of the liability (as recalculated as a result of subsection (2)), the excess must be repaid to the non-qualifying person (and may not be repaid to the scheme administrator).

(4) An application under this section is of no effect unless it complies with such requirements as to timing, form and content as may be prescribed by the Commissioners.

(5) For the purposes of subsection (1)(c) the deceased’s personal representatives “pass on the burden” of a payment of inheritance tax to the non-qualifying person if—

(a) the personal representatives pay a sum to the non-qualifying person out of the deceased’s estate that has been reduced by the amount of inheritance tax, or

(b) the non-qualifying person reimburses the personal representatives that amount.

(6) In this section—

the Commissioners means the Commissioners for His Majesty’s Revenue and Customs;

inheritance tax includes interest on inheritance tax;

non-qualifying person has the same meaning as in section 206.

206B Supplementary charge on refund of overpaid IHT

(1) This section applies where—

(a) a registered pension scheme pays a lump sum death benefit in respect of a deceased member to a non-qualifying person,

(b) a liability to the lump sum death benefits charge arises in respect of the lump sum death benefit,

(c) an amount of inheritance tax that is attributable to the value of notional pension property of the deceased member is paid,

(d) some or all of the inheritance tax paid as mentioned in paragraph (c) is subsequently—

(i) repaid under section 241(1) of that Act to the non-qualifying person, or

(ii) repaid under that section to the deceased’s personal representatives and passed on by the personal representatives to the non-qualifying person, and

(e) in a case in which the payment mentioned in paragraph (c) was made by the non-qualifying person or by the deceased’s personal representatives, the non-qualifying person has made an application under section 206A in relation to the lump sum death benefit.

(2) A charge to income tax arises in respect of the relevant amount.

(3) In subsection (2) “the relevant amount” means—

(a) in a case in which the payment of inheritance tax mentioned in subsection (1)(c) is made by the scheme administrator, the amount of the payment made to the non-qualifying person mentioned in subsection (1)(d)(i) or (ii);

(b) in a case in which the payment of inheritance tax mentioned in subsection (1)(c) is made by the non-qualifying person, or by the deceased’s personal representatives, the lesser of—

(i) the amount of the payment made to the non-qualifying person mentioned in subsection (1)(d)(i) or (ii), and

(ii) the repayment made under section 206A to the non-qualifying person in relation to the lump sum death benefit.

(4) The person liable to the charge is the non-qualifying person.

(5) The rate of the charge is the same as the rate of the special lump sum death benefits charge (see section 206(4)).

(6) In this section—

inheritance tax includes interest on inheritance tax;

non-qualifying person has the same meaning as in section 206.

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(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 Part.

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(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 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 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 tax year 2025-26, or

(b) the settlor ceasing to be a long-term UK resident at the start of any later tax year.

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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 to the value of property—

(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

(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 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 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).

(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;

(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.

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Foreign diplomats etc

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 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 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

the International Criminal Court Act 2001.

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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).

(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 for the purposes of calculating the value of the supply under this Act.

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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 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 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 paragraph (2) of item 15 in Group 12 in Schedule 8 to the Value Added Tax Act 1994 (zero-rating).

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(3A) But a person is not a tour operator if and so far as their business 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

(b) the transport of passengers by bus, coach, train, ship or aircraft.

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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—

(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—

(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;

(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—

(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—

(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 item concerned;

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 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.

(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 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.

(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).

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89C Section 87: UK listing relief

(1) Section 87 does not apply as regards an agreement to transfer 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,

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

(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 company, and

(b) immediately before those arrangements, the other company was—

(i) listed other than by reference to depositary interests, and

(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 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 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

(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 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.

(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—

(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;

(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—

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 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;

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)).

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(aa) it is not a remote bet,

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127A General betting duty charge on remote bets

(1) General betting duty is charged on a remote bet made with a bookmaker.

(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 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).

(4) Where the calculation for an accounting period under subsection (3) produces a negative amount—

(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) 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

(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,

(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 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 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 Amusements (Northern Ireland) Order 1985 (S.I. 1985/1204)).

(9) The Treasury may by regulations amend subsection (6).

”