Dear Jian Ma,
 

Today, the Chancellor of the Exchequer, the Rt Hon Rachel Reeves MP, gave her Autumn Budget 2025 speech which set out the government’s plans to strengthen foundations for a secure future.

The Budget package includes tax changes which address unfairness, underpin digital transformation, and support the integrity of the tax system. These changes align with HMRC’s strategic objectives; to modernise our services, improve our day-to-day performance, and close the tax gap; alongside those which bear down on those who deliberately flout the rules.

The relationships that HMRC have with our external partners are critical in ensuring that our work is rooted in expertise and customer insight. Your input over the last year has directly resulted in improved design across a number of measures from last year’s Budget, including Modernising and Mandating Tax Adviser Registration, tackling promoters of tax avoidance schemes, and modernising collection of third-party data. Please check the consultations page on GOV.UK regularly to share your views in response to consultations published in the coming days and months.

As part of today’s Budget, the government also published the independent review of the loan charge carried out by Ray McCann and accepted all but one of its recommendations. This includes a new loan charge settlement opportunity along with changes that will make it possible for customers to settle with extra support. Full details are available in the government’s response published alongside the Budget.

Yours sincerely,

Jonathan Athow

Director General, Customer Strategy & Tax Design, HM Revenue & Customs

Key tax measures are detailed below. Information on all Budget measures announced today, including the annual uprating of duties and reliefs, can be found on the Autumn Budget 2025 page on GOV.UK.

A variety of tax-related documents are also being published, including Tax Information and Impact Notes (for changes which require legislation), consultations and calls for evidence.

Personal tax Changes to property income

From 6 April 2027, the government will create separate tax rates for property income.

The Income Tax rates for property income will be 22% for basic rate, 43% for higher rate and 47% for additional rate.

The government will engage with the devolved governments of Scotland and Wales to provide them with the ability to set property income rates in line with their current Income Tax powers in their fiscal frameworks.

Changes to savings income

From 6 April 2027, the savings basic rate will increase to 22%.

Savings on the higher rate will be increased to 42% and the savings additional rate will be increased to 47%.

Changes to dividends rates

From 6 April 2026, the rate change of Income Tax is applicable to dividend income for income received from this date.

The rates for individuals will increase by 2% to 10.75% for the dividend ordinary rate and 35.75% for the dividend higher rate.
The additional rate will remain unchanged at 39.35%.

The way customers report and pay tax on dividends, rental income and savings interest will remain the same; it is only the rate of tax charged that will change. Customers therefore don’t need to take any action or call HMRC.

State Pension and Simple Assessment

The government will ease the administrative burden for pensioners whose sole income is the basic or new State Pension without any increments so that they do not have to pay small amounts of tax via Simple Assessment from 2027-28 if the new or basic State Pension exceeds the Personal Allowance from that point. The government is exploring the best way to achieve this and will set out more detail next year. Customers do not need to contact HMRC at this stage.

Salary sacrifice for pensions contributions

From 6 April 2029, the government will charge employer and employee National Insurance Contributions on pension contributions above £2,000 per tax year made via salary sacrifice.

Most employees making typical pension contributions and their employers will be unaffected. Contributions through salary sacrifice, like all pension contributions, will still be exempt from Income Tax (subject to the usual limits). Employees who choose to sacrifice salary to receive Tax-Free Childcare or Child Benefit can keep doing so.

Voluntary National Insurance Contributions (NICs) abroad

From April 2026 for tax years 2026-27 onwards, the option to pay voluntary Class 2 NICs for periods abroad will be removed and new Class 3 NICs applications for periods abroad will require 10 years' continuous UK residency or National Insurance contributions.

These changes do not affect the ability of anyone to purchase voluntary National Insurance contributions (VNICs) for tax years prior to 2026-27 and a wider review of VNICs policy is planned to ensure the system is fair and fit for purpose.

More timely payment for Self Assessment

From April 2029, the government will require Income Tax Self Assessment (ITSA) taxpayers who also have PAYE income to pay more of their tax payments through the year via the PAYE system. This will help spread the taxpayer’s ITSA liability across the year. Taxpayers with both ITSA and PAYE income will pay some of their forecast ITSA tax through their employer or pension provider, deducting their ITSA tax via the normal PAYE process. These payments will be based on their previous ITSA liability.

The government will consult in early 2026 on detailed design options, and on options for timelier tax payment for those with Self Assessment income only.

These proposals take steps to ensure Income Tax Self Assessment taxpayers pay tax automatically via regular payments throughout the year, moving taxpayers away from having to pay unexpected bills and reducing the number of falling into tax debt. No one will pay more tax than they do under the rules today, the only change is when the tax is paid.

The government will consult on how best to support taxpayers through the one-off impacts of this change.

Help to Save reform

The government has extended Help to Save permanently.

In addition, from 5 April 2028, eligibility for the scheme will be extended to all Universal Credit claimants in receipt of the caring or child element, or both.

Inheritance Tax and Infected Blood Compensation Payments

The government will update legislation so that payments made under the Infected Blood Compensation Scheme and Infected Blood Interim Compensation Payment Scheme are relieved from Inheritance Tax in cases where the original infected or affected person eligible for compensation has died before the compensation is paid.

First living recipients of compensation payments will also have two years in which to gift some or all of the compensation payment without an Inheritance Tax charge.

ISA reform and starting rate for savings

From 6 April 2027 the annual ISA cash limit will be set at £12,000, within the overall annual ISA limit of £20,000.

Annual subscription limits will remain at £20,000 for ISAs, £4,000 for Lifetime ISAs and £9,000 for Junior ISAs and Child Trust Funds until 5 April 2031.

Savers over the age of 65 will continue to be able to save up to £20,000 in a cash ISA each year.

The starting rate for savings will be retained at £5,000 for 2026-27 and will stay at this level until 5 April 2031, allowing individuals with less than £17,570 in employment or pensions income to receive up to £5,000 of savings income tax-free.

High Value Council Tax Surcharge (HVCTS) in England

The government is introducing the HVCTS in England for residential properties worth £2 million or more, from April 2028.

This charge will be based on updated valuations to identify properties above the threshold and will be in addition to existing Council Tax.

New charges start at £2,500 per year, rising to £7,500 per year for properties valued above £5 million, and will be levied on property owners rather than occupiers.

Closing the tax gap Raising standards in the tax advice market

We’re taking action to raise standards in the tax advice market. The government will introduce legislation in Finance Bill 2025-26 giving HMRC enhanced powers to target advisers who deliberately facilitate non-compliance.

From 18 May 2026, all tax advisers who interact with HMRC on behalf of clients must register and meet minimum standards - an important step towards raising standards and reducing poor practice, helping to create a fairer market for taxpayers and advisers.

We’ve listened to the sector’s feedback in shaping the final legislation on these measures. Following consultation, we are also announcing that we will not regulate the tax advice market during this Parliament. We remain committed to working in partnership with the sector to improve standards.

Informants reward scheme

We have launched a strengthened reward scheme for informants, targeting serious non-compliance involving large companies, wealthy individuals, offshore activities, and avoidance schemes.

The reward scheme will offer informants 15–30% of tax recovered for cases over £1.5M, aiming to attract high-quality intelligence on serious tax non-compliance by large companies and wealthy individuals. Rewards are uncapped, taxable, and only paid after successful recovery, with the scheme expected to significantly boost tax compliance and close the tax gap.

Promoters of marketed tax avoidance

The government will introduce new powers to close in on promoters of marketed tax avoidance and the other professionals who market or enable tax avoidance schemes. These powers show the government’s clear determination to close in on the few remaining promoters by strengthening deterrents and introducing significant additional consequences for promoters who continue promoting tax avoidance schemes.

The government will also publish a consultation in early 2026 on a package of measures for landing consequences on promoters of marketed tax avoidance.

High street non-compliance

We are committed to addressing risks which undermine legitimate businesses and have a corrosive impact on local communities. We’re taking decisive action through activity including:

• Undertaking additional enforcement activity on high streets, focusing on illicit tobacco and vaping products and more targeted criminal interventions to tackle the most serious fraud and evasion by small businesses, by deploying 350 newly recruited criminal investigators as part of a new team in HMRC’s Fraud Investigation Service.

• Publishing a call for evidence in 2026 on the introduction of software standards for the electronic and mobile point of sale sector to tackle electronic sales suppression and cash facilitated tax evasion.

• Directing up to £10 million in funding from HMRC to Border Force in 2026 27 to enhance operational information gathering capabilities ahead of the introduction of the Vaping Product Duty on 1 October 2026 and to support enforcement at the border.

Business E-invoicing

The UK will introduce mandatory e-invoicing for all VAT invoices from 2029 and will publish a roadmap to implement this mandate at Budget 2026. We continue to welcome stakeholder insights to help shape a strong and effective approach to e-invoicing that delivers real value to UK businesses. We hope to work closely with businesses of all sizes, representative bodies and tax professionals to develop the detail of the UK’s VAT e-invoicing regime to ensure that it delivers these benefits.

We will launch a period of detailed collaboration with stakeholders to design and develop the UK’s e-invoicing regime. If you would like to hear more about this process, or to participate in any workshops or webinars hosted by the policy team, please contact them at einvoicingengagement@hmrc.gov.uk.

Vaping Products Duty and Vaping Duty Stamps

A flat-rate excise duty at £2.20 per 10ml on all vaping liquid will come into effect from 1 October 2026.
The government is also legislating to introduce the Vaping Duty Stamps scheme from 1 October 2026, which requires all vaping products manufactured or imported into the UK to have a duty stamp on packaging, so illicit products are immediately identifiable.

Business systems integration

The government will publish a call for evidence in early 2026 to develop options to increase the uptake of business systems integration, which enables the automatic transfer of sales and purchase data into businesses’ accounting software.

VAT and PAYE timely payments

The government will publish a consultation in early 2026 considering ways VAT and Pay As You Earn (PAYE) liabilities can be paid promptly without the taxpayer falling behind on their payments, including requiring more tax payments by direct debit.

Customs treatment of low value imports into the UK

The government is removing the customs duty relief on goods imported into the UK valued at £135 or below, making them subject to customs duty from 2029, and consulting on implementing a new set of customs arrangements for these goods. 

Gambling Duty

The government published its Summary of Responses to the April 2025 consultation on The Tax Treatment of Remote Gambling and announced a number of changes to the Gambling Duty regimes: 

• Remote Gaming Duty (RGD): The rate will rise from 21% to 40% with effect from 1 April 2026.

• General Betting Duty (GBD): A new Remote Betting Rate will be introduced from 1 April 2027. The rate will be set at 25%. The new rate does not include any bets placed on UK horse racing, bets placed via self-service betting terminals, pool betting or spread betting.

• Bingo Duty will be abolished from 1 April 2026.

Reform of Inheritance Tax reliefs for business property and agricultural property

The government has confirmed that legislation will be laid in the Finance Bill 2025-26 to implement reforms to Inheritance Tax (IHT) announced in the Autumn Budget 2024. These include reforms to Agricultural Property Relief (APR) and Business Property Relief (BPR) from 6 April 2026 and bringing unused pension funds and death benefits into IHT from 6 April 2027.

Today the government announced that:

• From 6 April 2026, any unused allowance for the combined 100% rate on APR or BPR will be transferable between spouses and civil partners, including if the first death was before 6 April 2026.

• new features will be implemented to support personal representatives to effectively administer estates containing pensions.

Capital Gains Tax on Employee Ownership Trusts

The government will reduce the Capital Gains Tax relief available on qualifying disposals to Employee Ownership Trusts from 100% of the gain to 50%. This will take effect from 26 November 2025.

We are also implementing technical and structural fixes to close loopholes and improve the data that HMRC holds to tackle non-compliance by the wealthy.

From 6 April 2026 individuals, partnerships or trustees will need to make a claim for incorporation relief for Capital Gains Tax in their Self Assessment return.

Anti-avoidance rule relating to certain non-derecognition liabilities

From 26 November 2025, a new anti-avoidance provision will be introduced in relation to certain arrangements where there is a non-derecognition liability. This will deny tax relief for amounts arising from such arrangements that are attributable to a main purpose of securing a tax advantage.

Transformation and modernisation Making better use of third-party data

The government will acquire third-party data more frequently for interest income and card sales. Following industry feedback, new third-party data reporting requirements will start from April 2028.

Modernising digital outbound communication

HMRC is changing legislation so that outbound communication can be sent digitally by default. From spring 2026, HMRC will be able to operate a ‘digital by default’ model of outbound communication, where new and existing customers using our digital services will automatically receive digital letters instead of letters by post. This will be rolled out gradually, only when different services and IT systems become ready. Customers will be able to ‘opt out’ of digital communications if they need to receive information by post and digitally excluded customers will continue to receive paper communications.

Kind regards,

Nathan Watson