Other news in brief

The Committee of the whole House for Finance Bill 2025-26 took place on 12 and 13 January 2026. Certain selected Clauses and Schedules were debated as follows: Clauses 1 to 8 and Schedules 1 and 2 (income tax charge and rates); Clauses 9, 10 and 69 (freezing of allowances); Clause 62 and Schedule 12 (agricultural property relief (APR) and business property relief (BPR)); Clauses 63 to 68 (inheritance tax on pension interests); Clauses 83 to 85 and Schedule 13 (gambling duties); and Clause 86 (rates of alcohol duty). Although many amendments were tabled, as is common, only those put forward by the Government were agreed. These Government amendments related to the recent announcement that the Inheritance Tax allowance for APR and BPR 100 percent relief has been increased from £1 million to £2.5 million as discussed in the last edition of Tax Matters Digest. All the remaining Clauses and Schedules will now be scrutinised by the Public Bill Committee – this stage is expected to commence on 27 January and is due to conclude by 26 February 2026.

Following earlier publication of the Outline Draft Budget and the Detailed Draft Budget, the Welsh Final Budget for 2026/27 was published on 20 January 2026. There were no changes to the income tax, Landfill Disposals Tax and Land Transaction Tax proposals set out in the previous releases (outlined in a previous edition of Tax Matters Digest ). Additional announcements in the Final Budget included:

• Confirmation that, following the UK Budget announcement in November 2025, the Senedd will exercise a new devolved power to set separate rates of income tax on Welsh taxpayers’ property income from the tax year beginning 6 April 2027;
• Details of a transitional relief scheme for payers of non-domestic rates (NDR) whose liability increases by more than £300 following the scheduled 1 April 2026 revaluation, whereby the rise will be phased in gradually over two years. It was also announced that the standard multiplier would be reduced in order to maintain NDR revenues in real terms following the revaluation. A ‘lower retail’ multiplier will re-balance the NDR system in favour of small to medium sized shops, and a higher multiplier will levy a marginal supplement on the largest (by value) properties in the tax-base, to offset the revenue forgone through the lower retail multiplier; and
• A statement that the Welsh Government will review any further details released by the UK Government in relation to its indication that it will introduce additional business rates support for pubs in England, with a view to exploring if similar additional support is required in Wales.

A vote on the Final Budget will take place on 27 January 2026. However, it is expected to pass in light of an agreement that has been reached between the minority Labour Government and Plaid Cymru.

Further to our previous update in December, HMRC have now confirmed that new double tax conventions with Andorra, Romania and Portugal entered into force on 22, 23 and 29 December 2025 respectively. In all cases, the treaties are effective in the UK from 6 April 2026 for Income Tax and Capital Gains Tax and 1 April 2026 for Corporation Tax. For withholding taxes, the treaties with Portugal and Romania have been effective in the UK from 1 January 2026 and the treaty with Andorra is effective from 1 February 2026. At the time of writing HMRC had not yet updated their page for the new treaty with Peru but it was expected to enter into force on 21 January 2026 and should also apply in the UK from 6 April 2026 for Income Tax and Capital Gains Tax and 1 April 2026 for Corporation Tax, but for withholding taxes it will be effective from 1 January 2027.

Businesses accessing tax treaties with India will be interested in the Indian Supreme Court decision in Tiger Global

In a landmark ruling, the Supreme Court of India, in the case of Tiger Global, has held that capital gains arising to a Mauritian tax resident from the transfer of shares in a Singapore company with significant Indian investments are taxable in India. Unlike the High Court, the Supreme Court concluded that the transactions in question constituted tax avoidance arrangements and the Indian General Anti Avoidance Rules (GAAR) could override the treaty provisions even where the shares of the foreign company were originally acquired before 1 April 2017, the cut-off date for GAAR grandfathering. The case also considers whether the tax authorities can make further inquiries where the claimant has obtained a Tax Residency Certificate. KPMG in India has published a Tax News Flash that provides more details on the facts of the case and its potentially far-reaching implications on the larger issue of tax treaty entitlement of multinational companies earning any income from India.