Tax Matters Digest

Then we turn our attention to last week’s Budget activity. Just in case you missed all the excitement, our Budget homepage summarises the main announcements for businesses, employers and individuals. And if you were out for lunch during our midday in-depth webinar on the Budget last Friday then you can watch it on demand here. And, if that isn't enough for you, we have also penned articles on key areas, summarising the announcements and what they could mean for you:

• Business investment: The Government has issued a consultation on Corporate Tax Simplification for Business Investment which discusses simplification of aspects of the UK’s corporate tax system especially where measures are potentially duplicative. It sits alongside a Call for Evidence for modernising Corporation Tax administration. Working to a slower timetable, this workstream explores how administration could evolve to better reflect the varying needs of corporate taxpayers, whilst supporting better use of technology;
• Tax incentives: The next article highlights what the Budget said about our system of incentives, from the reduction in the writing down allowance for plant and machinery to potential simplification of the patent box and R&D regimes;
• Foreign sovereign investors: The Budget saw the publication of an important consultation on the taxation of foreign sovereign investors which could particularly affect those that invest in UK real estate;
• Founders' relief: A key announcement in support of entrepreneurs was the introduction of a new founder's relief which will offer a 10 percent capital gains tax rate but involves detailed conditions;
• Taxation of distributions: The Government has been consulting on modernising the taxation of distributions and repayments of capital. At the Budget the Government announced it intends to proceed with all seven proposals with modifications. Businesses contemplating capital reductions, demergers, share buybacks or other returns of value should be aware of the developments;
• Employee share ownership: Another aspect of the Government’s support for entrepreneurs is employee ownership and its role in attracting, retaining and rewarding employees. Following a Call for Evidence the Government announced several measures at the Budget. Firstly, changes to the Enterprise Management Incentive (EMI) regime to make it more flexible. Secondly, the Government has rebranded Company Share Option Plans (CSOPs) to EMI2 and will double the limit on the value that can be held to £120,000 to reflect that this is now the principal tax advantaged option plan for companies that have outgrown EMI;
• US Limited Liability Companies and other ‘reverse hybrids’: The Government has previously consulted on the double taxation faced by UK-resident individuals with interests in US LLCs and other ‘reverse hybrids'. It has now announced that it prefers an elective credit mechanism rather than treating such entities as transparent for UK tax purposes;
• In-year payments for income tax self-assessment: The Budget also announced that in-year payments for income tax self-assessment will be introduced from April 2029. This will bring forward payments of income tax and introduce more frequent instalments at lower amounts;
• Budget 2026 for Professional Services firms: One of our final Budget articles looks at what the Budget means for professional partnerships including partner taxation, cash flow, capital investment, business travel, VAT and employment costs; and
• Modernising HMRC’s wealthy compliance: The Budget highlighted HMRC’s new and increased focus on wealthy taxpayers, particularly those with complex or international affairs. Our final Budget article explains how HMRC intend to move to a more data‑driven, risk‑focused model, building a joined‑up view of wealthy taxpayers, their structures and cross‑border activity.

Our Other News in Brief in this edition covers the following (including yet more Budget changes!):

• The issuance of new Employment Related Securities year-end reporting templates by HMRC which should be used from 6 April 2027;
• A new Guidance for Compliance publication which focusses on the prevention of payroll errors and PAYE RTI disputed charges;
• A First-tier Tribunal decision in relation to SDLT where the presence of a small substation resulted in a significant reduction in the liability for a largely domestic property;
• Budget: Key updates on Securities Transfer Tax;
• Budget: Abolition of SDLT on assured tenancies; and
• Budget: Capital sums received for surrendering rights

Finally, we include links to our Indirect Tax Weekly Talking Points and Week in Tax editions, providing highlights and analysis of indirect and international tax developments.