Finance Act 2026

After section 6C insert—

“6DThe 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.”

After section 11C insert—

“11CAIncome 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.”

After section 16 insert—

“16ATreatment 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.”

After section 17 insert—

“17AMeaning 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).”

In section 25 (reliefs and allowances deductible at Steps 2 and 3: supplementary), after subsection (3) insert—

“(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.”

After paragraph 57E, insert—

“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.”.

On and after 6 April 2026, Schedule 5 to ITEPA 2003 has effect in relation to an option granted before 6 April 2026 as if the following paragraph were inserted after paragraph 37—

“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.”.

In section 173A(1) (the maximum amount raised annually through risk finance investments requirement), for paragraphs (a) and (b) substitute—

“(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.”.

In section 173AA(1) (maximum risk finance investments at the issue date requirement), for paragraphs (a) and (b) substitute—

“(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.”.

In section 173AB(4) (maximum risk finance investments during period B requirement) for paragraphs (a) and (b) substitute—

“(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.”.

After section 256A, insert—

“256BMeaning 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.”.

In section 292A(1) (the maximum amount raised annually through risk finance investments requirement​ ), for paragraphs (a) and (b) substitute—

“(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.”.

In section 292AA(1) (maximum risk finance investments when relevant holding is issued requirement), for paragraphs (a) and (b) substitute—

“(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.”.

In section 292AB(4) (maximum risk finance investments during the 5-year post-investment period requirement), for paragraphs (a) and (b) substitute—

“(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.”.

After section 331B, insert—

“331CMeaning 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.”.

After section 116 insert—

“116ACar 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.”

In section 136A (cars with a CO2 emissions figure: registration on or after IP completion day), after subsection (4) insert—

“(5)

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

After section 138 insert—

“138ACertain 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.”

After section 316 insert—

“316ZAAccommodation, 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.”

After section 320C insert—

“Flu vaccinations

320DFlu 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.”

After section 360A of ITEPA 2003 (no deduction from earnings for social security contributions) insert—

“360BAdditional 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.”

After section 221 of ITEPA 2003 (payments where employee absent because of sickness or disability) insert—

“221APayment 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.”

After section 38 (earnings for period of absence from employment) insert—

“38AEarnings 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.”

In Part 2 (employment income: charge to tax), after Chapter 10 insert—

“Chapter 11Umbrella companies

61YUmbrella 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).

61ZRelevant 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.

61Z1Purported 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).

61Z2Disclosures 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.”

In section 61V (consequences of providing fraudulent information), after subsection (4) insert—

“(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.”

In section 684(2) (PAYE regulations), in the list of provisions, after item 7 insert—

“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).”

In regulation 80 of those Regulations (determination of unpaid tax and appeal against determination), after paragraph (5) insert—

“(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.”

In section 39 (first-year allowances available for certain types of qualifying expenditure only), after the entry relating to section 45S insert—

“section 45U

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

After section 45T insert—

“45UExpenditure 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).

45VExclusion 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).”

In section 52 (first-year allowances), in subsection (3), in the table, at the end insert—

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

40%”.

In section 1042N of CTA 2009 (amounts surrendered to other group companies), after subsection (4) insert—

“(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.”

In section 1179CE of CTA 2009 (amounts surrendered to other group companies), after subsection (4) insert—

“(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.”

After paragraph 24 insert—

“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—

“Step 2

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).”

In subsection (3)(b) for paragraph (i) substitute—

“(i)

the adjusted VFX portion of Chapter 3 credits claimed in respect of the film or television programme, and”.

After subsection (6) insert—

“(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).”

For subsection (2) substitute—

“(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).”

After subsection (5) insert—

“(6)

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

Before paragraph 11 insert—

“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”.

In paragraph 2 of Schedule 18 to FA 1998 (duty to give notice of chargeability to corporation tax), after sub-paragraph (2) insert—

“(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).”

In section 55A of FA 2004 (exception to duty to give notice to coming within charge to corporation tax), after subsection (4) insert—

“(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).”

In FA 2025, in Schedule 12 (trust protections), in Part 4 (commencement and transitional provision), after paragraph 70 insert—

“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).”

In section 733 of ITA 2007, after subsection (2D) insert—

“(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.”

After section 523 (but beneath the same italic heading) insert—

“523ALegacies: 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.”

In ITTOIA 2005, in section 636 (settlements: calculation of undistributed income), in subsection (7), at the appropriate place insert—

“section 523A (legacies)”.

After section 474 (but beneath the same italic heading) insert—

“474ALegacies: 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.”

Before that subsection insert—

“(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).”

At the end insert—

“(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).”

Before that subsection insert—

“(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).”

At the end insert—

“(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).”

For subsection (5) substitute—

“(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.”

In subsection (8), at the appropriate place insert—

““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);”.

For subsection (5) substitute—

“(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.”

In subsection (8), at the appropriate place insert—

““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);”.

After section 23H (double taxation) insert—

“Carried interest

23ITax 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.

23JElection 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.

23KLocation 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.

23LCarried 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.

23MTemporary 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).

23NPermitted 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.

23PCarried 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.

23QCarried 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.

23RDefinitions

(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.”

Before section 274ZA (but after the italic heading) insert—

“274ZZAMaster 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.

274ZZBCollective 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.

274ZZCPower 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.”

In section 282 (orders and regulations), after subsection (1A) insert—

“(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.”

For paragraph 1 (appointment by a worldwide group of a reporting company) substitute—

“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.”

After that paragraph insert—

“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)).”

For paragraph 2 (revocation by worldwide group of appointment under paragraph 1), substitute—

“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).”

In paragraph 8 (revised interest restriction return), in sub-paragraph (3), for paragraph (b) substitute—

“(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.”

After paragraph 11 insert—

“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.”

In paragraph 44 (enquiry into return for wrong period or wrong group)—

“(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.”

In paragraph 61 (provision of information between members of group where no reporting company appointed), for sub-paragraph (2) substitute—

“(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.”

In Part 20 of CTA 2009 (general calculation rules), in Chapter 1 (restriction of deductions), after section 1305A insert—

“1305BAvoidance 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”).”