On 21 July 2025, known as ‘Legislation Day’, HM Treasury published a collection of draft legislation and tax-related documents. The forthcoming legislation outlines several significant measures, grouped into the following categories:

Closing the tax gap

A number of proposals aim to combat tax avoidance. Among them is a new requirement for tax agents to formally register with HMRC in order to act on behalf of their clients.

A major justification provided by HMRC for the rollout of Making Tax Digital (MTD) for Income Tax is the expectation that it will reduce taxpayer errors. Further details on MTD are discussed in the article below.

Towards a fairer, more sustainable tax system

Measures under this heading include:

  • The planned, and much-debated, restrictions on inheritance tax relief for agricultural and business property, due to come into effect in April 2026 (see below for more);

  • A proposal to treat inherited pension funds as part of the deceased’s estate for inheritance tax purposes, starting from April 2027; and

  • Bringing Employee Car Ownership Schemes within the scope of the benefit-in-kind (BiK) rules, in line with how company cars are treated.

Preserving the integrity of the tax system

This section contains:

  • A proposal to introduce an easement intended to soften the impact of a projected increase in BiK for plug-in hybrid electric vehicles (PHEVs). This would become relevant if the Euro 6e emissions standard is adopted in Great Britain, which could otherwise cause a sharp rise in BiK liabilities for company PHEVs, as the tax charge is based on CO2 emissions.

  • Technical guidance to clarify the tax treatment of PISCES – the “Private Intermittent Securities and Capital Exchange System”. This new platform is designed to allow private companies to trade shares on an intermittent basis.