The Government are today publishing draft legislation ahead of inclusion in the next Finance Bill. This allows for technical consultation on the application of tax policy in legislation. The Government are also publishing some new consultations and a number of responses to consultations on tax policy which have concluded.
The final contents of Finance Bill 2026-27 will be decided by the Chancellor at the next Budget.
Modernising the tax system
The Government are committed to modernising the tax system so that it is fit for our 21st-century economy and provides sustainable revenue to fund our public services into the future.
Electric vehicle excise duty: as announced at Budget 2025, the Government are publishing draft legislation to implement eVED, a new mileage charge for electric and plug-in hybrid cars, which will come into effect from April 2028. Drivers will pay for their mileage alongside their existing VED. The Government have also published a summary of responses to the eVED consultation which confirms the Government decision on aspects of the tax’s design and implementation.
Oil and gas revenue levy: as announced at Budget 2025, the Government are publishing draft legislation for the new permanent levy to tax exceptional oil and gas revenues in times of high prices. This had previously been referred to as the oil and gas price mechanism. Today, the Government confirm it will be legislated for as the oil and gas revenue levy. The OGRL will take effect when the energy profits levy ends at the end of March 2030, or earlier if the energy security investment mechanism is triggered. It will apply to upstream oil and gas companies operating in the UK or on the UK continental shelf, ensuring that companies continue to pay their fair share of tax in times of high prices. The OGRL will apply at a rate of 35% to revenues from oil and gas sales above specified thresholds. For 2026-27, these thresholds will be set at $90 per barrel for oil and 90 pence per therm for gas and will be adjusted annually in line with the preceding December’s consumer prices index. The measure aims to provide a stable and predictable fiscal environment, supporting investment and jobs while capturing windfall revenues of energy companies.
Reform of the foreign permanent establishment exemption: as announced on 21 May 2026, the Government are publishing draft legislation to exempt profits and losses attributable to foreign PEs from UK tax. This measure protects the UK’s corporation tax base by preventing losses from foreign activities being used to reduce UK tax liabilities. The draft legislation builds on an existing elective regime to mandate that amounts of profit and loss allocable to foreign PEs are excluded from the CT computation. The provisions will have effect for accounting periods beginning on or after 1 January 2027. The legislation prevents changes to the length of accounting periods delaying the operation of the provision. The draft legislation includes a provision to counteract avoidance arrangements by making adjustments to assessments, this will apply to businesses with foreign PEs who enter into arrangements on or after 13 July with a main purpose of obtaining a tax advantage and where the arrangements circumvent the operation of the principal measure.
Stamp taxes on shares modernisation: as previously announced, stamp duty and stamp duty reserve tax are due to be replaced with a single tax on transfers of securities. The securities transfer tax, which will be a modern, digital, self-assessed tax, will be introduced in 2027, with an update on the commencement date to be provided this Autumn. The Government are today publishing draft legislation and a summary of responses to the consultation on the 1.5% charge on certain overseas transfers of UK securities.
Removal of the landfill tax exemption for stabilisers added to dredgings: as announced at Budget 2025, the Government are publishing draft legislation to remove the landfill tax exemption for stabilisers added to dredged material before disposal at a landfill site from April 2027. As a result of this change, only the dredged material itself will remain exempt. Any additional material used to stabilise dredgings, such as air pollution control residues, will be subject to landfill tax at the relevant rate. The change is intended to limit the amount of hazardous stabiliser used and to encourage the recycling of materials such as APCr. The Government are confident that there are alternative practical and cost-effective methods of stabilising dredged material.
Mandatory reporting of benefits in kind from April 2027: as announced in June 2026, the Government are publishing draft primary legislation to introduce mandatory payrolling of benefits in kind from 6 April 2027, as part of wider reforms to modernise the tax system and improve the accuracy and timeliness of reporting of BIKs. The draft legislation sets out the framework for the mandatory reporting through real-time information, alongside provisions to ensure a proportionate approach to penalties during the initial years of implementation. It provides powers to ensure that certain benefits will remain outside mandatory payrolling where real-time reporting is not yet practical. The Government will continue to engage with stakeholders, including employers, payroll professionals and software providers, to support design and implementation.
Reforms to civil tax information and inspection powers and to modernise the definitions about computer records: as indicated at the 2026 tax update, the Government are publishing draft legislation on a number of reforms which will improve HMRC’s ability to carry out compliance checks by meeting OECD global forum standards on information exchange related to deceased taxpayers and cryptoasset-related businesses. This will be achieved by improving the administration and record-matching of an information notice that requires the identification of a taxpayer, by allowing flexibility in publishing reporting data, and by modernising definitions about computer records to ensure that HMRC can effectively access and process information in a modern, digital economy.
Pillar 2 side-by-side package and further amendments: as announced on 7 January 2026, the Government are implementing the pillar 2 side-by-side package into UK legislation in line with administrative guidance published by the OECD-G20 inclusive framework on base erosion and profit shifting in January 2026. The Government are now publishing draft legislation for both the side-by-side package and technical updates to the UK’s pillar 2 rules. These updates are being made in response to stakeholder feedback and to maintain consistency with the commentary and administrative guidance to the pillar 2 rules developed by the UK and other members of the inclusive framework.
The taxation of stablecoins: the Government are publishing draft legislation in relation to the tax treatment of eligible stablecoins. For individuals and trustees, disposals of eligible stablecoins will be exempt from capital gains tax and certain interest-like returns in respect of eligible stablecoins will be treated as savings income. For companies, the tax treatment of particular transactions involving eligible stablecoins will be based on amounts recognised in their accounts. The Government are publishing a summary of responses to the call for evidence, which ran between 26 March and 7 May 2026.
Cryptoasset loans and liquidity pools: the Government are publishing draft legislation for individuals and trustees in relation to cryptoasset loans and liquidity pools. This will treat certain disposals as being “no gain, no loss”, which defers capital gains tax until an economic disposal of the cryptoasset and better aligns the tax outcome with the economic substance of these arrangements.
Closing the tax gap
The Government are determined to close the tax gap and make sure that everyone pays the tax that they owe.
Publishing details of deliberate defaulters: following announcement at Budget 2025, the Government are publishing draft legislation that aims to strengthen the PDDD policy. The new legislation will allow HMRC to publish more information about the deliberate non-compliance that led to the defaulter’s details being published. In addition, the threshold for publication is being increased to £50,000 potential lost revenue. The reforms aim to increase transparency of HMRC’s compliance work and strengthen PDDD’s effect as a deterrent to deliberate non-compliance.
Modernising the correction of errors: as announced at Budget 2025, the Government are publishing draft legislation to modernise the correction of inaccuracies in returns or documents provided to HMRC. It introduces an explicit obligation on taxpayers to take reasonable action to correct errors once they are identified. It also gives HMRC a new power to issue a customer correction notice, which requires the taxpayer to check their position, and either correct the inaccuracy or explain why no correction is needed. This will help resolve simple, common issues more quickly and proportionately and improve consistency and fairness by setting a clear expectation that customers self-correct errors.
Alcohol duty penalty reform: the Government are publishing draft legislation to align alcohol duty penalties with wider penalty reform. This change affects producers of alcoholic products who submit monthly alcohol duty returns and payments. A new points-based system replaces the old penalties for alcohol producers who have missed the monthly deadlines. This new system is simpler and fairer, helping producers meet their monthly requirements. With the points system, not every mistake will lead to a financial penalty. Producers will only receive a penalty once a points threshold is reached after repeated late submissions.
Individual savings accounts, and introduction of a new compliance framework for ISA managers: as announced in June 2026, the Government are publishing draft primary legislation to enable the introduction of a new ISA manager compliance framework. It will provide clarity to ISA managers on their obligations, including meeting deadlines and reporting information accurately. It will strengthen protections for investors, while also supporting the move to digital ISA reporting.
Withholding of tax for rewards received under the strengthened reward scheme: the Government are publishing draft legislation on the tax treatment of rewards received by informants under the strengthened reward scheme, which launched at Budget 2025. This scheme increases the rewards paid to informants who provide HMRC with high-value information. For cases where tax over £1.5 million is recovered, HMRC will pay rewards up to 30% of the additional tax collected that would otherwise have gone unpaid. This legislation simplifies the tax payment process for recipients of the reward as income tax due is deducted at the source. This change will take effect from Royal Assent of the Finance Bill 2026-27.
Simplifying the tax system
The Government are simplifying the tax system to ensure that the system works effectively for all taxpayers and to make it easier to get tax right first time.
VAT provisions for drink deposit return schemes: as announced at Budget 2025, the Government are publishing draft legislation to introduce new VAT accounting rules for supplies made under a deposit return scheme. The new rules are designed to simplify VAT accounting. Under current VAT legislation concerning a DRS, the producer or importer who first supplies the drink in the UK is required to account for VAT on deposits relating to containers that are not returned. Under this measure, instead of VAT being accounted for by producers and importers, the deposit management organisation—the body with statutory responsibility for operating the DRS —will be required to account for VAT on deposits that are not refunded because containers are not returned. As a result, no business in the supply chain will need to account for VAT on the deposit element of the price at each stage. Instead, the VAT liability on unreturned deposits will rest centrally with the DMO.
Enterprise management incentives, and removal of the grant of options notification: as announced at Budget 2025, the Government are publishing draft legislation to remove the requirement for a company to submit a separate notification of a grant of EMI options. Instead, a company will be required to report details of the grant of options through the existing EMI end-of-year return. The change supports companies by simplifying the process to grant EMI options and reducing administrative burdens. These changes will apply to options granted on or after 6 April 2027.
Defined benefit pensions, and surplus extraction tax regime: as announced at Budget 2025, the Government are publishing draft legislation to introduce a new authorised payment from defined benefit pension schemes, allowing surplus funds to be paid directly to members. Under current rules, surplus payments to members are treated as unauthorised and subject to a tax charge. This measure will create a new category of authorised member payment, enabling schemes to distribute surplus to members as pension income, taxed at the individual’s marginal rate. This reform forms part of wider changes to modernise the defined benefit pension system and support the effective use of surplus assets, while maintaining appropriate safeguards and trustee responsibilities. Decisions to distribute surplus will remain at the discretion of scheme trustees and subject to scheme-specific circumstances. The legislation will take effect for payments made on or after 6 April 2027.
Corporation and income tax, and profits from exploration and exploitation rights: the Government are publishing draft legislation to ensure that profits from exploration and exploitation rights relating to oil and gas activities are defined in a clear, consistent and internationally aligned way when the UK’s domestic rules interact with the UK’s double taxation agreements. The update has effect in relation to accounting periods beginning on or after 1 April 2027 for corporation tax purposes and will have effect from 6 April 2027 for income tax purposes. The measure is expected to have a negligible impact on compliant businesses and is not expected to impose any significant additional administrative burdens.
Stamp duty land tax, and local government pensions scheme reform relief: as announced at Budget 2025, the Government are publishing draft legislation which provides a time-limited relief from stamp duty land tax for certain property acquisitions made by local government pension scheme pooled investment vehicles from LGPS administering authorities. This will apply from Budget day 2026, ceasing on 31 March 2032. It will enable the LGPS to reduce operating costs, become more competitive and attract investment by helping drive consolidation and strengthening the management of LGPS investments. This supports the Government aims to promote growth and increase investment in the UK.
Cultural gifts scheme: as announced at tax update 2025, the Government are publishing draft legislation to reform the cultural gifts scheme by removing the restriction on jointly owned objects and allowing tax credits to be used more flexibly. This will simplify the scheme by making it more accessible and improve take-up. The changes will come into effect from April 2027.
Making the tax system fairer
The Government are committed to ensuring that the tax system is fair and sustainable.
Reforming the customs treatment of low-value imports into the United Kingdom: as announced at Budget 2025, the Government are publishing draft legislation to reform the customs treatment of low-value imports, delivering on its commitment to modernise the handling of high-volume, low-value goods entering the UK. This measure will remove the £135 LVI relief, making LVIs subject to customs duty, and introduce a new set of customs arrangements designed to support fair competition and improve compliance. The Government are also publishing a consultation response document for LVIs. The document provides an overview of stakeholder views and detail on how the LVI reform will operate, including: standard import customs arrangements, new LVI customs arrangements and tariff treatment, alongside indicative detail on applying an additional fee on LVIs and aligning the VAT treatment with the new customs arrangements.
Soft drinks industry levy: the Government are publishing draft legislation to give effect to the changes to the soft drink industry levy announced at Budget 2025. From 1 January 2028 the Government will reduce the threshold at which the SDIL applies from 5 grams to 4.5 grams of sugar per 100 ml and remove the exemptions for milk-based and milk substitute drinks with added sugar. This technical consultation is to confirm that the legislation works to deliver the policy as set out in the Government consultation response.
Air passenger duty, and extension of the higher rate: as announced at Budget 2025, the Government are publishing draft legislation to extend the scope of the higher rate to all aircraft of 5.7 tonnes or more used as a private jet, to ensure the tax is applied consistently and that those who can afford to fly privately make a fair contribution. The change will take effect from April 2027.
Vehicle excise duty exemption for search and rescue vehicles: as announced at Budget 2025, and following consultation with stakeholders, the Government are publishing draft legislation to support the vital work of search and rescue charities. From 1 April 2027, eligible search and rescue vehicles operated by these charities will be exempt from vehicle excise duty.
International student levy: as confirmed in September 2025, the Government are publishing draft legislation to introduce an annual levy on higher education providers for their registered international students. The revenue raised will be fully reinvested into the higher education and skills system, including funding the reintroduction of maintenance grants for disadvantaged students. The levy will be set at £925 per international student, commencing from 1 August 2028 for the 2028-29 academic year. The Government intend that the levy amount will increase each year in line with inflation, that payments will be made by the registered provider in arrears the following academic year, and that each registered provider will be given an annual allowance of 220 international students that are not subject to the levy. Alongside this draft legislation, the Government are also publishing a Government response to the technical consultation on the levy that ran from 26 November 2025 to 18 February 2026.
Other consultations
Removing national insurance contributions debt from the scope of the Limitation Act 1980 and aligning processes with other forms of taxation: as announced at the 2026 tax update, the Government are publishing a consultation on proposals to remove national insurance contributions debt from the scope of the Limitation Act 1980 and to align NICs recovery processes more closely with other forms of taxation. This was a recommendation from the Office of Tax Simplification in their report “The closer alignment of income tax and national insurance” published in 2016. The proposed changes aim to simplify the tax system by ensuring greater consistency in how debts are treated across taxes, reducing complexity and administrative costs associated with current recovery processes. The consultation seeks views on how best to modernise and streamline those arrangements while maintaining appropriate safeguards.
Simplification of withholding tax on interest: the Government are publishing a consultation on simplifying the administration of treaty relief on withholding tax on payments of interest. The consultation seeks genuine and meaningful simplification to make it easier for taxpayers to obtain relief to which they are already entitled, while maintaining robust safeguards against avoidance. The Government’s aim is to ensure that the relevant processes provide adequate protection without imposing excessive administrative burden on either taxpayers or HMRC.
Land remediation relief: the Government are publishing a consultation seeking views on potential reforms to make land remediation relief more accessible, better targeted, and more closely aligned with the practical realities of brownfield development. The consultation seeks views on changes to the timing of the relief, aligning eligible contamination expenses with planning processes, and how to define and provide relief for long-term derelict land. The Government will work with industry to test the viability of these reforms and will only implement them if it is certain they offer meaningful cost-effective support to the sector.
Tax treatment of predevelopment costs: the Government are publishing a consultation on the tax treatment of predevelopment costs, meeting the commitment set out in the corporate tax road map. The consultation seeks views and evidence from stakeholders on the types of costs incurred, their treatment under the current rules, and the impact on investment decisions.