The Finance (No. 2) Bill 2025-26 was published on 4 December 2025 and received Royal Assent on 18 March 2026 to become Finance Act 2026. This is a summary of its contents, which includes legislation for the new 40% First Year Allowance, the registration of tax advisers, and the reform of Agricultural Property Relief and Business Property Relief.
The full Act, and its explanatory notes, are available here.
PART 1
INCOME TAX, CAPITAL GAINS TAX AND CORPORATE TAXES
Income tax charge, rates and allowances
1 Income tax charge for tax year 2026-27
2 Main rates of income tax for tax year 2026-27
3 Default and savings rates of income tax for tax year 2026-27
4 Increase in dividend ordinary and upper rates
5 Savings rates of income tax for tax year 2027-28
6 New rates of income tax on property income
7 Property rates of income tax for tax year 2027-28
8 Scottish and Welsh property rates set by Scottish Parliament and Senedd
9 Freezing starting rate limit for savings for tax years 2026-27 to 2030-31
10 Basic rate limit and personal allowance for tax years 2028-29 to 2030-31
Corporation tax charge and rates
11 Charge and main rate for financial year 2027
12 Standard small profits rate and fraction for financial year 2027
Employee reliefs
13 Enterprise management incentives: thresholds and period for exercise
14 Enterprise investment scheme: increase in amounts and asset requirements
15 Venture capital trusts: rate of relief and amounts and asset requirements
16 CSOP schemes and EMI: PISCES shares
Employment income relating to cars etc
17 Employee car and van ownership schemes
18 Car or van made available on arm’s length terms
19 CO2 emissions figure for certain cars with an electric range figure
Other employment income
20 Employment income: miscellaneous exemptions
21 Disallowing deduction from earnings for additional household expenses
22 Payment for cancelled shifts etc.
23 Location of duties of employment where duties not performed
24 Umbrella companies
25 Loan charge settlement scheme
26 Loan charge settlement scheme: inheritance tax
27 Loan charge settlement scheme: supplementary
Capital allowances and other reliefs for businesses
28 Main rate of writing-down allowances for expenditure on plant or machinery
29 First-year allowance for main rate expenditure on plant or machinery
30 Expenditure on zero-emission cars and electric vehicle charging points
31 Payments for surrender of expenditure credits
32 Transition from video games tax relief
33 Special credit for visual effects
34 R&D undertaken abroad: Chapter 2 relief only
Chargeable gains
35 Restriction of relief on disposals to employee-ownership trusts
36 Anti-avoidance: collective investment scheme reconstructions
37 Anti-avoidance: company reconstructions
38 Anti-avoidance: reconstructions involving transfer of business
39 Incorporation relief: requirement to claim
40 Non-residents: cell companies
41 Non-residents: double taxation relief relating to collective investment vehicles
Non-UK residents etc
42 Abolition of notional tax credit on distributions received by non-UK residents
43 Non-resident, and previously non-domiciled individuals
44 Trust protections etc: minor amendments and transitional protection
45 PAYE for treaty non-residents etc.
Other international matters
46 Unassessed transfer pricing profits
47 Transfer pricing reform
48 International controlled transactions
49 Permanent establishments
50 Pillar two
51 Controlled foreign companies: interest on reversal of state aid recovery
52 Offshore income gains
53 Offshore income gains: savings
Charities
54 Legacies to charities to be within scope of tax
55 Approved charitable investments: purpose test
56 Tainted charity donations: replacement of purpose test with outcome test
Miscellaneous
57 Winter fuel payment charge
58 Carried interest
59 Pensions: abolition of the lifetime allowance charge
60 Collective money purchase schemes and Master Trust schemes
61 Corporate interest restriction: reporting companies
62 Corporate interest restriction: capital expenditure and tax-EBITDA calculation
63 Avoidance schemes involving certain non-derecognition liabilities
64 Energy (oil and gas) profits levy: decommissioning relief agreements
PART 2
INHERITANCE TAX
Agricultural property relief and business property relief
65 Agricultural property relief and business property relief etc
Pension interests
66 Tax to be charged on certain pension interests
67 Liability for tax on pension interests
68 Withholding of benefits and payment of tax by pension scheme administrator
69 Connected amendments to IHTA 1984
70 Connected amendments to income tax rules
71 Commencement of sections 66 to 70
Freeze of nil rate band etc
72 Rate bands etc for tax year 2030-31
Provision relating to new regime in FA 2025
73 Relevant property: disapplication of exemptions from exit charges
74 Relevant property: cap on charges for pre-30 October 2024 excluded property
75 Foreign diplomats etc: periods of UK residence to be disregarded
76 Minor corrections
Infected blood compensation payments
77 Power to make provision about infected blood compensation payments
Gifts to charities and registered clubs
78 Scope of exemption for gifts to charities and registered clubs
79 Section 78: transitional protection for existing interests in possession
PART 3
OTHER EXISTING TAXES
Value added tax and insurance premium tax
80 Zero-rating of leases of vehicles to recipients of disability benefits
81 Insurance premium tax relief limited to adapted vehicles
82 Private hire vehicles or taxis
83 Certain charitable donations not to be treated as supplies of goods
84 Refunds of VAT to combined county authorities
Stamp duty reserve tax
85 UK listing relief
Gambling duties
86 Rate of remote gaming duty
87 General betting duty on remote bets
88 Abolition of bingo duty
Alcohol duty
89 Rates of duty
Tobacco products duty
90 Rates of duty effective from 6pm on 26 November 2025
91 Rates of duty effective from 1 October 2026
Taxes relating to vehicles
92 Vehicle excise duty for light passenger or light goods vehicles etc
93 Vehicle excise duty for rigid goods vehicles without trailers and tractive units
94 Vehicle excise duty for rigid goods vehicles with trailers
95 Vehicle excise duty for vehicles with exceptional loads etc
96 Vehicle excise duty for haulage vehicles other than showman’s vehicles
97 Vehicle excise duty: expensive car supplement
98 Rates of HGV road user levy
99 Rates of air passenger duty
Environmental taxes
100 Rates of climate change levy
101 Rates of landfill tax
102 Rate of aggregates levy
103 Aggregates levy: amendments relating to disapplication of levy to Scotland
104 Rate of plastic packaging tax
105 Chemical recycling: mass balance approach
106 Pre-consumer plastic
107 Sections 105 and 106: commencement
Soft drinks industry levy
108 Rates of levy
Customs duties
109 Amendment of customs tariff power
110 Dumping and subsidisation investigations
111 Safeguarding investigations
112 Customs facilities at approved wharves and other places
Economic crime (anti-money laundering) levy
113 Increases to rates of levy
Annual tax on enveloped dwellings
114 Removal of time limit to claim relief under section 106(3) of FA 2013
PART 4
VAPING PRODUCTS DUTY
Charge
115 Excise duty: charge
116 Vaping products
117 Production of vaping products
118 Excise duty point and payment
Administration
119 Administration
Duty stamps
120 Stamping of vaping products
121 Issue and management of duty stamps
122 Approved stamp holders
123 United Kingdom representatives
Forfeiture
124 Forfeiture
Civil penalties and enforcement
125 Dealing in unstamped vaping products
126 Loss and misuse of duty stamps
127 Failure to comply with this Part etc
128 Forfeiture: civil penalties
Offences
129 Dealing in duty stamps
130 Dealing in unstamped vaping products
131 Sales ban following conviction for unlawful use of premises
132 Offences: penalties
133 Forfeiture: offences
General provision
134 Publication of information
135 Information sharing
136 Investigation and enforcement
137 Regulations: further provision
138 Regulations: procedure
139 Amendments of other enactments
140 Interpretation
141 Commencement and transitional provision
PART 5
CARBON BORDER ADJUSTMENT MECHANISM
Introduction
142 Introduction to CBAM
The charge
143 Charge to CBAM
144 Importation
145 Goods processed under a special customs procedure
146 Person liable: the importer
147 Exemptions
148 Embodied emissions
149 Rate
150 Carbon price relief
Administration and enforcement
151 Administration and enforcement
152 Criminal offences
General
153 Supplementary amendments
154 Emissions: meaning etc
155 Interpretation
156 Power to make provision for linked emissions trading schemes
157 Regulations and notices
158 Commencement and transitory provision
PART 6
AVOIDANCE
CHAPTER 1
PROHIBITION OF PROMOTION OF CERTAIN TAX AVOIDANCE ARRANGEMENTS
Prohibition
159 Prohibition of promotion of certain tax avoidance arrangements
160 Meaning of promotion
161 Procedure
Sanctions
162 Civil penalties
163 Criminal offence
164 Criminal liability of responsible persons
General
165 Interpretation and commencement
CHAPTER 2
PROMOTER ACTION NOTICES
Promoter action notices
166 Certification of promoters
167 Promoter action notices
168 Preliminary notices
169 Disclosure of information by HMRC
170 Appeal against a decision to issue a promoter action notice
Sanctions
171 Civil penalties
172 Publication
173 Reporting to regulators etc
174 Extension of time periods
175 Reasonable excuse
General
176 Interpretation
CHAPTER 3
ANTI-AVOIDANCE INFORMATION NOTICES
Key definitions
177 Connected persons
178 Anti-avoidance enactments
Notices by type
179 Information notices: connected persons
180 Information notices: third parties
181 Information notices: unidentified connected persons
182 Information notices: identification
183 Information notices: financial institutions
Content, requirements and withdrawal of notices
184 Content and requirements of notices
185 Restriction on disclosure of notices
186 Excepted information
187 Tribunal approval of notices
188 Withdrawal of notices
Criminal sanctions
189 Offence of failing to comply with a notice
190 Offence of concealing information
191 Criminal liability of responsible persons
192 Criminal liability of responsible persons: no prosecution of recipient
193 Imprisonment or a fine
Civil sanctions
194 Penalty for failing to comply with a notice
195 Penalty for concealing information
196 Penalty for inaccurate information
197 Penalty for disclosing a notice
198 Penalty based on monies received
199 Increased daily default penalty
Sanctions: general
200 Extension of time periods
201 Reasonable excuse
202 Double jeopardy
203 Assessment etc of penalties: application of Schedule 36 to FA 2008
Appeals
204 Appeals against notices
205 Appeals against penalties
Miscellaneous and interpretation
206 Interpretation
207 Application of provisions of TMA 1970
208 Repeals
CHAPTER 4
MISCELLANEOUS
Legal professionals
209 Declaration in relation to privileged material
210 Penalties for an incorrect declaration
211 Penalties: procedure, appeals etc
212 Publication following an incorrect declaration
213 Time limits for publication
214 Amendments to existing legislation: removal of privilege exemption
215 Commencement
Disclosure of tax avoidance schemes: consequences for failure to comply
216 Penalties for non-disclosure of tax avoidance schemes
217 Removal of time limits on publication by HMRC
218 Consequential amendments
219 Commencement
Construction industry scheme: amendments
220 Construction industry scheme: amendments
221 Construction industry scheme regulations: amendments
222 Commencement
PART 7
TAX ADVISERS
CHAPTER 1
REGISTRATION
Prohibition against unregistered tax advisers interacting with HMRC
223 Prohibition against unregistered tax advisers interacting with HMRC
224 Meaning of “tax adviser” and “client”
Application process
225 Application for registration
226 Meaning of “relevant individual” and “officer”
227 Registration conditions
228 Registration conditions: interpretation
229 Registration conditions: offences
230 Registration of tax advisers etc
Monitoring of registration conditions and suspension of registration
231 Monitoring of registration conditions
232 Suspension of registration
Compliance notice
233 Compliance notice
Financial penalties
234 Financial penalties for prohibited interaction with HMRC
235 Financial penalties for prohibited interaction with HMRC: liability of relevant individuals
Ineligibility orders
236 Tax advisers: ineligibility orders
237 Relevant individuals: ineligibility orders
Requirement for tax adviser to notify clients of suspension or ineligibility orders
238 Requirement for tax adviser to notify clients of suspension or ineligibility orders
Reasonable excuse
239 Reasonable excuse
Extension of period for making representations
240 Extension of period for making representations
Assessment of financial penalties etc
241 Assessment of financial penalties
242 Time limits and treatment of financial penalties
243 Double jeopardy
Reviews and appeals
244 Reviews and appeals
Disclosure of information
245 Disclosure of information
Power to publish information
246 Power to publish information
Power to amend Schedule 20 (exceptions)
247 Power to amend Schedule 20 (exceptions)
Interpretation
248 Interpretation of Chapter
Commencement
249 Commencement
CHAPTER 2
CONDUCT ETC
Conduct of tax advisers
250 Conduct of tax advisers
Power to publish information about tax advisers etc
251 Power to publish information
252 Power to publish information: change of circumstances
253 Power to publish information: interpretation and commencement
PART 8
MISCELLANEOUS AND FINAL
Fiscal mandate assessments by the OBR
254 Fiscal mandate assessments prepared by the Office for Budget Responsibility
Provision of data by third parties
255 Data-gathering
Making tax digital
256 Persons on whom digital reporting requirements may be imposed
257 Exemptions from digital reporting requirements
258 Returns to be delivered by electronic communications etc.
259 Penalties: amendments consequential on section 255 etc
260 Powers relating to electronic communications: directions
261 Power to require digital contact details
Penalties
262 Penalty points and late submission penalties (power to cancel etc)
263 Assessments of late payment penalties etc.
264 Penalties for failure to pay tax due on further appeal
265 Failure to deliver company tax returns
Advance tax clearances
266 Clearances
267 Binding effect
268 Extension
269 Modification
270 Information
271 Misrepresentation
272 Commissioners notice
273 Powers
274 Interpretation
Cryptoasset reporting framework
275 Cryptoasset reporting: users and controlling persons resident in the UK
276 International cryptoasset reporting framework: connected matters
Miscellaneous
277 Stamp duty: piloting of digital service etc
278 Oversight of HMRC tax enforcement functions in Northern Ireland
279 Repeal of obsolete provision in FA 1925 concerning Dominion Governments
280 Repeal of other obsolete provisions and correction of wrong cross-references
Final
281 Interpretation
282 Short title
SCHEDULES
Schedule 1 - Property and savings rates of income tax: consequential amendments
Part 1 - Amendments of ITA 2007
Part 2 - Amendments of other tax legislation
Part 3 - Amendment of Scotland Act 1998
Schedule 2 - Scottish and Welsh property income rates
Part 1 - Scotland
Part 2 - Wales
Schedule 3 - Non-resident, and previously non-domiciled individuals
Part 1 - Relief for new residents on foreign income and gains
Part 2 - Temporary repatriation facility
Part 3 - Temporary non-residence
Schedule 4 - PAYE for treaty non-residents etc
Part 1 - Treaty non-residents
Part 2 - Other amendments of ITEPA 2003
Schedule 5 - Unassessed transfer pricing profits
Schedule 6 - Transfer pricing
Part 1 - Amendments of Part 4 of TIOPA 2010
Part 2 - Other amendments
Chapter 1 - Loan relationships etc
Chapter 2 - Intangible fixed assets
Chapter 3 - Exchange gains and losses etc
Part 3 - Commencement
Schedule 7 - Permanent establishments
Part 1 - Amendments to CTA 2009
Part 2 - Amendments to CTA 2010
Part 3 - Amendments to ITA 2007
Part 4 - Amendments to TCGA 1992
Part 5 - Consequential amendments
Part 6 - Commencement
Schedule 8 - Pillar Two
Schedule 9 - Tainted charity donations
Schedule 10 - Winter fuel payment charge
Schedule 11 - Tax treatment of carried interest
Part 1 - Carried interest: interpretation of key terms
Part 2 - Consequential and connected amendments
Schedule 12 - Reform of reliefs for business property and agricultural property
Part 1 - Business property relief and agricultural property relief
Part 2 - Inheritance tax on overseas property with value attributable to UK agricultural property
Schedule 13 - Abolition of bingo duty: consequential and transitional provision
Schedule 14 - Aggregates levy: amendments relating to disapplication of levy to Scotland
Schedule 15 - Vaping products duty: amendments of other enactments
Schedule 16 - CBAM Goods
Schedule 17 - Administration of CBAM
Part 1 - Introduction
Part 2 - Registration
Part 3 - Payment, accounting periods and returns
Part 4 - Determination and evidence of emissions and carbon price relief
Part 5 - Measurement of weight
Part 6 - Records
Part 7 - Artificial separation of business activities
Part 8 - Death, incapacity and insolvency
Part 9 - Recovery
Part 10 - Repayments
Part 11 - Penalties
Part 12 - Reviews and appeals
Part 13 - Service
Part 14 - Interpretation
Schedule 18 - Offences relating to CBAM
Part 1 - Fraudulent evasion
Part 2 - Misstatement
Part 3 - Proceedings
Schedule 19 - Supplementary amendments relating to CBAM
Schedule 20 - Registration of tax advisers: exceptions
Schedule 21 - Registration of tax advisers: reviews and appeals
Schedule 22 - Conduct of tax advisers
Part 1 - Amendments to Schedule 38 to FA 2012
Part 2 - Consequential amendments
Schedule 23 - Data-gathering
Part 1 - Power to require provision of data to HMRC on an ongoing basis
Part 2 - Penalties and appeals
Part 3 - General