The Finance (No. 2) Bill 2025-26 was published on 4 December 2025. 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 Bill, 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
Charities
52 Legacies to charities to be within scope of tax
53 Approved charitable investments: purpose test
54 Tainted charity donations: replacement of purpose test with outcome test
Miscellaneous
55 Winter fuel payment charge
56 Carried interest
57 Collective money purchase schemes and Master Trust schemes
58 Corporate interest restriction: reporting companies
59 Corporate interest restriction: capital expenditure and tax-EBITDA calculation
60 Avoidance schemes involving certain non-derecognition liabilities
61 Energy (oil and gas) profits levy: decommissioning relief agreements
PART 2
INHERITANCE TAX
Agricultural property relief and business property relief
62 Agricultural property relief and business property relief etc
Pension interests
63 Tax to be charged on certain pension interests
64 Liability for tax on pension interests
65 Withholding of benefits and payment of tax by pension scheme administrator
66 Connected amendments to IHTA 1984
67 Connected amendments to income tax rules
68 Commencement of sections 63 to 67
Freeze of nil rate band etc
69 Rate bands etc for tax year 2030-31
Provision relating to new regime in FA 2025
70 Relevant property: disapplication of exemptions from exit charges
71 Relevant property: cap on charges for pre-30 October 2024 excluded property
72 Foreign diplomats etc: periods of UK residence to be disregarded
73 Minor corrections
Infected blood compensation payments
74 Power to make provision about infected blood compensation payments
Gifts to charities and registered clubs
75 Scope of exemption for gifts to charities and registered clubs
76 Section 75: transitional protection for existing interests in possession
PART 3
OTHER EXISTING TAXES
Value added tax and insurance premium tax
77 Zero-rating of leases of vehicles to recipients of disability benefits
78 Insurance premium tax relief limited to adapted vehicles
79 Private hire vehicles or taxis
80 Certain charitable donations not to be treated as supplies of goods
81 Refunds of VAT to combined county authorities
Stamp duty reserve tax
82 UK listing relief
Gambling duties
83 Rate of remote gaming duty
84 General betting duty on remote bets
85 Abolition of bingo duty
Alcohol duty
86 Rates of duty
Tobacco products duty
87 Rates of duty effective from 6pm on 26 November 2025
88 Rates of duty effective from 1 October 2026
Taxes relating to vehicles
89 Vehicle excise duty for light passenger or light goods vehicles etc
90 Vehicle excise duty for rigid goods vehicles without trailers and tractive units
91 Vehicle excise duty for rigid goods vehicles with trailers
92 Vehicle excise duty for vehicles with exceptional loads etc
93 Vehicle excise duty for haulage vehicles other than showman’s vehicles
94 Vehicle excise duty: expensive car supplement
95 Rates of HGV road user levy
96 Rates of air passenger duty
Environmental taxes
97 Rates of climate change levy
98 Rates of landfill tax
99 Rate of aggregates levy
100 Aggregates levy: amendments relating to disapplication of levy to Scotland
101 Rate of plastic packaging tax
102 Chemical recycling: mass balance approach
103 Pre-consumer plastic
104 Sections 102 and 103: commencement
Soft drinks industry levy
105 Rates of levy
Customs duties
106 Amendment of customs tariff power
107 Dumping and subsidisation investigations
108 Safeguarding investigations
109 Customs facilities at approved wharves and other places
Economic crime (anti-money laundering) levy
110 Increases to rates of levy
Annual tax on enveloped dwellings
111 Removal of time limit to claim relief under section 106(3) of FA 2013
PART 4
VAPING PRODUCTS DUTY
Charge
112 Excise duty: charge
113 Vaping products
114 Production of vaping products
115 Excise duty point and payment
Administration
116 Administration
Duty stamps
117 Stamping of vaping products
118 Issue and management of duty stamps
119 Approved stamp holders
120 United Kingdom representatives
Forfeiture
121 Forfeiture
Civil penalties and enforcement
122 Dealing in unstamped vaping products
123 Loss and misuse of duty stamps
124 Failure to comply with this Part etc
125 Forfeiture: civil penalties
Offences
126 Dealing in duty stamps
127 Dealing in unstamped vaping products
128 Sales ban following conviction for unlawful use of premises
129 Offences: penalties
130 Forfeiture: offences
General provision
131 Publication of information
132 Information sharing
133 Investigation and enforcement
134 Regulations: further provision
135 Regulations: procedure
136 Amendments of other enactments
137 Interpretation
138 Commencement and transitional provision
PART 5
CARBON BORDER ADJUSTMENT MECHANISM
Introduction
139 Introduction to CBAM
The charge
140 Charge to CBAM
141 Importation
142 Goods processed under a special customs procedure
143 Person liable: the importer
144 Exemptions
145 Embodied emissions
146 Rate
147 Carbon price relief
Administration and enforcement
148 Administration and enforcement
149 Criminal offences
General
150 Supplementary amendments
151 Emissions: meaning etc
152 Interpretation
153 Power to make provision for linked emissions trading schemes
154 Regulations and notices
155 Commencement and transitory provision
PART 6
AVOIDANCE
CHAPTER 1
PROHIBITION OF PROMOTION OF CERTAIN TAX AVOIDANCE ARRANGEMENTS
Prohibition
156 Prohibition of promotion of certain tax avoidance arrangements
157 Meaning of promotion
158 Procedure
Sanctions
159 Civil penalties
160 Criminal offence
161 Criminal liability of responsible persons
General
162 Interpretation and commencement
CHAPTER 2
PROMOTER ACTION NOTICES
Promoter action notices
163 Certification of promoters
164 Promoter action notices
165 Preliminary notices
166 Disclosure of information by HMRC
167 Appeal against a decision to issue a promoter action notice
Sanctions
168 Civil penalties
169 Publication
170 Reporting to regulators etc
171 Extension of time periods
172 Reasonable excuse
General
173 Interpretation
CHAPTER 3
ANTI-AVOIDANCE INFORMATION NOTICES
Key definitions
174 Connected persons
175 Anti-avoidance enactments
Notices by type
176 Information notices: connected persons
177 Information notices: third parties
178 Information notices: unidentified connected persons
179 Information notices: identification
180 Information notices: financial institutions
Content, requirements and withdrawal of notices
181 Content and requirements of notices
182 Restriction on disclosure of notices
183 Excepted information
184 Tribunal approval of notices
185 Withdrawal of notices
Criminal sanctions
186 Offence of failing to comply with a notice
187 Offence of concealing information
188 Criminal liability of responsible persons
189 Criminal liability of responsible persons: no prosecution of recipient
190 Imprisonment or a fine
Civil sanctions
191 Penalty for failing to comply with a notice
192 Penalty for concealing information
193 Penalty for inaccurate information
194 Penalty for disclosing a notice
195 Penalty based on monies received
196 Increased daily default penalty
Sanctions: general
197 Extension of time periods
198 Reasonable excuse
199 Double jeopardy
200 Assessment etc of penalties: application of Schedule 36 to FA 2008
Appeals
201 Appeals against notices
202 Appeals against penalties
Miscellaneous and interpretation
203 Interpretation
204 Application of provisions of TMA 1970
205 Repeals
CHAPTER 4
MISCELLANEOUS
Legal professionals
206 Declaration in relation to privileged material
207 Penalties for an incorrect declaration
208 Penalties: procedure, appeals etc
209 Publication following an incorrect declaration
210 Time limits for publication
211 Amendments to existing legislation: removal of privilege exemption
212 Commencement
Disclosure of tax avoidance schemes: consequences for failure to comply
213 Penalties for non-disclosure of tax avoidance schemes
214 Removal of time limits on publication by HMRC
215 Consequential amendments
216 Commencement
Construction industry scheme: amendments
217 Construction industry scheme: amendments
218 Construction industry scheme regulations: amendments
219 Commencement
PART 7
TAX ADVISERS
CHAPTER 1
REGISTRATION
Prohibition against unregistered tax advisers interacting with HMRC
220 Prohibition against unregistered tax advisers interacting with HMRC
221 Meaning of “tax adviser” and “client”
Application process
222 Application for registration
223 Meaning of “relevant individual” and “officer”
224 Registration conditions
225 Registration conditions: interpretation
226 Registration conditions: offences
227 Registration of tax advisers etc
Monitoring of registration conditions and suspension of registration
228 Monitoring of registration conditions
229 Suspension of registration
Compliance notice
230 Compliance notice
Financial penalties
231 Financial penalties for prohibited interaction with HMRC
232 Financial penalties for prohibited interaction with HMRC: liability of relevant individuals
Ineligibility orders
233 Tax advisers: ineligibility orders
234 Relevant individuals: ineligibility orders
Requirement for tax adviser to notify clients of suspension or ineligibility orders
235 Requirement for tax adviser to notify clients of suspension or ineligibility orders
Reasonable excuse
236 Reasonable excuse
Extension of period for making representations
237 Extension of period for making representations
Assessment of financial penalties etc
238 Assessment of financial penalties
239 Time limits and treatment of financial penalties
240 Double jeopardy
Reviews and appeals
241 Reviews and appeals
Disclosure of information
242 Disclosure of information
Power to publish information
243 Power to publish information
Power to amend Schedule 19 (exceptions)
244 Power to amend Schedule 19 (exceptions)
Interpretation
245 Interpretation of Chapter
Commencement
246 Commencement
CHAPTER 2
CONDUCT ETC
Conduct of tax advisers
247 Conduct of tax advisers
Power to publish information about tax advisers etc
248 Power to publish information
249 Power to publish information: change of circumstances
250 Power to publish information: interpretation and commencement
PART 8
MISCELLANEOUS AND FINAL
Fiscal mandate assessments by the OBR
251 Fiscal mandate assessments prepared by the Office for Budget Responsibility
Provision of data by third parties
252 Data-gathering
Making tax digital
253 Persons on whom digital reporting requirements may be imposed
254 Exemptions from digital reporting requirements
255 Returns to be delivered by electronic communications etc.
256 Penalties: amendments consequential on section 255 etc
257 Powers relating to electronic communications: directions
258 Power to require digital contact details
Penalties
259 Penalty points and late submission penalties (power to cancel etc)
260 Assessments of late payment penalties etc.
261 Penalties for failure to pay tax due on further appeal
262 Failure to deliver company tax returns
Advance tax clearances
263 Clearances
264 Binding effect
265 Extension
266 Modification
267 Information
268 Misrepresentation
269 Commissioners notice
270 Powers
271 Interpretation
Cryptoasset reporting framework
272 Cryptoasset reporting: users and controlling persons resident in the UK
273 International cryptoasset reporting framework: connected matters
Miscellaneous
274 Stamp duty: piloting of digital service etc
275 Oversight of HMRC tax enforcement functions in Northern Ireland
276 Repeal of obsolete provision in FA 1925 concerning Dominion Governments
277 Repeal of other obsolete provisions and correction of wrong cross-references
Final
278 Interpretation
279 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 - Vaping products duty: amendments of other enactments
Schedule 15 - CBAM Goods
Schedule 16 - 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 17 - Offences relating to CBAM
Part 1 - Fraudulent evasion
Part 2 - Misstatement
Part 3 - Proceedings
Schedule 18 - Supplementary amendments relating to CBAM
Schedule 19 - Registration of tax advisers: exceptions
Schedule 20 - Registration of tax advisers: reviews and appeals
Schedule 21 - Conduct of tax advisers
Part 1 - Amendments to Schedule 38 to FA 2012
Part 2 - Consequential amendments
Schedule 22 - Data-gathering
Part 1 - Power to require provision of data to HMRC on an ongoing basis
Part 2 - Penalties and appeals
Part 3 - General
Schedule 23 - Aggregates levy: amendments relating to disapplication of levy to Scotland