OpenLegislation

Finance Act 2025

2025 c. 8 · Enacted 20 March 2025 · Extends to United Kingdom

Up to date with all changes known to legislation.gov.uk, revised to 2 April 2026.

An Act to make provision about finance. [20th March 2025]

Most Gracious Sovereign

We , Your Majesty’s most dutiful and loyal subjects, the Commons of the United Kingdom in Parliament assembled, towards raising the necessary supplies to defray Your Majesty’s public expenses, and making an addition to the public revenue, have freely and voluntarily resolved to give and to grant unto Your Majesty the several duties hereinafter mentioned; and do therefore most humbly beseech Your Majesty that it may be enacted, and be it enacted by the King’s most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—

Contents

  1. Part 1: Income tax, capital gains tax and corporate taxes
  2. Income tax charge, rates etc
  3. 1Income tax charge for tax year 2025-26
  4. 2Main rates of income tax for tax year 2025-26
  5. 3Default and savings rates of income tax for tax year 2025-26
  6. 4Freezing starting rate limit for savings for tax year 2025-26
  7. Income tax provisions relating to cars
  8. 5Appropriate percentage for cars: tax year 2028-29
  9. 6Appropriate percentage for cars: subsequent tax years
  10. Capital gains tax rates and reliefs
  11. 7Main rates of CGT for gains other than carried interest gains
  12. 8Business asset disposal relief: increase in rate
  13. 9Investors’ relief: increase in rate
  14. 10Investors’ relief: reduction in amount qualifying for relief
  15. 11Sections 7 to 10: transitional provision
  16. 12Rate of CGT for carried interest gains
  17. Corporation tax charge and rates
  18. 13Charge and main rate for financial year 2026
  19. 14Standard small profits rate and fraction for financial year 2026
  20. Oil and gas
  21. 15Increase in rate of energy (oil and gas) profits levy
  22. 16Relief from levy for investment expenditure
  23. 17Extending the period for which levy has effect
  24. 18Decommissioning of carbon storage installations
  25. International matters
  26. 19Pillar Two
  27. 20Offshore receipts in respect of intangible property
  28. 21Application of PAYE in relation to internationally mobile employees etc.
  29. 22Advance pricing agreements: indirect participation in financing cases
  30. Reliefs for businesses
  31. 23Expenditure on zero-emission cars
  32. 24Expenditure on plant or machinery for electric vehicle charging point
  33. 25Commercial letting of furnished holiday accommodation
  34. 26Films and television programmes: increased relief for visual effects
  35. 27Certification of films etc: minor amendments
  36. 28Films etc: unpaid amounts
  37. 29Research and development relief: Northern Ireland companies
  38. 30Research and development intensity condition: transitional provision
  39. Employee-ownership trusts
  40. 31Employee-ownership trusts
  41. Miscellaneous measures
  42. 32Overseas transfer charge: pension schemes in EEA state or Gibraltar
  43. 33Overseas pension schemes established in EEA states
  44. 34Pension scheme administrators required to be resident in United Kingdom
  45. 35Alternative finance: diminishing shared ownership refinancing arrangements
  46. 36Statutory neonatal care pay
  47. Part 2: Replacement of special rules relating to domicile
  48. Chapter 1: New rules for foreign income and gains of individuals becoming UK resident
  49. 37Claim for relief on foreign income
  50. 38Claim for relief on foreign employment income
  51. 39Claim for relief on foreign gains
  52. Chapter 2: Ending the special treatment of individuals not domiciled in United Kingdom
  53. 40Remittance basis not available after tax year 2024-25
  54. 41Temporary repatriation facility
  55. 42Rebasing of assets
  56. Chapter 3: Trusts etc
  57. 43Trusts: connected amendments, transitional provision etc
  58. Chapter 4: Inheritance tax
  59. 44Excluded property: domicile test replaced with long-term residence test
  60. 45Corresponding change for settled property
  61. 46Consequential, connected and transitional provision
  62. Part 3: Other taxes
  63. Value added tax
  64. 47Removal of exemption for private school fees
  65. 48Charge on pre-paid private school fees
  66. 49Sections 47 and 48: commencement
  67. Stamp duty land tax
  68. 50Increased rates for additional dwellings: transactions before 1 April 2025
  69. 51Increased rates for additional dwellings: transactions on or after 1 April 2025
  70. 52Contracts substantially performed before relevant rate change
  71. 53Purchases by companies etc
  72. Annual tax on enveloped dwellings
  73. 54Alternative finance: land in England, Scotland or Northern Ireland
  74. 55Alternative finance: land in Wales
  75. Stamp duty and stamp duty reserve tax
  76. 56Testing of FMI technologies or practices
  77. Inheritance tax
  78. 57Rate bands etc for tax years 2028-29 and 2029-30
  79. 58EBTs: prohibition on applying property for benefit of participators etc
  80. 59EBTs: restriction on proportion of beneficiaries who may be participators etc
  81. 60EBTs: shares entering trust to have been held for two years
  82. 61Agricultural property relief: environmental management agreements
  83. 62National Savings Bank: statements from HMRC no longer to be required
  84. Alcohol duty
  85. 63Rates of alcohol duty
  86. 64Abolition of duty stamps for alcoholic products
  87. Tobacco products duty
  88. 65Rates of tobacco products duty
  89. Taxes relating to vehicles
  90. 66Rates of vehicle excise duty for light passenger or light goods vehicles etc
  91. 67Rates of vehicle excise duty for rigid goods vehicles without trailers etc
  92. 68Rates of vehicle excise duty for rigid goods vehicles with trailers
  93. 69Vehicle excise duty for vehicles with exceptional loads etc
  94. 70Rate of vehicle excise duty for haulage vehicles other than showman’s vehicles
  95. 71Vehicle excise duty: zero-emission vehicles
  96. 72Rates of HGV road user levy
  97. 73Rates of air passenger duty until 1 April 2026
  98. 74Rates of air passenger duty from 1 April 2026
  99. Environmental taxes
  100. 75Rates of climate change levy
  101. 76Rates of landfill tax
  102. 77Rate of aggregates levy
  103. 78Rate of plastic packaging tax
  104. Soft drinks industry levy
  105. 79Rates of soft drinks industry levy
  106. Part 4: Miscellaneous and final
  107. Avoidance
  108. 80Limited liability partnerships
  109. 81Loans to participators
  110. Crytpo-asset reporting framework
  111. 82OECD crypto-asset reporting framework
  112. Preparing for new taxes and information sharing
  113. 83Duty on vaping products
  114. 84Carbon border adjustment mechanism
  115. Wrong cross-reference etc
  116. 85Correction of wrong cross-reference etc
  117. Final
  118. 86Interpretation
  119. 87Short title
  120. Schedule 1: Consequential provision in connection with section 7
  121. 1Amendments of TCGA 1992
  122. 2Amendments of TCGA 1992
  123. 3Amendments of TCGA 1992
  124. 4Amendments of TCGA 1992
  125. 5Amendments of TCGA 1992
  126. 6Amendments of TCGA 1992
  127. 7Amendments of other Acts
  128. 8Amendments of other Acts
  129. 9Amendments of other Acts
  130. 10Amendments of other Acts
  131. Schedule 2: Sections 7 to 10 : transitional provision
  132. Part 1: Transitional provision in consequence of section 7 and Schedule 1
  133. 1Introductory
  134. 2Allocation of amounts to times before or after 30 October 2024
  135. 3Allocation of amounts to times before or after 30 October 2024
  136. 4Allocation of amounts to times before or after 30 October 2024
  137. 5Allocation of amounts to times before or after 30 October 2024
  138. Part 2: Anti-forestalling provisions: sections 7(3) and 10(2)
  139. 6Introductory
  140. 7Assets transferred under unconditional contract made before 30 October 2024
  141. 8Investors’ relief: reorganisations of share capital before 30 October 2024
  142. 9Interpretation
  143. Part 3: Anti-forestalling provisions: sections 8(3) and (6) and 9(4) and (8)
  144. 10Introductory
  145. 11Assets transferred on or after 6 April 2025 under unconditional contract made before 30 October 2024
  146. 12Assets transferred on or after 6 April 2025 under unconditional contract made on or after 30 October 2024 but before 6 April 2025
  147. 13Assets transferred on or after 6 April 2026 under unconditional contract made in tax year 2025-26
  148. 14Paragraphs 11 to 13: supplementary provision
  149. 15Business asset disposal relief: reorganisations of share capital before 30 October 2024
  150. 16Business asset disposal relief: reorganisations of share capital on or after 30 October 2024 but before 6 April 2026
  151. 17Business asset disposal relief: exchanges of securities etc before 30 October 2024
  152. 18Business asset disposal relief: exchanges of securities etc on or after 30 October 2024 but before 6 April 2026
  153. 19Investors’ relief: reorganisations of share capital before 30 October 2024
  154. 20Investors’ relief: reorganisations of share capital on or after 30 October 2024 but before 6 April 2026
  155. 21Interpretation
  156. Schedule 3: Payments into decommissioning funds
  157. 1Payments into decommissioning fund treated as general decommissioning expenditure
  158. 2Meaning of “relevant transferred plant or machinery”
  159. 3Application of sections 164 and 165 of CAA 2001
  160. 4Prevention of subsequent allowance where expenditure paid out of qualifying payment
  161. 5Application of the Energy (Oil and Gas) Profits Levy Act 2022
  162. 6Commencement
  163. Schedule 4: Pillar two
  164. Part 1: Introduction
  165. 1Paragraph 1
  166. Part 2: Undertaxed profits rule
  167. 2Multinational top-up tax to include undertaxed profits rule
  168. 3Expansion of chargeable persons
  169. 4Charge to multinational top-up tax to include UTPR
  170. 5New chapter to deal with UTPR
  171. 6Transition into regime
  172. 7Consequential amendments: IIR and qualifying undertaxed profits tax
  173. 8Other consequential amendments etc
  174. 9Other consequential amendments etc
  175. 10Commencement
  176. Part 3: Others
  177. 11Permanent establishments as excluded entities
  178. 12Use of substituted values
  179. 13Flow-through entities
  180. 14Flow-through entities
  181. 15Flow-through entities
  182. 16Flow-through entities
  183. 17Flow-through entities
  184. 18Tax equity partnerships
  185. 19Tax equity partnerships
  186. 20Tax equity partnerships
  187. 21Tax equity partnerships
  188. 22Tax equity partnerships
  189. 23Tax equity partnerships
  190. 24Tax equity partnerships
  191. 25Blended CFC regimes
  192. 26No allocation of deferred tax assets and liabilities under blended CFC regimes
  193. 27Cross-border allocation of current tax under cross-crediting regimes
  194. 28Cross-border allocation of deferred tax
  195. 29Extension of qualifying foreign tax credits
  196. 30Deferred tax recapture
  197. 31Existing deferred tax assets and liabilities arising under blended CFC regimes
  198. 32Substance based income exclusion: permanent establishments and flow-through entities
  199. 33Substance based income exclusion: permanent establishments and flow-through entities
  200. 34Substance based income exclusion: permanent establishments and flow-through entities
  201. 35Substance based income exclusion: permanent establishments and flow-through entities
  202. 36Eligible payroll costs
  203. 37Additional top-up amounts
  204. 38Additional top-up amounts
  205. 39Joint ventures
  206. 40Joint ventures
  207. 41Joint ventures
  208. 42Domestic top-up tax
  209. 43Domestic top-up tax
  210. 44Domestic top-up tax: excluded entities
  211. 45De minimis rule
  212. 46Transitional safe harbour
  213. 47Transitional safe harbour: arbitrage arrangements
  214. 48Substance based income exclusion: removal of provision for election
  215. 49Inclusion ratio
  216. 50Inclusion ratio
  217. 51Specification of territories and taxes
  218. 52Filing etc not required before 30 June 2026
  219. 53Minor amendments
  220. 54Minor amendments
  221. 55Minor amendments
  222. 56Minor amendments
  223. 57Minor amendments
  224. 58Minor amendments
  225. 59Minor amendments
  226. 60Minor amendments
  227. 61Minor amendments
  228. 62Minor amendments
  229. 63Minor amendments
  230. 64Minor amendments
  231. 65Minor amendments
  232. 66Minor amendments
  233. 67Minor amendments
  234. 68Minor amendments
  235. 69Minor amendments
  236. 70Minor amendments
  237. 71Minor amendments
  238. 72Commencement
  239. Schedule 5: Furnished holiday lettings
  240. Part 1: Amendments relating to income tax
  241. 1FA 2004
  242. 2ITTOIA 2005
  243. 3ITA 2007
  244. 4Consequential repeals of amending provisions
  245. Part 2: Amendments relating to corporation tax
  246. 5CTA 2009
  247. 6CTA 2010
  248. 7Consequential repeals of amending provisions
  249. Part 3: Amendments relating to capital allowances
  250. 8CAA 2001
  251. 9Consequential repeals of amending provisions
  252. Part 4: Amendments relating to chargeable gains
  253. 10TCGA 1992
  254. 11Consequential repeals of amending provisions
  255. Part 5: Commencement and transitional provision
  256. 12Commencement: Parts 1 to 3
  257. 13Commencement: Part 4
  258. 14Anti-forestalling: disposals under unconditional contracts
  259. 15Corporation tax: accounting periods straddling 1 April 2025
  260. 16Carry-forward of losses: income tax
  261. 17Carry-forward of losses: corporation tax
  262. 18Plant and machinery allowances
  263. 19Business asset disposal relief: disposals relating to pre-commencement businesses
  264. 20Post-commencement disposals by companies with substantial shareholding
  265. Schedule 6: Employee-ownership trusts
  266. Part 1: Capital gains tax
  267. 1Introduction
  268. 2Requirement for trustees of employee-ownership trusts to be UK resident
  269. 3Trustee independence
  270. 4Temporary breach of trustee independence requirement or residence requirement arising from death of trustee
  271. 5Consideration requirement
  272. 6Extended period for disqualifying events
  273. 7Additional information to be provided in claims
  274. Part 2: Income tax
  275. 8Participation requirement not infringed by exclusion of directors
  276. 9Relief for distributions to trustees of employee-ownership trusts
  277. Schedule 7: Diminishing shared ownership refinancing arrangements
  278. 1Income tax
  279. 2Corporation tax
  280. 3Capital gains tax
  281. 4Application
  282. Schedule 8: Relief on foreign employment income: consequential and transitional provision
  283. Part 1: General consequential amendments
  284. 1Paragraph 1
  285. 2Paragraph 2
  286. 3Paragraph 3
  287. Part 2: Consequential amendments relating to PAYE
  288. 4Paragraph 4
  289. Part 3: Transitional provision
  290. 5Individuals no longer meeting section 26A requirement not qualifying new residents
  291. 6Certain individuals meeting section 26A requirement treated as qualifying new residents
  292. 7Limit on relief not to apply to certain foreign employment relief claims
  293. 8Definitions
  294. Schedule 9: Income tax and capital gains tax: remittance basis and domicile
  295. Part 1: Remittance basis
  296. 1No remittance basis for tax years after 2024-25
  297. 2Amendments of TCGA 1992 connected with end of remittance basis
  298. 3Amendments of ITEPA 2003 connected with end of remittance basis
  299. 4Amendment of ITTOIA 2005 connected with end of remittance basis
  300. 5When amounts will be remitted
  301. 6Relief for amounts remitted again on becoming UK resident
  302. Part 2: Removal of domicile (primary legislation)
  303. 7Removal of exemption for persons not domiciled in United Kingdom
  304. 8Transferable tax allowance for married couples etc
  305. 9Residence of personal representatives: domicile of deceased no longer relevant
  306. 10Residence of personal representatives: domicile of deceased no longer relevant
  307. 11Residence of trustees: domicile of settlor no longer relevant
  308. 12Residence of trustees: domicile of settlor no longer relevant
  309. 13Residence of trustees: domicile of settlor no longer relevant
  310. 14Application of Income Tax Acts in relation to deemed employment
  311. 15Pension schemes
  312. 16Pension schemes
  313. 17Domicile of overseas electors
  314. 18Domicile of overseas electors
  315. 19Situs of debt
  316. 20Trust reporting requirements
  317. 21Trusts with vulnerable beneficiary
  318. 22Disposals of deeply discounted securities
  319. 23The accrued income scheme
  320. 24FOTRA securities
  321. 25Reliefs in respect of income from investments etc. of certain pension schemes
  322. Part 3: Removal of domicile (secondary legislation)
  323. 26Education funding
  324. 27Making Tax Digital
  325. Schedule 10: Temporary repatriation facility
  326. Part 1: Temporary repatriation facility charge
  327. 1Introduction and charge
  328. 2Qualifying overseas capital: main cases
  329. 3Capital payments made by settlement: section 87 and 89 TCGA 1992 cases
  330. 4Capital payments made by settlement: offshore income gains cases Repealed
  331. 5Capital payments made by settlement: Schedule 4C cases
  332. 6Amounts of income treated as qualifying overseas capital
  333. 7Deemed income under section 732 of ITA 2007 where pre-2025 gains available for matching
  334. 8Designation of qualifying overseas capital
  335. 9Payment of the TRF charge through the income tax system
  336. Part 2: Exemptions etc for designated qualifying overseas capital
  337. 10Income tax exemptions and relief
  338. 11Income tax exemptions: application of transfer of assets abroad rules in future years
  339. 12Capital gains tax: main exemption
  340. 13Capital gains tax: reliefs in respect of matched capital payments
  341. 13AAmounts derived from designated qualifying overseas capital
  342. 13BEffect of this Schedule on section 65(5) IHTA 1984 and section 260(2) of TCGA 1992
  343. Part 3: Effect of designation on when amounts remitted etc
  344. 14Temporary disapplication of nominated income ordering rules
  345. 15Mixed funds: section 809Q of ITA 2007
  346. 16Mixed funds: section 809R of ITA 2007
  347. 17Mixed funds: TRF capital account
  348. 18Temporary application of annualised basis to mixed funds containing TRF capital
  349. 19Business investment relief
  350. 20No tax credits for pre 2016-17 dividends etc
  351. 21Commencement
  352. Schedule 11: Rebasing of assets
  353. 1Rebasing of assets for individuals who have been subject to the remittance basis
  354. 2Assets becoming situated in the United Kingdom before 6 April 2025
  355. 3Election for paragraph 1 not to apply
  356. 4Rebasing under Schedule 8 to F(No.2)A 2017
  357. Schedule 12: Trusts: connected amendments, transitional provision etc
  358. Part 1: Settlements (income)
  359. 1Paragraph 1
  360. 2Paragraph 2
  361. 3Paragraph 3
  362. 4Paragraph 4
  363. 5Paragraph 5
  364. 6Paragraph 6
  365. 7Paragraph 7
  366. 8Paragraph 8
  367. 9Paragraph 9
  368. 10Paragraph 10
  369. 11Paragraph 11
  370. 12Paragraph 12
  371. 13Paragraph 13
  372. 14Paragraph 14
  373. 15Paragraph 15
  374. 16Paragraph 16
  375. 17Paragraph 17
  376. 18Paragraph 18
  377. 19Paragraph 19
  378. 20Paragraph 20
  379. 21Paragraph 21
  380. 22Paragraph 22
  381. 23Paragraph 23
  382. 24Paragraph 24
  383. 25Paragraph 25
  384. Part 2: Transfer of assets abroad
  385. 26Paragraph 26
  386. 27Paragraph 27
  387. 28Paragraph 28
  388. 29Paragraph 29
  389. 30Paragraph 30
  390. 31Paragraph 31
  391. 32Paragraph 32
  392. 33Paragraph 33
  393. 34Paragraph 34
  394. 35Paragraph 35
  395. 36Paragraph 36
  396. 37Paragraph 37
  397. 38Paragraph 38
  398. 39Paragraph 39
  399. 40Paragraph 40
  400. 41Paragraph 41
  401. 42Paragraph 42
  402. 43Paragraph 43
  403. 44Paragraph 44
  404. 45Paragraph 45
  405. 46Paragraph 46
  406. 47Paragraph 47
  407. 48Paragraph 48
  408. 49Paragraph 49
  409. 50Paragraph 50
  410. Part 3: Settlements (chargeable gains)
  411. 51Paragraph 51
  412. 52Paragraph 52
  413. 53Paragraph 53
  414. 54Paragraph 54
  415. 55Paragraph 55
  416. 56Paragraph 56
  417. 57Paragraph 57
  418. 58Paragraph 58
  419. 59Paragraph 59
  420. 60Paragraph 60
  421. 61Paragraph 61
  422. 62Paragraph 62
  423. 63Paragraph 63
  424. 64Paragraph 64
  425. 65Paragraph 65
  426. 66Paragraph 66
  427. 67Paragraph 67
  428. 68Paragraph 68
  429. 69Paragraph 69
  430. Part 4: Commencement and transitional provision
  431. 70Commencement
  432. 70ASettlements: transitional protection where available protected income is increased by this Schedule
  433. 71Onward gifts: settlements (income)
  434. 72Onward gifts: settlements (income)
  435. 73Onward gifts: transfer of assets abroad
  436. 74Onward gifts: settlements (chargeable gains)
  437. 75Onward gifts: settlements (chargeable gains)
  438. Schedule 13: Inheritance tax
  439. Part 1: Amendments to IHTA 1984 and related legislation
  440. 1IHTA 1984
  441. 2IHTA 1984
  442. 3IHTA 1984
  443. 4IHTA 1984
  444. 5IHTA 1984
  445. 6IHTA 1984
  446. 7IHTA 1984
  447. 8IHTA 1984
  448. 9IHTA 1984
  449. 10IHTA 1984
  450. 11IHTA 1984
  451. 12IHTA 1984
  452. 13IHTA 1984
  453. 14IHTA 1984
  454. 15IHTA 1984
  455. 16IHTA 1984
  456. 17IHTA 1984
  457. 18IHTA 1984
  458. 19IHTA 1984
  459. 20IHTA 1984
  460. 21IHTA 1984
  461. 22IHTA 1984
  462. 23IHTA 1984
  463. 24IHTA 1984
  464. 25IHTA 1984
  465. 26IHTA 1984
  466. 27IHTA 1984
  467. 28IHTA 1984
  468. 29IHTA 1984
  469. 30IHTA 1984
  470. 31FA 1986
  471. 32FA 2004
  472. 33FA 2004
  473. 34FA 2004
  474. 35FA 2004
  475. 36Constitutional Reform and Governance Act 2010
  476. 37Inheritance Tax (Delivery of Accounts) (Excepted Estates) Regulations 2004 (S.I. 2004/2543)
  477. 38Inheritance Tax (Delivery of Accounts) (Excepted Estates) Regulations 2004 (S.I. 2004/2543)
  478. 39Inheritance Tax (Delivery of Accounts) (Excepted Estates) Regulations 2004 (S.I. 2004/2543)
  479. 40Inheritance Tax (Delivery of Accounts) (Excepted Estates) Regulations 2004 (S.I. 2004/2543)
  480. 41Inheritance Tax (Delivery of Accounts) (Excepted Estates) Regulations 2004 (S.I. 2004/2543)
  481. 42Inheritance Tax (Delivery of Accounts) (Excepted Estates) Regulations 2004 (S.I. 2004/2543)
  482. 43Inheritance Tax (Delivery of Accounts) (Excepted Estates) Regulations 2004 (S.I. 2004/2543)
  483. 44Inheritance Tax (Delivery of Accounts) (Excepted Settlements) Regulations 2008 (S.I. 2008/606)
  484. Part 2: Commencement and transitional provision
  485. 45Commencement
  486. 46Certain pre-commencement emigrants treated as not being long-term UK residents
  487. 47Property moving between settlements
  488. 48Settlor’s death etc: application to bodies corporate
  489. 49Deemed domicile rules still to apply in relation to times before commencement