‘Legislation Day’ – also known as’ L Day’ – is an important date on the calendar. It’s when the government publishes draft clauses for the next Finance Bill and other documents for technical consultation. It also provides us all with more certainty over future tax changes although the final contents of the 2025-26 Finance Bill will be decided by Rachel Reeves at the next Budget.
This year’s L Day occurred on 21 July. A summary of the key announcements is outlined below:
- From 6 April 2025, the UK’s ‘non-dom’ regime was replaced by a new four-year residence based foreign income and gains regime (FIG) although the government are considering softening some aspects, such as changes to the Temporary Repatriation Facility (TRF).
- The controversial restrictions on the amounts of Inheritance Tax (IHT) relief available for agricultural and business property from April 2026 will go ahead. However, from 2030/31 the £1 million allowance will be increased in line with the Consumer Price Index (CPI).
- Two anti-fragmentation measures have been proposed with the aim of deterring the use of multiple trusts to claim more than one £1 million allowance and to prevent individuals from accumulating discounted valuations for future IHT planning.
- From April 2026, IHT Reliefs will no longer apply to shares not listed on recognised stock exchanges, including those traded on AIM (Alternative Investment Market).
- Proposals to include inherited pension pots within a deceased person’s estate for IHT purposes from April 2027 are still under discussion. However, death-in-service benefits will remain exempt from IHT. Executors or Personal Representatives (those who are responsible for administering an Estate) will be liable for settling any IHT due on unspent pensions funds.
- Making Tax Digital (MTD) will be implemented from 6 April 2026 for those with self-employed income or property income exceeding £50,000 (before expenses). Exceptions apply to ministers of religion, qualifying carers (e.g., those receiving foster care income), and non-UK resident entertainers or sportspersons who have no other sources of income subject to MTD requirements.
- Proposals have been put forward to bring Employee Car Ownership Schemes within the scope of benefit-in-kind rules, aligning them with the treatment of company cars.
Consulting with a tax professional can provide valuable guidance and help you navigate these changes. If you’d like to talk to a CKLG expert, give us a call on 01223 810100.
