On ‘Legislation Day’ (21 July 2025), HM Treasury released a range of draft legislation and tax documents. The key measures to be implemented by the new legislation can be categorised into the following areas:
Closing the Tax Gap
Several measures are proposed that will target tax avoidance. In addition, tax agents will be required to register with HMRC in order to deal with HMRC on their customers’ behalf.
One of HMRC’s main reasons for introducing Making Tax Digital (MTD) for Income Tax is that it will supposedly reduce errors. MTD is covered in more detail in the article below.
Putting the Tax System on a Fairer, more Sustainable Footing
Key measures in this category include:
- The controversial restrictions on the amounts of inheritance tax relief available for agricultural and business property from April 2026 (see below);
- Proposals to include inherited pension pots in a deceased person’s estate for inheritance tax purposes from April 2027; and
- Proposals to bring Employee Car Ownership Schemes into scope of the benefit in kind rules as company cars.
Maintaining the Tax System
Key measures in this category include:
- A proposal to introduce an easement that will help to mitigate the significant increase in benefit in kind (BiK) for plug-in hybrid electric vehicles (PHEVs) following a potential introduction of the new Euro 6e standard. If the standard is introduced in Great Britain, it would significantly increase the BiK tax due on PHEV company cars, which is linked to CO2 emissions.
- Technical guidance that aims to provide clarity on the tax implications of PISCES. PISCES stands for “Private Intermittent Securities and Capital Exchange System”, which is a new type of stock market that will allow private companies to have their shares traded intermittently.
On 21 July 2025, HMRC launched their Transformation Roadmap, which sets out ambitious plans for HMRC to become a digital-first organisation by 2030, with 90% of customer interactions taking place digitally. This compares to 76% as at today. HMRC will automate tax wherever possible and offer new digital self-serve options across a number of tax regimes.
It is estimated that the plans will save HMRC £50 million a year, including moving customer letters and reminders to a digital-first approach and reducing the reliance on paper correspondence by 2028/29. Paper post provision will remain for critical correspondence and for the digitally excluded.
The Transformation Roadmap sets out timescales for delivery and HMRC is committed to reporting on progress. Work is underway to deliver some of the measures set out in the roadmap this tax year, including:
- improving Self-Assessment registration service and streamlining the exit process for those customers who no longer need to file a Self-Assessment tax return.
- a new service to give employed parents, who are newly liable for the High Income Child Benefit Charge, the choice to pay it directly through their tax code without needing to register for Self-Assessment.
- launching an enhanced reward scheme for informants, targeting information on serious non‑compliance in large corporates, wealthy individuals, offshore and avoidance schemes.
Longer-term improvements include:
- From April 2026, the pre-population of Self-Assessment tax returns with Child Benefit data.
- From 2027-28, digitising the inheritance tax service.
- Simplifying payments and refunds, including direct bank repayments and easier National Insurance contribution refunds.
- Single Customer Account Programme to provide a unified view of the taxpayer’s overall income and tax position in their digital account.
Lastly, in what will come as good news to many, HMRC announced that MTD for Corporation Tax will not be implemented.