ICAEW’s analysis of the Autumn Budget 2025 can be found on the Budget hub. This includes links to articles, a recorded webinar and podcasts.  

In the summary of measures below, the numbers in brackets refer to the relevant paragraph in HMRC’s Overview of tax legislation and rates (OOTLAR). 

Employment taxes 

• Expanding workplace benefits relief (1.19). The reimbursement of costs for eye tests and homeworking equipment, and for the provision and reimbursement of flu vaccinations, will be exempt from income tax and national insurance contributions (NIC) from 6 April 2026. ICAEW called for these changes in its response to the government consultation on tax incentives for occupational health in 2023. 
  Further information: policy paper.
• Non-reimbursed employment expenses for homeworking (1.20). From 2026/27 onwards, employees will be prevented from claiming an income tax deduction for additional household costs incurred if they are required to work from home. Currently, employees can claim tax relief for the actual expenditure or at a flat rate of £6 per week. It will still be possible for employers to reimburse employees for these costs where eligible without deducting income tax and NIC. The measure is expected to affect an estimated 300,000 individuals.
  Further information: policy paper. 

Income tax

• Non-resident dividend tax credit (1.75). The notional tax credit non-resident individuals receive for tax treated as being paid on dividends from UK companies will be abolished from 2026/27 onwards.
  Further information: policy paper.
• Construction industry scheme (1.76). From 6 April 2026, HMRC will have the power to take the following action where a business makes or receives a payment that it knows, or should have known, was connected to fraud:
  • remove the business’ gross payment status;
  • assess it for the tax lost; and
  • charge a penalty of up to 30% on the business or its officers.
Further information: policy paper.

Capital gains tax (CGT)

• Share exchanges and reorganisations (1.34). The government says that it intends to “modernise” the anti-avoidance provisions that apply to share exchanges and company reorganisations, which will take effect for issues of shares or debentures on or after 26 November 2025. The timing of the change may be particularly challenging if HMRC received a clearance application before 26 November. In this case, the relevant legislation in force before the Budget changes will continue to apply where the shares or debentures are issued within 60 days of the Budget or, if later, within 60 days of HMRC’s decision.
  Further information: policy paper.
• CGT relief for gifts of business assets (2.19). The formula that restricts gift holdover relief on the disposal of qualifying shares or securities will be modernised to include assets within the intangible fixed assets regime, or that qualify for the substantial shareholding exemption. 

Corporation tax

• Corporate interest restriction (CIR). The government will:
  • simplify administration in relation to reporting companies under the CIR for, broadly, accounting periods ending on or after 31 March 2026 (1.69). ICAEW highlighted some of the issues affecting reporting companies in an earlier article.
    Further information: policy paper.
  • make technical amendments to the legislation in respect of relief for certain capital expenditure (1.70). The government says that the amendments are required to ensure the rules work as intended and that they will apply for accounting periods ending on or after 31 December 2021.
    Further information: policy paper.
• Research and development (R&D) tax relief (1.81). The government will clarify the scope of the overseas restriction for R&D tax relief “to put beyond doubt” that restrictions on “relief for overseas expenditure apply to companies across the United Kingdom claiming the R&D expenditure credit”.  The changes will apply to claims made on or after 30 October 2024 and will take effect from the date of Royal Assent to Finance Bill 2025-26.
• Entrepreneurship (2.15). The government has published a call for evidence on tax support for entrepreneurs. The government is seeking “views on the effectiveness of existing tax incentives, and the wider tax system, for business founders and scaling firms, and how the UK can better support these companies to start, scale and stay in the UK”. ICAEW will be responding to the call for evidence. If you have any comments that could help inform ICAEW’s response, please email Richard Jones by 6 February 2026.
• Notification of uncertain tax treatments (UTT) by large businesses (2.37). In 2026, the government will consult on a possible extension to the UTT regime.  The objective of the proposed changes will be “to reduce the legal interpretation portion of the tax gap by requiring more legal interpretation uncertainties to be brought to HMRC’s attention”.
• Company payments to participators (2.38). The government is considering introducing new requirements to report transactions between close companies and their shareholders to HMRC. It will publish a consultation in early 2026.
• Modernising and standardising corporation tax submissions (2.39). The government will consult in early 2026 on “delivery timescales and enforcement options for prescribing the content and tagging of the corporation tax computation”, building on prior public engagement by HMRC.

Other taxes

• Annual tax on enveloped dwellings (ATED) (1.72). The government will amend the rules to ensure that relief from ATED is available to companies holding property for qualifying commercial purposes.
  Further information: policy paper.
• Carbon border adjustment mechanism (CBAM) (1.53). The government has confirmed that it will introduce a new environmental tax – CBAM – from 1 January 2027. In its response to an earlier consultation, ICAEW had called on the government to give businesses more time to prepare for CBAM’s implementation. Indirect emissions linked to the production of CBAM goods will not be included in CBAM from 1 January 2027.
  Further information: policy paper. 

Compliance

• Enhancing HMRC’s powers to ensure taxpayer errors in tax returns are corrected (2.44). Draft legislation on new correction powers, including a general obligation on taxpayers to correct inaccuracies when they are identified, will be published for technical consultation in 2026. ICAEW responded to an earlier consultation on the government’s proposals in January 2025.
• Behavioural penalties reform (2.45). The government has published a summary of responses to an earlier consultation on the reform of behavioural penalties, confirming that it “intends to simplify and strengthen HMRC’s inaccuracy and failure to notify penalties, while reducing administration costs for HMRC, taxpayers and agents”.
• Expanding tax conditionality to new sectors (2.47). In a summary of responses to an earlier consultation, the government has confirmed that it will expand the tax conditionality rules to new sectors, including licences in the waste and animal welfare sectors and additional transport licences.
• Recklessness offence (2.48). The government will consult in early 2026 on the introduction of a new criminal offence of recklessness for direct taxes. The government says that the intention is “to align direct tax offences with those already in place for indirect taxes, ensuring that prosecutors have a consistent set of offences across both regimes”.
• Tackling tax debt (2.49). Tax debt increased significantly during the COVID-19 pandemic and remains stubbornly high, as explained in an earlier article. In early 2026, the government will consult on requiring the payment of VAT and PAYE liabilities by direct debit.