Autumn Budget 2025: Business Taxes

UK Listing Relief

Companies that list (for the first time) on a UK regulated market on or after 27 November 2025 will benefit from a three-year stamp duty holiday on share transfers.

The relief, known as UK listing relief, will exempt any such transfers from the standard 0.5% Stamp Duty Reserve Tax ("SDRT") . It is designed to incentivise individuals to invest in newly listed companies and to encourage both UK and overseas companies to list in the UK. Legislation will be included in the Finance Bill 2025-26. The government has been clear recently that it wants to promote London as the listing market of choice, and this measure shows a willingness to back that ambition with practical, time bound tax levers. Pro-growth and very welcome.

Details on the scope of the exemption include:

• Relevant listings will be shares and depositary interests which have been included on the FCA's "Official List".
  
  Not all companies which might colloquially be referred to as being listed are included on the Official List – so care will need to be taken to ensure that the relevant company is included when applying the exemption. For example, the Official List includes most – but not all – of the different segments of the LSE Main Market and does not include companies listed on AIM (although AIM of course already benefits from the growth market stamp duty exemption).
  
  
• The exemption will cease to apply to a company's securities if there is a change in control.
  
  
• The exemption will not apply to the higher 1.5% rate of SDRT for transfers to depositary receipt systems or unelected clearance services.
  
  
• The exemption will only remove the charge to SDRT (which applies to agreements to transfer chargeable securities). This means that if the relevant transfer is also within the scope of Stamp Duty on shares because there is an instrument of transfer and the relevant securities are not, for example, being transferred within CREST, then the Stamp Duty charge will still apply.

Stamp Duty modernisation

The Government will give HMRC the power to make regulations which enable the testing of the new digital service for self-assessing and paying a single "securities transfer charge".

This was announced by HMRC in April 2025 and is intended to replace Stamp Duty and Stamp Duty Reserve Tax as part the modernisation project. The power to make these regulations will be legislated for in the Finance Bill 2025-26 and will come into force immediately.

Research & Development Credits – targeted advance assurance service

The Government has published the outcome of its consultation on obtaining advance clearances in relation to research and development tax relief.

HMRC has identified high levels of non-compliance with the R&D relief schemes (the R&D Expenditure Credit ("RDEC") scheme and the Enhanced R&D Intensive Support ("ERIS") for Small and Medium-sized Enterprises ("SMEs")) and has, therefore, been exploring options for widening the use of advance clearances to reduce errors and non-compliance.

One of the outcomes of this consultation is the announcement of a pilot for a targeted advance assurance service from spring 2026 which will enable SMEs to get clarity on key aspects of their R&D relief claims before submitting them to HMRC. SMEs will be able to seek assurance on one of four issues during the pilot:

• Whether the project meets the definition of R&D for tax purposes.
  
  
• Whether overseas expenditure qualifies for relief.
  
  
• Which party can claim relief for contracted-out expenditure.
  
  
• Whether the company qualifies for exemption from the PAYE/NICs cap.

Capital allowances – a new first year allowance and a reduction in the rate of writing-down allowances

The Government has announced a new 40% first year allowance for expenditure incurred on certain plant and machinery assets on or after 1 January 2026.

Details of which assets this allowance will apply to, and which business can access it, will be set out in the Finance Bill 2025-26, but the Government has confirmed that it will be available to the UK leasing sector (which is currently excluded from accessing accelerated first year allowances) and to both incorporated and unincorporated businesses.

The new first year allowance will be introduced alongside a reduction in the main rate of plant and machinery writing down allowances from 18% to 14%.

The new rate will apply from 1 April 2026 for incorporated businesses and 6 April 2026 for unincorporated businesses.

Further amendments to Multinational Top-up Tax and Domestic Top-up Tax

Pillar 2 and the respective top-up taxes have been a feature of recent budgets with the OECD's framework being brought into force by the enactment of the Finance (No.2) Act 2023 (with subsequent amendments in Finance Act 2024 and Finance Act 2025).

In Autumn Budget 2025, the Government confirmed that further amendments would be implemented to ensure the UK legislation remains consistent with the OECD's GloBE rules commentary and administrative guidance. The amendments are not expected to raise any additional revenue and are described as measures to ensure the legislation works as originally intended.

Controlled foreign companies: interest on the reversal of state aid recovery

Following a Commission Decision ((EU) 2019/1352) the UK tax code was amended to recover amounts of State Aid from controlled foreign companies. This decision was overturned by a decision of the European Court of Justice on 19 September 2024, and the Government introduced regulations to allow companies to recover the tax which had historically been paid.

Under the existing law, interest was repayable on the amount of tax which was to be repaid but this did not extend to interest which the company had paid. The measure announced at the budget will extend that to allow for interest to be recovered on amounts of interest which were paid by companies.

Introduction of Carbon Border Adjustment Mechanism ("CBAM")

This is a new measure which places a carbon price on specified goods imported to the UK from sectors that are at risk of carbon leakage.

The UK CBAM will take effect from 1 January 2027 and looks to ensure that the UK reduces its global carbon emissions rather than moving carbon emissions overseas. The targeted areas are aluminium, cement, fertiliser, hydrogen, iron, and steel sectors. The measure is expecting to raise £250m a year by the end of the budget forecast.

For our analysis of the Sustainability related announcements, please read our Briefing: Autumn Budget 2025: a Sustainability Stocktake.

Transfer Pricing: SME Exemption and the International controlled transactions schedule (ICTS)

As part of its intention to reform the UK transfer pricing regime, the Government has confirmed its plans to introduce new powers for HMRC to be able to introduce regulations to compel in scope multinational companies to file an ICTS with HMRC.

This would be an annual filing requirement which would allow HMRC to collect information about relevant cross-border party transactions.

HMRC published both the policy proposal and the responses received to its initial consultation which was launched 28 April 2025.

• SME Exemption: The Government has been consulting about whether there should be reforms to the SME exemption from UK transfer pricing rules, particularly in relation to the exemption for medium-sized enterprises.

The Budget 2025 announcement, and release of the responses, show that this proposal has been dropped, with the reasons given relating to the potential compliance burden.

Note that the Government will continue to review whether they consider that the exemption should apply to medium-sized enterprises.

• ICTS: Transfer pricing is so often at the centre of compliance checks and enquiries opened by HMRC. HMRC is now being given powers to compel multinational groups to provide HMRC with the information which they will need either throughout an enquiry or to be able to assess on which groups of companies they should carry out a manual risk assessment.

The Government committed to this reform in its Corporate Tax Roadmap 2024, and the final proposal comes off the back of responses to the consultation carried out in the spring of this year.

These rules build on the updates made in 2023 to the UK transfer pricing regime, which required businesses to maintain their own transfer pricing records and provide them to HMRC upon request. The intention is to now have businesses file some of this data in a standardised format, the ICTS.

Nonetheless, the Government have confirmed that, to minimise costs, they would expect the filing requirements to be broadly aligned with similar overseas requirements. The initial consultation noted that thirteen of the nineteen other G20 members have a similar filing requirement. There is hope, then, that this additional requirement does not impose too dramatic an additional compliance burden on the approximately 75,000 companies that might be in scope for these new rules.

The primary legislation will be included in the Finance Bill 2025-26. HMRC will then issue regulations that set out the detailed design of the ICTS.

It is expected that the regulations will include details of the type of transactions that are to be included, from when companies will be required to file the ICTS, and the form and way such information is to be provided. A de minimis of £1m of aggregated foreign transactions is expected to apply. The Government has also indicated that transactions below a certain value threshold (currently proposed to be £100,000) would not need to be disclosed, although there will be specific rules aggregating similar types of transactions (for example those made with the same counterparty).

Given that there will be a further technical consultation in the spring of 2026, the Government expects that the measure will take effect for accounting periods beginning on or after 1 January 2027.

Cross-border grouping

The Government has announced that it will revert to unconditional 'whole entity' cross-border VAT grouping with effect from 26 November 2025

In the 2014 CJEU case, Skandia (C-7/13), it was held that a cross-border supplies between a primary establishment in a third-country and its overseas branch in an EU member state should be treated as a taxable supply if that overseas branch was a member of a VAT-group in that member state because that member state operated 'establishment-only' VAT grouping. In essence, establishment-only VAT-grouping effectively treats a branch as being a separate taxable person for VAT purposes.

The UK operates 'whole entity' VAT grouping. However, in HMRC's response to the Skandia case, as set out in Brief 18/2015, HMRC accepted that if a UK business had an overseas (EU) establishment which was VAT-grouped in a jurisdiction that operated 'establishment-only' VAT grouping, any supplies between the primary UK establishment and its overseas branch would need to be treated as taxable supplies (with, in the majority of cases, the UK business operating the reverse charge in the UK when a supply was made by the overseas branch.

The Government have now confirmed that this change in approach to adhere to Skandia has been reversed, as set out in Brief 7/2025 (published alongside the Budget). With effect from 26 November 2025, "an overseas establishment of a business VAT grouped in the UK should be treated as part of that VAT group, even when located in an EU member state that does not operate whole entity VAT grouping". The effect is that supplies between a UK establishment and its overseas branch will not be taxable supplies for UK VAT purposes (because, in effect, they are considered to be supplies made within the same entity). HMRC indicates that businesses may be able to reclaim VAT which has been "overpaid" under the previous approach through error correction notices. As this represents a revised interpretation of existing UK VAT law, the Government does not propose any legislative amendments.

VAT relief for business donations on goods to charities

The Government has announced a new VAT relief for goods which are donated by companies free of charge to charities.

The policy objective is to encourage business to donate surplus products to charitable causes, as opposed to letting those items go to waste. Provided those goods are eligible and distributed onward to people in need, then there will be no need for businesses to account for VAT on those items. For other items, for example those sold in charity shops, the relief will apply only up to a certain per-item value limit.

Motability, VAT, and the Insurance Premium Tax

Approximately 815,000 people use the Motability Scheme in the UK. It is estimated that some 40,000 users acquire "premium brands" such as Audi, Mercedes, and BMW under the scheme.

The scheme allows recipients of eligible benefits paid to be used to cover the cost of vehicle leases. Some individuals choose to top up this payment with additional cash to acquire a more expensive lease than the one covered by their benefits. Until now, both of those payments have been disregarded in terms of valuing the supply for VAT purposes. That is, any amount of the lease which is covered by the eligible benefits and the top up payments is not subject to VAT.

The Chancellor has announced two changes:

• Any top up payment made by the recipient will no longer be zero-rated and so the individual will be required to pay standard rate VAT. Vehicles that are designed, or substantially and permanently adapted, for wheelchair or stretcher users will continue to be zero-rated, even if paid for with a top up payment.
  
  
• Where, previously, insurance provided on vehicles acquired through the Motability scheme was not subject to Insurance Premium Tax, this will now only be the case in relation to vehicles for wheelchair and stretcher users.

Corporate interest restriction – reporting companies and updates to the calculation of tax-EBITDA

The Government has announced two sets of changes in relation to the corporate interest restriction, which, in broad terms, restricts the extent to which companies' interest expenses are deductible for corporation tax purposes by reference to their EBITDA:

• Administrative simplification: The first set of changes is designed to simplify the administration of the regime. The main change here will be the removal of both the time limit for appointing the "reporting member" and the requirement to notify HMRC of their appointment.
  
  
• Calculation of tax-EBITDA: The Government has also announced some changes to the calculation of EBITDA for businesses incurring capital expenditure which is deducted by way of specific reliefs in relation to waste disposal site preparation/restoration, and cemeteries, crematoria, flood, and coastal erosion risk management projects. This expenditure is to be excluded from the calculation of EBITDA.

Rate of withholding tax on interest to increase to 22%

From April 2027 the rate of withholding tax on yearly interest will be tied to the new basic rate of income tax for savings income – the basic savings rate. This will be set at 22%, resulting in a 2% increase from the current 20% rate of withholding tax which is applicable to UK source payments of yearly interest.

For more details on these proposals, please see our analysis of the Personal tax announcements in Autumn Budget 2025.

Cryptoasset Reporting Framework (CARF): reporting of UK resident cryptoasset users

Cryptoasset Service Providers will now be required to report on their UK tax resident customers.

This policy framework, based on an OECD recommendation, has been in the works for a little while now (it started with an initial Consultation in 2024), but this policy announcement now requires UK Reporting Cryptoasset Service Providers (RCASPs) to collect tax relevant information and undertake due diligence in relation to their users on an annual basis.

The current OECD framework does not require UK RCASPs to provide information on their UK customers.

The hope is that HMRC will have CARF data on all UK taxpayers using both UK and non-UK RCASPs, helping them to tackle tax evasion and avoidance.

The taxation of decentralised finance involving the lending and staking of cryptoassets: Consultation outcome

HMRC undertook a Consultation from April 2023 to June 2023 on the taxation of certain cryptoasset transactions. After considering three options initially, HMRC seems to have settled on an approach which involves decentralised finance transactions occurring on a no-gain, no-loss basis for tax purposes.

The effect of this is the individual is only taxed when the cryptoasset is sold and not when it is lent out or returned. This ensures that, even though each transaction is a disposal, the taxable gains or losses only arise where there is an economic disposal of the asset.

The Government intends to continue to engage with stakeholders to refine the approach it takes, so this is an area that can be expected to continue to evolve over the coming months and years.

Energy Profits Levy and Oil and Gas Price Mechanism

In last year's budget, the Government noted its intention to create a permanent successor to the EPL, known as the Oil and Gas Price Mechanism ("OGPM") which will take effect when the EPL ends. The purpose of these measures is to tax 'windfall profits' made by energy companies at times of particularly high prices.

The EPL is due to the end on the earlier of

• 31 March 2030, and
  
  
• if/when the EPL's price floor – the Energy Security Investment Mechanism – is triggered.

This year's budget includes some more detail on the OGPM through the newly published summary of responses to the OGPM Consultation with a commitment to include legislation in the next available Finance Bill.

The key features of the OGPM are as follows:

·       The OGPM will be a permanent fixture in UK legislation, but will only apply in periods of high prices

• The tax rate will be 35% and will apply to revenues above a given threshold that are realised on the disposal of gas or oil (which for these purposes includes natural liquid gas).
  
  
• The initial thresholds for FY 2026-27 are set at $90 per barrel of oil and 90p per therm of gas. The thresholds will adjust using the CPI year on year.

Plastic Packaging Tax — mass balance approach and removal of pre-consumer plastic

The closest the Chancellor came to mentioning the environment in her speech was to highlight the Green Party leader, Zack Polanski's hypnotherapist past, and there were only a few 'eco measures'.

One of those measures is to encourage the use of chemically recycled plastics by exempting from the plastic packaging tax plastics using at least 30% recycled materials. The measure also removes pre-consumer waste as a source of recycled content (the inclusion of which apparently undermined the environmental objective) and will apply from 1 April 2027.