The Spring Statement
2026
This IHT exemption is being abolished from 6 April 2027. The government has confirmed that, from 6 April 2027, most unused pension funds and death benefits will come within the deceased’s estate for IHT purposes, whether written into trust or not. Since April 2015, it has generally been possible to pass on an undrawn balance in a pension fund to the beneficiaries of a pensioner’s estate. In many cases, the only tax to be suffered on the value in the undrawn fund would be income tax in the hands of the recipient, as and when drawings are made from the fund. For this reason, in recent years it has been standard advice to make lifetime gifts of other assets, retaining the maximum in the pension fund to be passed on at death. That advice needs to be reviewed urgently, as the addition of the whole value of a pension fund to a person’s chargeable estate, all of it potentially chargeable to tax at 40%, will fundamentally change the IHT planning. Image rights payments (April 2027) From 2027/28, all image rights payments related to an employment will be treated as taxable employment income and subject to income tax, employer NICs and employee NICs. This will affect sports people who set up image rights companies to accumulate payments for the rights. Electric Vehicle Excise Duty (April 2028) The government is introducing Electric Vehicle Excise Duty (eVED), a new mileage charge for electric and plug-in hybrid cars, with effect from April 2028. Drivers will pay for their mileage on a per-mile basis alongside their existing Vehicle Excise Duty. Electric cars will pay half the equivalent fuel duty rate for petrol and diesel cars, and plug-in hybrid cars will pay a reduced rate equivalent to half of the electric car rate. The government will carry out a consultation to gather views on how this will be implemented. ‘Mansion tax’ (April 2028) The High Value Council Tax Surcharge (HVCTS) is a new charge on owners of residential property in England worth £2 million or more (in 2026), which will take effect in April 2028.
Homeowners, rather than occupiers, will be liable to the surcharge and will continue to pay their existing Council Tax alongside the surcharge. The Valuation Office will conduct a targeted valuation exercise to identify properties above £2 million. Revaluations will be conducted every five years. Properties above the £2 million threshold will be placed into bands based on their property value. Charges will increase in line with CPI inflation each year from 2029/30 onwards. The surcharge will be £2,500 for properties between £2 million and £2.5 million, £3,500 between £2.5 million and £3.5 million and £5,000 between £3.5 million and £5 million. Above £5 million, the surcharge is £7,500. Pension contributions by salary sacrifice (April 2029) If an employer pays a contribution directly to an employee’s pension fund, there is no income tax and no employee or employer NICs on the payment. By contrast, if an employee chooses to make a contribution out of salary, they can claim income tax relief but the full amount of NICs remains payable. Under a ‘salary sacrifice’ arrangement, the employer and employee agree to replace some of the ‘normal’ salary with a direct pension contribution, avoiding the NICs for both parties. From 6 April 2029, full tax relief on ‘salary sacrifice’ arrangements will be restricted to a contribution of £2,000. On amounts in excess of that, employer and employee NICs will be due as if cash salary has been paid (although the contribution will still be free of income tax). The rules for other employer pension contributions (not made by salary sacrifice) will remain unchanged. Customs duty: low value imports (March 2029) The government intends to remove the customs duty relief on goods imported into the UK valued at £135 or less, making them subject to customs duty from March 2029 at the latest, and is consulting on implementing a new set of customs arrangements for these goods. VAT: e-invoicing (April 2029) From April 2029, it will be a requirement to issue all VAT invoices in a specified electronic format. The government is working on a ‘roadmap’ towards implementation of this measure and will publish this during 2026. Information contained on this document has been prepared as a way of summarising measures announced by the Government and HMRC as at the date of publication for the benefit of our clients. No responsibility is accepted for completeness on the part of this firm, its partners and/or employees. Modifications and clarifications may follow.
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