Budget 26th November 2025: Key Changes Relevant To Gander Tax Services Clients

With one of the most significant rounds of UK tax reform in years now confirmed in the Budget, business owners, investors, trustees and internationally mobile individuals face a rapidly changing landscape from late 2025 through 2027.

These measures will reshape how share disposals are taxed, how trusts are treated, how reliefs such as EIS and EMI operate, and how UK income is taxed for residents and non-residents alike. Understanding the changes ahead – and preparing early – will be critical for avoiding pitfalls and maximising available reliefs.

Below is a clear breakdown of the key reforms you need to know.

Employee Ownership Trusts (EOT)

From 26^th November 2025, when shares are disposed of to an EOT, instead of CGT on the whole gain being deferred, only half of it is deferred, with CGT on 50% of the gain becoming taxable immediately.

Relief for share for share exchanges

Changes are to be introduced that make it more difficult to qualify for tax relief on share for share exchanges. The details have not yet been released.

Excluded property trusts (EPTs) changes

From 26^th November 2025, if an EPT held excluded property as at 30^th October 2024, any IHT arising thereon will be limited to £5m in each ten year cycle.

Previously, if an EPT holds shares in a non-UK resident company, it will be excluded property and therefore not subject to IHT, even if the assets the company holds are sited in the UK, with the exception of UK residential property, where the company is looked through and it will be treated as UK sited. From 26^th November 2025, this rule has been extended to non-UK companies holding UK agricultural land and buildings, which will now be looked through and treated as UK sited.

Amendments to rules for long-term residents (LTRs) and trusts

From 26^th November 2025, where the settlor of a trust ceases to be an LTR and then changes the trust assets from UK sited to non-UK sited, thereby removing them from the IHT regime, there will be an IHT exit charge at that point.

Taxation of non-UK residents

At present, a non-UK resident can either be taxed on all of their UK income or only be taxed on non-savings income, but forego the personal allowance. From 6^th April 2026, this option will no longer be available and a non-UK resident will be subject to UK tax on all of their UK income, including savings and dividends.

Incorporation relief

From 6^th April 2026, if an individual is incorporating a business and claiming relief under s.162 of the TCGA 1992, the claim must be included in the relevant tax return.

Agricultural property relief and business property relief (APR and BPR)

An individual can receive 100% relief of the first £1m of APR and BPR combined qualifying assets. From 6^th April 2026, if one spouse does not use this, it can be transferred to the surviving spouse, i.e. the latter will obtain relief on up to £2m.

Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT)

From 6^th April 2026, the rules on reliefs for the EIS and VCT will change as follows:

• The gross assets test has increased from £15m before and £16m after to £30m before and £35m after.
• The annual investment limit has increased from £5m to £10m; for knowledge-intensive companies, this has increased from £10m to £20m.
• The income tax relief for VCTs has decreased from 30% to 20%.

Enterprise Management Incentive (EMI) Scheme

From 6^th April 2026, the following amendments will be made to the EMI rules:

• The amount of options held in a company that will qualify for the EMI will increase from £3m to £6m.
• The gross assets test will increase from £30m to £120m.
• The employee test will increase from 250 employees to 500 employees.
• The period in which the option must be exercisable is increased from 10 years to 15 years.

Increase in income tax rates

From 6^th April 2027, income tax rates will increase for certain income as follows.

For income from properties and savings:

• Basic rate band will be 22%
• Higher rate band will be 42%
• Additional rate band will be 47%.

From 6^th April 2026, income tax rates will increase for certain income as follows.

For income from dividends:

• Basic rate band will be 10.75%
• Higher rate band will be 35.75%
• Additional rate band will be 39.35%.

The personal allowance and basic rate band will remain at £12,570 and £37,700 respectively up to and including the 2030/31 tax year.

Income Tax ordering rules

The Income Tax ordering rules will change from 6 April 2027. The personal allowance will be deducted from employment, trading or pension income first. Currently, individuals can choose which income the allowance is offset against.

Tax advisor registration

From May 2026, tax advisors will need to register with HMRC.

Post-departure profits

At present, if an individual becomes non-UK resident and returns within a certain period (generally speaking, 5 years), any dividends they take from a company are subject to income tax on their return to the extent that they relate to pre-departure profits and not post-departure profits. Essentially, if they are taking from profits that arose after departing the UK, calculated based on a just and reasonable basis, these are not subject to UK income tax, even if they are treated as temporarily non-resident.

From 6th April 2026, this concept will be removed and a temporary non-resident will be subject to UK income tax on all dividends taken in the period.

Preparing for the New UK Tax Era Speak to Gander Tax Services

These changes represent a significant shift in the UK tax system, affecting succession planning, business exits, international mobility, investment strategies and trust structuring. Reviewing your position early – before these measures take effect – is essential.

If you’d like tailored guidance on how these reforms affect you, your business or your trust arrangements, get in touch today for expert support.