HMRC Anti-Avoidance Measures - Autumn Budget 2025

New Anti-Avoidance Measures from HMRC

The UK's Autumn Budget 2025 introduces a comprehensive package of anti-avoidance measures aimed at closing tax loopholes and ensuring tax compliance. Here are the key measures:

1. Tackling Promoters of Tax Avoidance Schemes

HMRC is introducing sweeping new powers to combat marketed tax avoidance schemes, effective from Royal Assent to Finance Bill 2025-26:

• Universal Stop Notices (USN): HMRC commissioners can now issue notices requiring all persons to stop promoting schemes with "no realistic prospect of success"
• Promoter Action Notices (PAN): HMRC can require businesses (banks, insurance companies, social media platforms) to cease providing services to suspected promoters
• Enhanced penalties: Civil penalties up to £1m plus £5,000 per scheme user, with criminal prosecution possible for serious cases (up to 2 years imprisonment)
• DOTAS regime strengthening: HMRC officers can issue civil penalties for failure to disclose without tribunal approval

2. Tax Adviser Accountability

New legislation will hold tax advisers accountable for facilitating non-compliance:

• Mandatory registration: All tax advisers interacting with HMRC must register by May 2026
• File access notices: HMRC can obtain information from advisers suspected of deliberately facilitating non-compliance
• New penalty framework: Sanctions for advisers who deliberately facilitate non-compliance
• Publication powers: HMRC can publish information about sanctioned advisers

3. Corporate Tax Anti-Avoidance

Share Reorganisations (effective 26 November 2025):

• Anti-avoidance rules rewritten to target cases where commercial transactions include additional arrangements to obtain tax advantages
• Focus shifts from overall transaction purpose to specific avoidance arrangements

Securitisation Non-Derecognition (effective 26 November 2025):

• New rule denies tax relief for amounts from securitisation arrangements where the main purpose is securing a tax advantage

Protected Cell Companies (effective 26 November 2025):

• Changes to non-resident capital gains rules for Protected Cell Companies
• Each cell treated as separate company for the 75% UK land test

4. Inheritance Tax Anti-Avoidance

For Non-UK Domiciles (effective 26 November 2025 or 6 April 2026):

• Legislation prevents using property situs to avoid IHT or pay less than long-term UK residents
• Extended to UK agricultural property (from 6 April 2026)

Charity Exemption Restrictions (effective 26 November 2025):

• IHT charity exemption restricted to direct gifts to UK charities and community amateur sports clubs
• Gifts to trusts that don't meet required definitions will not be exempted

Relevant Property Trusts (effective 26 November 2025):

• Technical change prevents avoidance of exit charges by temporarily bringing overseas assets to UK before moving them offshore

5. Employee Ownership Trust Changes

Effective 26 November 2025:

• Capital gains tax relief on disposals to employee ownership trusts reduced from 100% to 50%
• Remaining 50% of gain remains chargeable
• Business asset disposal relief and investors' relief unavailable if EOT relief claimed

6. Tainted Charitable Donations

From 6 April 2026 (income tax) / 1 April 2026 (corporation tax):

• Rules focus on transaction outcome rather than donor motivation
• Test lowered from "financial advantage" to "financial assistance"
• All categories of qualifying investments now included

7. Construction Industry Scheme Fraud

Finance Bill 2025-26 introduces measures for businesses knowingly entering fraud-connected transactions:

• Gross payment status cancellation (5-year reapplication ban)
• Business liable for lost tax
• 30% penalty on lost tax for liable businesses and connected persons

8. Enhanced Compliance Tools

Cryptoasset Reporting Framework (effective 1 January 2026):

• UK Reporting Cryptoasset Service Providers must collect and report data on UK-resident and overseas users
• Extended to include UK residents (not just overseas customers)
• First report due 31 May 2027

International Controlled Transactions Schedule (accounting periods from 1 April 2027):

• Companies must submit detailed data on cross-border related party transactions
• Categorized breakdown of goods, assets, intangibles, services, and financing

9. Transfer Pricing Changes

Accounting periods beginning 1 January 2026:

• Strengthened participation condition (connectedness)
• UK:UK transfer pricing measures
• Enhanced rules for related party intangibles
• Financial transactions provisions
• Interaction with loan relationships clarified

Conclusion

These measures represent HMRC's most comprehensive crackdown on tax avoidance in recent years. The key message is clear: promoters of tax avoidance schemes and advisers who facilitate non-compliance will face significant consequences, while legitimate taxpayers can expect greater certainty through advance clearance services.

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Don't wait until HMRC comes knocking. With mandatory adviser registration coming in May 2026 and enhanced HMRC powers already in force, now is the time to ensure your tax affairs are in order.

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