Currently, stablecoins are taxed in the same manner as other cryptoassets. However, this is anticipated to change in April 2027, when eligible stablecoins will likely be classified similarly to money for tax purposes.
Why choose stablecoins?
Stablecoins are predominantly US dollar-based, with over $300 billion in circulation. They offer significant convenience for investors looking to hold their funds while trading more volatile cryptoassets.
Stablecoins provide an efficient means of payment for goods and services, minimizing the costs typically associated with traditional payment methods like credit cards, particularly in cross-border transactions. Approximately 1.2 million individuals participate in stablecoin transactions, and the upcoming changes will simplify the tax framework.
Defining eligible stablecoins
An eligible stablecoin will be generally defined as a cryptoasset that maintains a stable value relative to a fiat currency. To support this stable value, fiat currency or other assets must be held.
Disposal of cryptoassets
Most disposals of cryptoassets incur capital gains tax (CGT). A disposal occurs when an individual:
– Sells a cryptoasset;
– Exchanges one type of cryptoasset for another;
– Uses cryptoassets to purchase goods or services; or
– Gifts cryptoassets to another person (except to a spouse or registered civil partner).
However, no disposal occurs if an individual merely transfers cryptoassets between different wallets.
Changes in tax status
Starting from 6 April 2027, the disposal of eligible stablecoins by individuals will be exempt from CGT. While most stablecoins do not accrue interest, any interest-like returns from holding eligible stablecoins will be classified as savings income and subject to income tax. The personal savings allowance of £1,000 or £500 may be applicable. The government’s policy paper on the taxation of stablecoins can be found here.
The legal framework in England and Wales is progressing towards equal treatment of married and unmarried couples.
“More than 3.5 million couples cohabit without marriage or civil partnership, a figure that has more than doubled in the last thirty years. Nevertheless, cohabiting couples and their children face significant financial vulnerabilities if their relationship dissolves.”
This statement is from the foreword of A Fairer End to Relationships, a comprehensive 100-page document from the Ministry of Justice that outlines recommendations regarding divorce for married individuals and civil partners, as well as separation and intestacy for those who are unmarried in England and Wales. The most notable recommendations pertain to unmarried couples, who currently enjoy far less legal protection compared to their married counterparts. For instance, while intestacy laws prioritize the surviving spouse as the primary beneficiary, the surviving partner in an unmarried couple is overlooked.
The proposed changes for unmarried couples would automatically apply to adults in “long-term, committed, and interdependent relationships” who have cohabited for a minimum of three years or who live together and share a child. However, there would be an option for both parties to opt out, provided they mutually agree and adhere to specific safeguards.
According to the suggested framework, the default position would be that each individual retains ownership of their legal assets. The court would then assess the needs of both parties, aiming to meet these needs in a manner that allows both individuals to “transition to independence… as far as resources permit.” This narrow interpretation of needs would ensure that cohabitants cannot achieve a more advantageous outcome than spouses in similar situations. The welfare of children would be the court’s foremost concern, ensuring their protection when resources are constrained.
While the settlement mechanisms would be similar to those currently applying on divorce, the goal would be to achieve a clean break wherever possible, with maintenance limited to exceptional circumstances, such as long-term ill health.
On intestacy, the proposal is that rights of inheritance should be extended to ‘qualifying cohabitants’. The minimum duration for qualification would not necessarily be the same as applied on separation and might be longer.
If you are in an unmarried relationship, do not wait for the law to change, which could take years – if it happens at all. Make sure your legal and financial planning works within the existing legal framework, which does not recognise common-law marriage.
The government’s proposal on reforms for unmarried couples can be read here.
Although no date for its introduction has yet been announced, the government has recently provided some details for the new first time buyer individual savings account (FTB ISA), which is set to replace the lifetime ISA (LISA).
Essential differences
The LISA never garnered a large take-up, so its replacement has some fundamental changes:
- Target: The FTB ISA is for first-time property purchasers only, whereas the LISA can also be used to save money for retirement.
- Age limit: To open a LISA, a saver must be 18 to 40, with no subscriptions allowed over age 50. With the FTB ISA, the only requirement is that a saver be 18 or over; there is no upper age limit.
- Bonus: With the LISA, the government bonus is paid monthly, so the saver benefits from interest or investment growth on bonus payments. However, with the FTB ISA, the bonus will only be paid when a property is purchased.
- Withdrawal penalty: The LISA comes with a withdrawal penalty of 25%, meaning a saver will end up with less than they paid in. There will be no penalty for withdrawing funds from the FTB ISA.
The government has said that any change to the property price cap of £450,000 will apply to both products.
Interaction
A saver who already has a LISA, or opens one before the FTB ISA is introduced, will be able to continue to contribute to it indefinitely. Although it will not be possible to transfer a LISA into the FTB ISA, a saver will have the choice each tax year whether to save into a LISA or FTB ISA. It will then be possible to combine the funds held in both accounts when making a property purchase.
Although there is no withdrawal penalty for the FTB ISA, the timing of the government bonus would seem to give the LISA a distinct advantage, although full details of the new product have yet to be announced. The government’s guide to lifetime ISAs can be found here.
The tax gap for the fiscal year 2024/25 has reached a new high of £59.2 billion, with small businesses responsible for approximately 62% of the uncollected taxes.
The tax gap refers to the disparity between the tax that should theoretically be paid to HMRC and the actual amount paid.
Upward trend
The tax gap for 2024/25 constitutes about 6.4% of the total tax owed. While the tax gap has historically been higher, it has generally shown an upward trend in recent years; for instance, it was recorded at 5.7% for 2021/22.
HMRC has, as is customary, updated figures for prior years. When the figures for 2023/24 were published, they indicated a general decline in the tax gap. However, the most recent data reveals that the tax gap for 2023/24 is now at 6.0%, an increase from the previously reported 5.3%, amounting to an additional £6 billion.
Small businesses under scrutiny
In 2024/25, small businesses represented 62% of the tax gap, marking a four percentage point rise since 2020/21. These businesses are primarily responsible, with HMRC estimating that around 45% of the corporation tax owed remains uncollected. It is therefore not surprising that identity verification measures have recently been implemented for company directors and individuals with significant control.
Behaviour
The largest share of the tax gap arises from a failure to exercise reasonable care, currently accounting for 35%—nearly £21 billion—up from 30% in 2020/21.
HMRC attributes this failure to a taxpayer’s carelessness, negligence, or inadequate record-keeping, but the growing complexity of the tax system and a decline in HMRC’s customer service also contribute to the issue.
When taxpayer errors are included, more than half of the tax gap is attributed to taxpayers who likely consider themselves compliant with tax regulations.
Actual tax evasion constitutes only 12% of the tax gap, while tax avoidance represents a mere 1% of the total. HMRC’s summary details of the latest tax gap figures can be found here.
Public house owners have encountered significantly increased business rates bills starting April 2026. To help mitigate these hikes, the government has introduced a 15% discount for the current year and recently announced a 20% discount for 2027/28.
These elevated business rates are a result of a revaluation and the cessation of Covid-related relief measures.
Who is eligible?
For the year 2025/26, retail, hospitality, and leisure businesses in England were eligible for a 40% discount on their business rates. However, the new 15% and 20% discounts are more limited, applying only to public houses, clubs, and live music venues. These discounts can be combined with any other available reliefs.
Unsurprisingly, owners of restaurants, cafés, and hotels have expressed disappointment over their exclusion from these recent discounts.
Additionally, larger live music venues will not be eligible for the 20% discount, with more information expected to be provided in the Autumn Budget.
Approximately 32,000 public houses, clubs, and live music venues are anticipated to benefit from the 15% and 20% discounts, with the average public house projected to save £1,100 in 2027/28.
For the year 2026/27, Scotland has implemented a 15% discount for retail, hospitality, and leisure businesses, while Wales offers a similar discount for food and drink hospitality establishments.
Support for small businesses
In England, properties with a rateable value under £12,000 are eligible for 100% relief, with tapered relief available for those valued up to £15,000. Most English properties that have lost the retail, hospitality, and leisure discount qualify for the Supporting Small Business Relief (SSBR) scheme. The calculations can be complex; for instance, the business rates increase for 2026/27 for a property with a rateable value between £20,001 (£28,001 in London) and £100,000 is capped at the greater of £800 or 15%. Similar caps are also in place for 2027/28 and 2028/29.
However, for public houses, clubs and live music venues, their business rates bill will only increase by inflation for 2027/28 and 2028/29, with the newly announced 20% discount in addition to this cap.
Details of the 15% discount for 2026/27 can be found here.
HMRC has released new information regarding the process of collecting inheritance tax (IHT) on pensions.
In the October 2024 Budget, the Chancellor revealed that most pension death benefits would be subject to IHT starting from 6 April 2027. However, it wasn’t until March 2026 that the necessary primary legislation was enacted. This is not the final step, as HMRC now needs to establish regulations to implement the new rules, followed by consultations to create “detailed guidance and other supporting materials.” The completion of these elements is expected by next spring, which is alarmingly close to the April 2027 implementation date.
The lengthy process underscores the challenges involved in creating a system that accommodates:
- The personal representatives (PRs), typically the executors named in the will,
- The administrators and trustees of the pension scheme,
- The beneficiaries of the pension death benefits, whether as a lump sum or income,
- HMRC, which may require both IHT and income tax on the pension benefits.
At the end of May, HMRC published a comprehensive ‘technical note’ outlining its perspective on the current situation. This document emphasized the considerable new responsibilities assigned to PRs:
IHT liability: PRs will bear the primary responsibility for reporting and settling any IHT owed on pension benefits. However, once the pension scheme confirms that an individual is entitled to a lump sum or pension, that beneficiary also becomes jointly and severally liable. This implies that if the PRs fail to pay the IHT owed, the beneficiary will be responsible for it.
Withholding funds: As anyone familiar with estate administration can attest, locating the deceased’s assets and determining their value at the time of death can be time-consuming. To mitigate this unavoidable delay, PRs will have the option to request that a pension scheme withhold up to 50% of a beneficiary’s entitlement as a safeguard against a potential IHT liability. The maximum duration for withholding is 15 months. However, a withholding notice cannot apply to beneficiaries classed as exempt (mainly surviving spouses and civil partners) nor to a limited range of excluded benefits (such as dependants’ scheme pensions, joint life annuities and death in service payments).
The new duties for PRs mean that you might wish to review who you have appointed as your executors. If you have no will, then the changes to IHT have given you another reason for making one.
HMRC technical note on IHT on pensions is available here.
The government has announced that starting in 2028, micro-entities and small businesses will be required to submit profit and loss (P&L) accounts to Companies House, with the option to keep these accounts private.
Initially, the changes were set to take effect in April 2027, but due to concerns raised by stakeholders, the implementation has been postponed to April 2028.
Filing requirements
From April 2028, both micro-entities and small companies must file a P&L account with Companies House. However, they will have the choice to opt out of making this information public:
- Details regarding the opt-out process have yet to be released.
- Even if a company decides not to publish its P&L account, HMRC (as is currently the case) and law enforcement agencies will still have access to this information to assist in identifying fraud and tax evasion.
- All companies will be required to file their annual accounts using commercial software, which is already a requirement for HMRC submissions. The current web and paper-based filing options at Companies House will be discontinued.
Given that HMRC already receives a complete set of accounts, the general sentiment regarding the option to opt out of publishing P&L accounts is that it may be somewhat redundant; it could lead to increased time and costs.
Considering the existing HMRC filing obligations, companies should verify that their filing software is compatible with the requirements of Companies House.
Other changes
Additional reforms will also be implemented starting in April 2028:
- The option for companies to prepare and submit abridged accounts will be eliminated.
- The frequency with which a company can shorten its accounting reference period will be limited; currently, there are no restrictions on how often this can occur.
Companies House will contact all companies through their registered email address to tell them about the upcoming changes.
The government’s report explaining the changes to accounts filing from April 2028 can be found here.
The enterprise management incentive (EMI) reforms introduced in April 2026 have significantly advanced the acceptance of this benefit. With increased qualifying limits, companies can now continue to offer EMI tax-advantaged share options as they expand and develop.
EMIs are effective in retaining and rewarding essential personnel. Employees can be granted options at a predetermined price, which can be exercised at a specified time or upon achieving a performance target. The maximum market value of unexercised EMI share options that an employee may hold over a three-year period is £250,000.
Tax advantages
Typically, there is no tax liability when EMI share options are granted to an employee or when those options are exercised. However, a capital gains tax may be applicable when the shares are sold, with the gain potentially qualifying for a flat rate of 18%.
Qualifying limits
The following limits are applicable to EMI contracts granted since 6 April 2026:
The maximum market value of unexercised EMI options granted by a company cannot exceed £6 million (up from £3 million).
- Gross assets must be under £120 million, and the company must have fewer than 500 full-time equivalent employees (previously £30 million and 250 employees).
- The maximum exercise period for EMI options has been extended to 15 years (previously 10 years).
- Companies can retroactively apply the 15-year exercise period to previously granted EMI share option contracts.
Company considerations:
- Companies that have not previously qualified for EMI should assess whether they now meet the criteria and if EMI options are suitable for future employee equity incentives.
- Similar evaluations should be made if a company has previously qualified but has since surpassed the gross assets or employee limits due to growth, or if it has reached the former £3 million cap for unexercised EMI options.
- Companies with existing EMI options must determine if they wish to extend the exercise period to 15 years.
Details on EMIs (along with other employee share schemes) can be found here.
Individuals are revising their tax-planning approaches to account for inheritance tax (IHT) being applied to unused pension pots starting April 2027. However, an unintended consequence of this planning is its effect on long-term care expenses.
The issue
In England, if an individual’s capital and savings exceed £23,250, they are responsible for covering all their long-term residential care costs. While this threshold may seem low, it’s important to note that the value of a home will not be considered if a partner (or a relative aged 60 or older, or a dependent child) continues to reside there. Consequently:
Deprivation of assets regulations stipulate that individuals cannot secure funding for care costs by transferring assets to family members. This is where the new pension tax regulations pose a challenge: many seniors are trying to minimize future IHT liabilities by withdrawing significant amounts from their pensions and subsequently gifting that money to their children and grandchildren.
A local authority may view such gifts as a deliberate deprivation of assets.
There is no limitation on how far back local authorities can investigate. If an individual is determined to have deprived themselves of assets, they will be considered as still possessing the money or assets that were given away.
Considering the increased life expectancy, the financial repercussions of unexpectedly needing to cover care costs can be considerable.
Finding the right balance
A significant gift may achieve the IHT goal, but it could lead to complications regarding future care expenses. Local authorities will assess whether care needs were predictable at the time a gift was made, making earlier gifts, when the individual was in good health, much easier to defend. Meticulous record-keeping is crucial. The documentation should demonstrate that the intent behind a gift is legitimate estate planning or family assistance, rather than an attempt to evade care costs.