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Finance Act 2026

Type Public General Act

Publication 2026-03-18

Last updated 2026-10-01

State In force

Department Statute Law Database

Source legislation.gov.uk

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Part 1 — Income tax, capital gains tax and corporate taxes

Income tax charge, rates and allowances

Income tax charge for tax year 2026-27

1

Income tax is charged for the tax year 2026-27.

Main rates of income tax for tax year 2026-27

2

For the tax year 2026-27 the main rates of income tax are as follows—

(a) the basic rate is 20%,

(b) the higher rate is 40%, and

Default and savings rates of income tax for tax year 2026-27

3

(1) For the tax year 2026-27 the default rates of income tax are as follows—

(a) the default basic rate is 20%,

(b) the default higher rate is 40%, and

(2) For the tax year 2026-27 the savings rates of income tax are as follows—

(a) the savings basic rate is 20%,

(b) the savings higher rate is 40%, and

Increase in dividend ordinary and upper rates

4

(1) In section 8 of ITA 2007 (which provides, among other things, for the dividend ordinary rate and dividend upper rate)—

(a) in subsection (1) (the dividend ordinary rate), for “8.75%” substitute “10.75%”, and

(b) in subsection (2) (the dividend upper rate), for “33.75%” substitute “35.75%”.

(2) The amendments made by this section have effect for the tax year 2026-27 and subsequent tax years.

Savings rates of income tax for tax year 2027-28

5

For the tax year 2027-28 the savings rates of income tax are as follows—

(a) the savings basic rate is 22%,

(b) the savings higher rate is 42%, and

New rates of income tax on property income

6

(1) Part 1 of ITA 2007 (rates at which income tax is charged etc) is amended as follows.

(2) After section 6C insert—

(6D) The property basic rate, the property higher rate and the property additional rate for a tax year are the rates determined as such by Parliament for the tax year.

(3) After section 11C insert—

(11CA) (1) Income tax is charged at the property basic rate on an individual’s income which— (a) is property income, and (b) would otherwise be charged at the basic rate or the default basic rate. (2) Income tax is charged at the property higher rate on an individual’s income which— (a) is property income, and (b) would otherwise be charged at the higher rate or the default higher rate. (3) Income tax is charged at the property additional rate on an individual’s income which— (a) is property income, and (b) would otherwise be charged at the additional rate or the default additional rate. (4) Subsections (1) to (3) are subject to— - section 11A (income charged at Scottish rates), - section 11CB (income charged at the Welsh property basic, higher and additional rates: individuals), - any other provisions of the Income Tax Acts which provide for income to be charged at different rates of income tax in some circumstances. (5) Sections 16 and 16A have effect for determining the extent to which an individual’s property income would otherwise be charged at the basic, higher or additional rate or the default basic, default higher or default additional rate.

(4) After section 16 insert—

(16A) (1) This section has effect for determining— (a) which part of a Scottish taxpayer’s income consists of property income, (b) the rate at which income tax would be charged on a person’s property income apart from section 11CA, and (c) the rate at which income tax would be charged on the property income of a Welsh taxpayer apart from section 11CB. (2) It also has effect for all other income tax purposes except for the purposes of sections 535 to 537 of ITTOIA 2005 (gains from contracts for life insurance etc: top slicing relief). (3) If a person has property income but no dividend income or savings income, the property income is treated as the highest part of the person’s total income. (4) If a person— (a) has property income, and (b) dividend income or savings income (or both dividend income and savings income), the property income is treated as the part of the person’s total income immediately before the savings income or, if the person does not have savings income, immediately before the dividend income.

(5) After section 17 insert—

(17A) (1) This section applies for the purposes of the Income Tax Acts. (2) “Property income” is income which is— (a) chargeable under Chapter 3 of Part 3 of ITTOIA 2005 (the profits of a UK property business or an overseas property business), (b) chargeable under Chapter 7 of that Part (amounts treated as adjustment income under section 330), (c) chargeable under Chapter 8 of that Part (rent receivable in connection with a UK section 12(4) concern), (d) chargeable under Chapter 9 of that Part (rent receivable for UK electric-line wayleaves), and (e) chargeable under Chapter 10 of that Part (post-cessation receipts arising from a UK property business).

(6) In section 25 (reliefs and allowances deductible at Steps 2 and 3: supplementary), after subsection (3) insert—

(3A) Subsection (2) is also subject to a requirement that the reliefs and allowances in Steps 2 and 3 must be deducted from components of income other than property income, savings income or dividend income (so far as it would otherwise be possible to do so) before they are deducted from property income, savings income or dividend income.

(7) Schedule 1 makes amendments in connection with, or otherwise related to, provision made by this section and section 5 (including amendments concerning savings rates).

(8) The amendments made by this section and that Schedule have effect for the tax year 2027-28 and subsequent tax years.

Property rates of income tax for tax year 2027-28

7

For the tax year 2027-28 the property rates of income tax are as follows—

(a) the property basic rate is 22%,

(b) the property higher rate is 42%, and

Scottish and Welsh property rates set by Scottish Parliament and Senedd

8

(1) Schedule 2 makes provision for Scottish and Welsh property rates to be set by the Scottish Parliament and Senedd Cymru.

(2) This section and that Schedule come into force on such day as the Treasury may by regulations appoint.

(3) The amendments made by this section and that Schedule have effect in relation to—

(a) the tax year appointed by the Treasury by regulations, and

(b) subsequent tax years.

(4) The tax year appointed under subsection (3)—

(a) must be a tax year after the tax year 2026-27, and

(b) must begin on or after the day appointed under subsection (2).

(5) Regulations under this section may appoint different days for different purposes.

(6) For further provision about regulations under this section, see section 1014(1), (3) and (6)(b) of ITA 2007.

Freezing starting rate limit for savings for tax years 2026-27 to 2030-31

9

(1) For the tax years 2026-27, 2027-28, 2028-29, 2029-30 and 2030-31, the amount specified in section 12 (3) of ITA 2007 (the starting rate limit for savings) is “£5,000”.

(2) Accordingly, section 21 of that Act (indexation) does not apply in relation to the starting rate limit for savings for any of those tax years.

Basic rate limit and personal allowance for tax years 2028-29 to 2030-31

10

(1) Section 5 of FA 2021 (basic rate limit and personal allowance for tax years up to 2027-28) is amended as follows.

(2) In subsection (1) (which specifies the basic rate limit in section 10(5) of ITA 2007 as £37,700 for tax years up to 2027-28), for “and 2027-28” substitute “, 2027-28, 2028-29, 2029-30 and 2030-31”.

(3) In subsection (2) (which specifies the personal allowance in section 35(1) of ITA 2007 as £12,570 for tax years up to 2027-28), for “and 2027-28” substitute “, 2027-28, 2028-29, 2029-30 and 2030-31”.

(4) In subsection (3) (which makes consequential provision preventing the uprating of those amounts for the affected tax years), in the words after paragraph (b), for “and 2027-28” substitute “, 2027-28, 2028-29, 2029-30 and 2030-31”.

Corporation tax charge and rates

Charge and main rate for financial year 2027

11

(1) Corporation tax is charged for the financial year 2027.

(2) The main rate of corporation tax for that year is 25%.

Standard small profits rate and fraction for financial year 2027

12

For the purposes of Part 3A of CTA 2010, for the financial year 2027—

(a) the standard small profits rate is 19%, and

(b) the standard marginal relief fraction is 3/200ths.

Employee reliefs

Enterprise management incentives: thresholds and period for exercise

13

(1) In section 529 of ITEPA 2003 (scope of tax advantages: option must be exercised within 10 years)—

(a) in the heading, for “within 10 years” substitute “by the specified anniversary”;

(b) in subsection (2), for “tenth” substitute “specified”;

(2A) In this section, “specified anniversary” means— (a) in cases where the employer company is a specified Northern Ireland company, the tenth anniversary, and (b) otherwise, the fifteenth anniversary.

(2) Schedule 5 to ITEPA 2003 is amended as set out in subsections (3) to (7).

(3) In paragraph 7 (maximum value of options in respect of relevant company’s shares)—

(a) in sub-paragraph (1), after “exceed” insert—

(a) £6 million, or (b) where the employer company is a specified Northern Ireland company,

(b) in sub-paragraph (2), after “option if the” insert “applicable”;

(d) after sub-paragraph (5), insert—

(5A) If— (a) the grant of two or more share options at the same time causes only the limit in paragraph 7(1)(b) to be exceeded, and (b) the employer company in respect of some of the share options is not a specified Northern Ireland company, the share options in respect of which the employer company is a specified Northern Ireland company are, for the purposes of this paragraph, to be treated as having been granted before the other share options.

(4) In paragraph 12 (the gross assets requirement)—

(a) in sub-paragraph (1) after “exceed” insert—

(a) £120 million, or (b) where the company is a specified Northern Ireland company,

(b) in sub-paragraph (2) after “exceed” insert—

(a) £120 million, or (b) where the employer company is a specified Northern Ireland company,

(5) In paragraph 12A (the number of employees requirement)—

(a) in sub-paragraph (1) after “less than” insert—

(a) 500, or (b) where the company is a specified Northern Ireland company,

(b) in sub-paragraph (2) after “less than” insert “500 or, where the employer company is a specified Northern Ireland company,”

(6) In paragraph 36 (option to be capable of exercise within ten years)—

(a) in the italic cross-heading, for “10 years” substitute “the specified period”;

(b) in sub-paragraph (1), for “the period of 10 years” substitute “the specified period”;

(d) after sub-paragraph (2) insert—

(3) In this paragraph, the “specified period” means— (a) 15 years, or (b) where the employer company is a specified Northern Ireland company, 10 years.

(7) After paragraph 57E, insert—

(57F) In the EMI code, a “specified Northern Ireland company” means a company that— (a) has its registered office in Northern Ireland, and (b) carries on a trade involving— (i) a trade in goods, or (ii) the generation, transmission, distribution, supply, wholesale trade or cross-border exchange of electricity.

(8) In section 169I(7D)(b) of TCGA 1992 (material disposal of business assets)—

(a) for “tenth ” substitute “specified”;

(b) at the end insert “(with “specified anniversary” having the meaning given in section 529(2A) of that Act)”.

(9) The amendments made by subsections (1) to (8) come into force on 6 April 2026.

(10) On and after 6 April 2026, Schedule 5 to ITEPA 2003 has effect in relation to an option granted before 6 April 2026 as if the following paragraph were inserted after paragraph 37—

(37A) (1) Sub-paragraph (2) applies if— (a) on or after 26 November 2025, a fixed-date qualifying option is varied so as to delay the date on which it can be exercised, (b) the variation takes place on or before the tenth anniversary of the grant of the option, and (c) the variation results in an option that is capable of being exercised on a single date falling on or before the fifteenth anniversary of the grant of the option. (2) An option that is varied as described in sub-paragraph (1)— (a) continues to be a qualifying option for the purposes of the EMI code, and (b) is to be treated for the purposes of the EMI code as having been granted in its varied form. (3) In sub-paragraph (1)— (a) “fixed-date qualifying option” means a qualifying option granted before 6 April 2026 that is capable of being exercised on a single date set by reference to its date of grant, and (b) a reference to an option being varied is a reference to its being varied by written agreement between the person who granted the option and the person entitled to exercise it. (4) Sub-paragraph (2) does not apply in relation to an option if, at the time of variation, the employer company is a specified Northern Ireland company.

Enterprise investment scheme: increase in amounts and asset requirements

14

(1) Part 5 of ITA 2007 is amended as follows.

(2) In section 173A(1) (the maximum amount raised annually through risk finance investments requirement), for paragraphs (a) and (b) substitute—

(a) if at that date the issuing company is a knowledge-intensive company (see section 252A and subsection (5A)) and— (i) not a specified Northern Ireland company, £20 million; (ii) a specified Northern Ireland company, £10 million, and (b) if at that date the issuing company is not a knowledge-intensive company and— (i) not a specified Northern Ireland company, £10 million; (ii) a specified Northern Ireland company, £5 million.

(3) In section 173AA(1) (maximum risk finance investments at the issue date requirement), for paragraphs (a) and (b) substitute—

(a) if at the issue date the issuing company is a knowledge-intensive company (see section 252A) and— (i) not a specified Northern Ireland company, £40 million; (ii) a specified Northern Ireland company, £20 million, and (b) if at the issue date the issuing company is not a knowledge-intensive company and— (i) not a specified Northern Ireland company, £24 million; (ii) a specified Northern Ireland company, £12 million.

(4) In section 173AB(4) (maximum risk finance investments during period B requirement) for paragraphs (a) and (b) substitute—

(a) if at the issue date the issuing company is a knowledge-intensive company (see section 252A) and— (i) not a specified Northern Ireland company, £40 million; (ii) a specified Northern Ireland company, £20 million, and (b) if at the issue date the issuing company is not a knowledge-intensive company and— (i) not a specified Northern Ireland company, £24 million; (ii) a specified Northern Ireland company, £12 million.

(5) In section 175 (the use of the money raised requirement)—

(a) in subsection (1), for “The” substitute “A”;

(b) after subsection (1A), insert—

(1B) Another requirement of this section is that, of the money raised by the issue of the relevant shares (other than any of them which are bonus shares), only such part of that money as could have been raised by an issue of shares falling within subsection (1C) is employed for the purposes of a qualifying business activity that is carried on by one or more specified Northern Ireland companies. (1C) Shares fall within this subsection if the general requirements referred to in section 172 as they apply in relation to shares issued by a specified Northern Ireland company are met in respect of them.

(6) In section 186 (the gross assets requirement)—

(a) before subsection (1), insert—

(A1) In the case of relevant shares issued by a single company that is not a specified Northern Ireland company, the value of the company’s gross assets— (a) must not exceed £30 million immediately before the relevant share issue, and (b) must not exceed £35 million immediately afterwards. (A2) In the case of relevant shares issued by a parent company that is not a specified Northern Ireland company, the value of the group assets— (a) must not exceed £30 million immediately before the relevant share issue, and (b) must not exceed £35 million immediately afterwards.

(b) in subsection (1), after “single company” insert “that is a specified Northern Ireland company”;

(7) After section 256A, insert—

(256B) For the purposes of this Part, a “specified Northern Ireland company” means a company that— (a) has its registered office in Northern Ireland, and (b) carries on a trade involving— (i) a trade in goods, or (ii) the generation, transmission, distribution, supply, wholesale trade or cross-border exchange of electricity.

(8) The amendments made by this section come into force on 6 April 2026.

Venture capital trusts: rate of relief and amounts and asset requirements

15

(1) Part 6 of ITA 2007 is amended as follows.

(2) In section 263(2) (form and amount of relief), for “30%” substitute “20%”.

(3) In section 292A(1) (the maximum amount raised annually through risk finance investments requirement ), for paragraphs (a) and (b) substitute—

(a) if at that date the relevant company is a knowledge-intensive company (see section 331A and subsection (6A)) and— (i) not a specified Northern Ireland company, £20 million; (ii) a specified Northern Ireland company, £10 million, and (b) if at that date the relevant company is not a knowledge-intensive company and— (i) not a specified Northern Ireland company, £10 million; (ii) a specified Northern Ireland company, £5 million.

(4) In section 292AA(1) (maximum risk finance investments when relevant holding is issued requirement), for paragraphs (a) and (b) substitute—

(a) if at the investment date the relevant company is a knowledge-intensive company (see section 331A) and— (i) not a specified Northern Ireland company, £40 million; (ii) a specified Northern Ireland company, £20 million, and (b) if at the investment date the relevant company is not a knowledge-intensive company and— (i) not a specified Northern Ireland company, £24 million; (ii) a specified Northern Ireland company, £12 million.

(5) In section 292AB(4) (maximum risk finance investments during the 5-year post-investment period requirement), for paragraphs (a) and (b) substitute—

(a) if at the investment date the relevant company is a knowledge-intensive company (see section 331A) and— (i) not a specified Northern Ireland company, £40 million; (ii) a specified Northern Ireland company, £20 million, and (b) if at the investment date the relevant company is not a knowledge-intensive company and— (i) not a specified Northern Ireland company, £24 million; (ii) a specified Northern Ireland company, £12 million.

(6) In section 293 (the use of the money raised requirement)—

(a) in subsection (1), for “The” substitute “A”;

(b) after subsection (5A) insert—

(5B) Another requirement of this section is that, of the money raised by the issue of the relevant holding, only such part of that money as could have been raised by an issue of shares and securities falling within subsection (5C) is employed for the purposes of a qualifying business activity that is carried on by one or more specified Northern Ireland companies. (5C) Shares and securities fall within this subsection if the requirements in section 286(2) as they apply in relation to a relevant company that is a specified Northern Ireland company are met in respect of them.

(7) In section 297 (the gross assets requirement)—

(a) before subsection (1) insert—

(A1) The requirement of this section in the case of a relevant company that is a single company and not a specified Northern Ireland company is that the value of the company’s gross assets— (a) did not exceed £30 million immediately before the issue of the relevant holding, and (b) did not exceed £35 million immediately afterwards. (A2) The requirement of this section in the case of a relevant company that is a parent company and not a specified Northern Ireland company is that the value of the group assets— (a) did not exceed £30 million immediately before the issue of the relevant holding, and (b) did not exceed £35 million immediately afterwards.

(b) in subsection (1), after “single company” insert “and a specified Northern Ireland company”;

(8) After section 331B, insert—

(331C) For the purposes of this Part, a “specified Northern Ireland company” means a company that— (a) has its registered office in Northern Ireland, and (b) carries on a trade involving— (i) a trade in goods, or (ii) the generation, transmission, distribution, supply, wholesale trade or cross-border exchange of electricity.

(9) The amendments made by this section come into force on 6 April 2026.

CSOP schemes and EMI: PISCES shares

16

(1) If—

(a) a share option is granted under a CSOP scheme before 6 April 2028,

(b) the terms of the option which are mentioned in paragraph 21A(1)(d) of Schedule 4 to ITEPA 2003 are, at any time on or after 15 May 2025, varied, and

(c) the sole effect of the provision constituting the variation is that, in the event that the shares are or become PISCES shares, the option may be exercised (to any extent) but only if the shares acquired as a result of its exercise are then sold on a PISCES as soon as is reasonably practicable,

the provision mentioned in paragraph (c) is to be treated for the purposes of the CSOP code as if it had been included in the share option at the time at which the option was granted.

(2) Subsection (1) is to have effect as if contained in Schedule 4 to ITEPA 2003.

(3) If—

(a) a share option which is a qualifying option for the purposes of the EMI code is granted before 6 April 2028,

(b) the terms of the option which are mentioned in paragraph 37(2)(e) of Schedule 5 to ITEPA 2003 are, at any time on or after 15 May 2025, varied, and

(c) the sole effect of the provision constituting the variation is that, in the event that the shares are or become PISCES shares, the option may be exercised (to any extent) but only if the shares acquired as a result of its exercise are then sold on a PISCES as soon as is reasonably practicable,

the provision mentioned in paragraph (c) is to be treated for the purposes of the EMI code as if it had been included in the share option at the time at which the option was granted.

(4) Subsection (3) is to have effect as if contained in Schedule 5 to ITEPA 2003.

(5) A variation of an option is not to count for the purposes of this section unless—

(a) the variation is effected by a written agreement to which the person entitled to exercise the option is a party, or

(b) the variation is otherwise notified in writing to that person.

(6) For the purposes of this section, “PISCES shares” and “a PISCES” have the same meaning as in the applicable PISCES regulations.

(7) For this purpose, “the applicable PISCES regulations” means—

(a) the Financial Services and Markets Act 2023 (Private Intermittent Securities and Capital Exchange System Sandbox) Regulations 2025 (“the 2025 regulations”), or

(b) if regulations are made under section 15 of the Financial Services and Markets Act 2023 (“the 2023 Act”) in the case of a PISCES, regulations under that section.

(8) If—

(a) regulations made under section 15 of the 2023 Act use expressions other than PISCES shares or a PISCES, but

(b) those other expressions are used in those regulations for the same or similar purposes as the expressions PISCES and a PISCES are used in the 2025 regulations,

this section has effect as if the references to PISCES shares or a PISCES are to those other expressions.

Employment income relating to cars etc

Employee car and van ownership schemes

17

(1) Chapter 6 of Part 3 of ITEPA 2003 (taxable benefits: cars, vans and related benefits) is amended in accordance with subsections (2) to (4).

(2) In section 114(1)(a) (cars, vans and related benefits)—

(a) omit “(without any transfer of the property in it)”;

(b) after “household” insert

— (i) without any transfer of the property in it, or (ii) in circumstances falling within section 116A (car or van made available with transfer of ownership),

(3) In section 116(1) (meaning of when car or van is available to employee)—

(a) omit “and without any transfer of the property in it”;

(b) after “household” insert

— (a) without any transfer of the property in it, or (b) in circumstances falling within section 116A.

(4) After section 116 insert—

(116A) (1) A car or van is made available to an employee or a member of the employee’s family or household in circumstances falling within this section if the car or van is made available— (a) with a transfer of the property in it to the employee or member, and (b) pursuant to qualifying arrangements. (2) For the purposes of this section, arrangements are “qualifying arrangements” if any of the following applies in relation to them— (a) they include restrictions on the private use of the car or van by the employee or member; (b) they provide for a person other than the employee or member to be the registered keeper of the car or van; (c) they provide for the employee or member, after a certain period of time or in certain circumstances, to transfer the property in the car or van to another person for an amount determined in accordance with the arrangements; (d) they are of a description specified in regulations made by the Treasury. (3) For the purposes of this Chapter, a car or van made available as mentioned in subsection (1) is to be treated as being so made available until the arrangements cease to have effect (but see sections 132A, 143 and 156 for provision about the days on which a car or van is unavailable). (4) In subsection (2)(a) the reference to restrictions does not include a restriction that— (a) is included in a motor insurance policy held in respect of the car or van, and (b) might reasonably be expected to be so included. (5) In this section— - “arrangements” includes any scheme, agreement or understanding, whether or not legally enforceable; - “motor insurance policy” means a policy of insurance that complies with the requirements of Part 6 of the Road Traffic Act 1988 or, in relation to Northern Ireland, Part 8 of the Road Traffic (Northern Ireland) Order 1981 (S.I. 1981/154 (N.I. 1)); - “registered keeper” means the person in whose name a vehicle is registered under VERA 1994.

(5) The amendments made by subsections (2) to (4) have effect for the tax year 2030-31 and subsequent tax years.

(6) But in relation to a car or van made available to an employee or a member of the employee’s family or household pursuant to pre-6 April 2030 arrangements, the amendments made by subsections (2) to (4) have effect for the tax year 2032-33 and subsequent tax years.

(7) If pre-6 April 2030 arrangements are varied or renewed on or after 6 April 2030, the car or van is treated, with effect from the beginning of the day on which the variation or renewal takes effect, as not being made available pursuant to pre-6 April 2030 arrangements.

(8) In subsection (7) the reference to arrangements being varied does not include any variation which is required for reasons beyond the control of the parties to the arrangements.

(9) In this section “pre-6 April 2030 arrangements” means arrangements which are entered into before 6 April 2030.

Car or van made available on arm’s length terms

18

(1) In section 117 of ITEPA 2003 (meaning of car or van made available by reason of employment)—

(a) in subsection (1), for “or (3)” substitute “, (3) or (4)”;

(b) after subsection (3) insert—

(4) Subsection (1) does not apply where— (a) the employer carries on a business under which cars or vans of the same kind are made available to members of the public for sale or lease, (b) the car or van in question is sold or leased to the employee or member in the normal course of that business, and (c) the terms on which the car or van is sold or leased to the employee or member might reasonably be expected to be agreed between the employer and a member of the public with whom the employer deals at arm’s length.

(2) The amendments made by subsection (1) have effect for the tax year 2026-27 and subsequent tax years.

CO2 emissions figure for certain cars with an electric range figure

19

(1) Chapter 6 of Part 3 of ITEPA 2003 (taxable benefits: cars etc) is amended in accordance with subsections (2) and (3).

(2) In section 136A (cars with a CO₂ emissions figure: registration on or after IP completion day), after subsection (4) insert—

(5) Subsection (2) is also subject to section 138A (certain cars with a CO₂ emissions figure and an electric range figure).

(3) After section 138 insert—

(138A) (1) This section applies to a car if— (a) the car was first registered under VERA 1994 on or after 1 January 2025 and before 6 April 2028, (b) the car’s CO₂ emissions figure (as determined under section 136A) is 51 or more, (c) the CO₂ emissions figure or (as the case may be) the CO₂ emissions (combined) figure specified in the car’s qualifying emissions certificate was calculated in accordance with an emission standard other than the Euro 6d-ISC-FCM emission standard or the Euro 6e emission standard, and (d) the car’s electric range figure is 1 or more. (2) For the purposes of this Chapter, the car is to be treated as having a CO₂ emissions figure of 1. (3) In this section— - “electric range figure” is the number of miles which is the equivalent of the number of kilometres specified in an EC certificate of conformity, an EC type-approval certificate or a UK approval certificate on the basis of which a car is registered, as being the maximum distance for which the car can be driven in electric mode without recharging the battery; - “Euro 6d-ISC-FCM emission standard” and “Euro 6e emission standard” have the same meaning as in Schedule 3A to the Vehicle Emissions Trading Schemes Order 2023 (alternative specific emissions of CO₂: OVC hybrid electric vehicles) (S.I. 2023/1394) (see paragraph 1 of that Schedule). (4) For the purposes of this section, in determining the electric range figure for a car, ignore any values specified in an EC certificate of conformity, an EC type-approval certificate or a UK approval certificate that are not WLTP (worldwide harmonised light vehicle test procedures) values.

(4) The amendments made by subsections (2) and (3) have effect—

(a) for the tax years 2024-25 to 2027-28, and

(b) in relation to a car to which subsection (5) applies, for the tax years 2028-29 to 2030-31.

(5) This subsection applies to a car made available to an employee or a member of the employee’s family or household pursuant to pre-6 April 2028 arrangements.

(6) Where—

(a) a car is made available by an employer to an employee or a member of the employee’s family or household pursuant to pre-6 April 2028 arrangements, and

(b) the arrangements are varied on or after 6 April 2028 only so far as is necessary to ensure that the car is made available by the employer to another employee or a member of the other employee’s family or household pursuant to the arrangements,

the car is treated as being made available by the employer to the other employee or member pursuant to pre-6 April 2028 arrangements.

(7) If pre-6 April 2028 arrangements are otherwise varied or renewed on or after 6 April 2028, the car is treated, with effect from the beginning of the day on which the variation or renewal takes effect, as not being made available pursuant to pre-6 April 2028 arrangements.

(8) In subsection (7) the reference to arrangements being varied does not include a variation which is required for reasons beyond the control of the parties to the arrangements.

(9) In this section “pre-6 April 2028 arrangements” means arrangements which are entered into before 6 April 2028.

(10) Sections 136A(5) and 138A of ITEPA 2003, and subsections (1) to (3) of this section, are repealed.

(11) Subsection (10) comes into force on 6 April 2031.

Other employment income

Employment income: miscellaneous exemptions

20

(1) Chapter 11 of Part 4 of ITEPA 2003 (employment income: miscellaneous exemptions) is amended in accordance with subsections (2) to (4).

(2) After section 316 insert—

(316ZA) (1) No liability to income tax arises in respect of the payment or reimbursement of expenses incurred by an employee on behalf of the employer in respect of the provision for the employee of accommodation, supplies or services if conditions A and B are met. (2) Condition A is that, at the time the accommodation, supplies or services are first provided, the intention of the employer is that— (a) they will be used by the employee in performing duties of the employment, and (b) any use of them for private purposes by the employee or members of the employee’s family or household will not be significant. (3) Condition B is that where the provision is otherwise than on premises occupied by the employer— (a) its sole purpose is to enable the employee to perform the duties of the employee’s employment, and (b) what is provided is not an excluded benefit. (4) In this section “for private purposes” and “excluded benefit” have the same meaning as in section 316.

(3) In section 320A (eye tests and special corrective appliances)—

(a) after subsection (1) insert—

(1A) No liability to income tax arises in respect of the payment or reimbursement of expenses incurred by an employee in respect of the provision for the employee of a test or appliances of the kind mentioned in subsection (1) if conditions A and B are met.

(b) in subsection (3), after “regulations” insert “, whether by way of provision under subsection (1) or payment or reimbursement under subsection (1A)”.

(4) After section 320C insert—

(320D) (1) No liability to income tax arises in respect of the provision for an employee of an influenza vaccination if the provision is not made pursuant to relevant salary sacrifice arrangements. (2) No liability to income tax arises in respect of the payment or reimbursement of expenses incurred by an employee in respect of the provision for the employee of an influenza vaccination if the payment or reimbursement is not made pursuant to relevant salary sacrifice arrangements. (3) In this section “relevant salary sacrifice arrangements” means arrangements (whenever made, whether before or after the employment began) under which the employee gives up the right to receive an amount of general earnings or specific employment income in return for the provision of an influenza vaccination or the payment or reimbursement of the cost of such a vaccination.

(5) In section 266(3) of ITEPA 2003 (exemption of non-cash vouchers for exempt benefits)—

(a) omit the “or” after paragraph (f);

(b) after paragraph (g) insert

, or (h) section 320D (flu vaccinations).

(6) In section 267(2) of ITEPA 2003 (exemption of credit-tokens used for exempt benefits)—

(a) omit the “and” after paragraph (h);

(b) after paragraph (i) insert

, and (j) section 320D (flu vaccinations).

(7) The amendments made by this section have effect in relation to the tax year 2026-2027 and subsequent tax years.

Disallowing deduction from earnings for additional household expenses

21

(1) After section 360A of ITEPA 2003 (no deduction from earnings for social security contributions) insert—

(360B) (1) No deduction from earnings is allowed under this Chapter for additional household expenses which the employee incurs in the performance of the duties of the employment at home. (2) In this section, “household expenses” has the same meaning as in section 316A.

(2) The amendment made by this section has effect for the tax year 2026-27 and subsequent tax years.

Payment for cancelled shifts etc.

22

(1) After section 221 of ITEPA 2003 (payments where employee absent because of sickness or disability) insert—

(221A) (1) This section applies to a payment made to an employee under section 27BP of the Employment Rights Act 1996 (right to payment for a cancelled, moved or curtailed shift) by reason of the employee’s employment. (2) The payment— (a) is to be treated as earnings from the employment for the relevant tax year, and (b) does not constitute earnings from the employment by virtue of any other provision. (3) For the purposes of this section and the application of Part 2 of this Act (charge to tax) to amounts treated as earnings under this section— (a) “employee” includes a former employee or individual who was a prospective employee immediately before the shift was cancelled, moved or curtailed, and (b) employment is to be construed accordingly. (4) Accordingly, for the purposes of applying this section and Part 2 of this Act (charge to tax) to a payment made to a prospective employee by reason of a prospective employment it does not matter whether the prospective employee ever holds the employment. (5) Sections 17 and 30 (treatment of earnings for year in which employment not held) do not apply in connection with determining the year for which amounts are to be treated as earnings under this section. (6) In this section “relevant tax year” means the tax year in which the duties of the shift in respect of which the payment under subsection (1) was made that were not performed would have been performed if the shift had not been cancelled, moved or curtailed.

(2) The amendment made by this section comes into force on the first day on which the duty in section 27BP(1) of the Employment Rights Act 1996 has effect.

Location of duties of employment where duties not performed

23

(1) ITEPA 2003 is amended as follows.

(2) In section 27 (UK-based earnings for year when employee not resident in UK)—

(a) in subsection (1)—

(i) at the end of paragraph (a) insert “that do not fall within paragraph (c)”;

(ii) at the end of paragraph (b) insert “that do not fall within paragraph (c)”;

(iii) at the end of paragraph (c) insert “and which have been reduced by a claim for relief under section 414 (reduction in other cases of foreign service)”;

(b) in subsection (2), for “(1)(a) or (b)” substitute “(1)”;

(d) in subsection (3), for “Subsections (2) and (2A) apply” substitute “Subsection (2) applies”.

(3) In section 38 (earnings for period of absence from employment)—

(a) in subsection (1), for “This section” substitute “Subsection (2)”;

(b) after subsection (2) insert—

(3) If and to the extent that general earnings for a period of absence from an employment are not treated for the purposes of this Chapter as general earnings in respect of duties performed in the United Kingdom, the general earnings are to be treated for the purposes of this Chapter as general earnings in respect of duties performed outside the United Kingdom. (4) For the purposes of this section references to “general earnings for a period of absence” do not include any general earnings to which section 221A (cancelled, moved or curtailed shift) applies (see section 38A).

(4) After section 38 (earnings for period of absence from employment) insert—

(38A) (1) This section applies for determining the extent to which general earnings that relate to duties that were not performed are to be treated for the purposes of this Chapter as general earnings in respect of duties performed in the United Kingdom. (2) For the purposes of this section— (a) “general earnings” means an amount of general earnings specified in the first column of the table, and (b) the “duties that were not performed”, in relation to general earnings, means the duties specified in the corresponding entry in the second column of the table.

General earnings	Duties that were not performed
General earnings to which section 221A (cancelled, moved or curtailed shift) applies	The duties that it is reasonable to assume would have been performed during the shift but were not performed because of the shift’s cancellation, movement or curtailment
General earnings to which section 402B (termination payments etc) applies	The duties that it is reasonable to assume would have been performed during the post-employment notice period as defined by section 402E if the employee’s employment had not been terminated until the end of that period
General earnings which consist of a payment in lieu of notice to which Chapter 3 of Part 6 (termination payments etc). does not apply	The duties that it is reasonable to assume would have been performed during the notice period if the employee’s employment had not been terminated until the end of that period
Any other general earnings in respect of duties that an employee does not perform other than any general earnings for a period of absence from employment	The duties that the employee does not perform

(3) Subsection (4) applies to the general earnings from an employment for a tax year if— (a) it is reasonable to assume that some or all of the duties that were not performed would have been performed in the United Kingdom, or (b) any duties of the employment performed during that tax year are performed wholly or partly in the United Kingdom. (4) The general earnings are to be treated for the purposes of this Chapter as general earnings in respect of duties performed in the United Kingdom except in so far as, had the duties that were not performed been performed, general earnings in respect of those duties would have been general earnings for duties performed outside the United Kingdom. (5) If and to the extent that the general earnings are not treated for the purposes of this Chapter as general earnings in respect of duties performed in the United Kingdom, the general earnings are to be treated for the purposes of this Chapter as general earnings in respect of duties performed outside the United Kingdom.

(5) In section 41Y (location of employment duties), in subsection (1), for “applies” substitute “and section 38A (earnings in respect of duties not performed) apply”.

(6) In section 402B (termination awards not benefiting from threshold to be treated as earnings), omit subsection (1)(b) (and the “but” before it).

(7) The amendments made by this section have effect in relation to general earnings that are, for the purposes of Chapter 4 or 5 of Part 2 of ITEPA 2003—

(a) for tax years 2026-27 and subsequent tax years, and

(b) treated as received on or after 6 April 2026.

Umbrella companies

24

(1) ITEPA 2003 is amended as follows.

(2) In Part 2 (employment income: charge to tax), after Chapter 10 insert—

(61Y) (1) Subsection (2) applies if— (a) an individual (“the worker”) personally provides services, or enters into arrangements with a view to personally providing services, to another person (“the client”), (b) the worker is employed by a third person (“the umbrella company”)— (i) that carries on a business (whether or not with a view to profit and whether or not in conjunction with any other business) of supplying labour, and (ii) that is not a company in which the worker has a material interest, and (c) the umbrella company arrangements conditions are met. (2) Each relevant party (see section 61Z) is, along with the umbrella company, jointly and severally liable to pay any amount payable, in accordance with the PAYE provisions, by the umbrella company in relation to a qualifying umbrella company payment. (3) A “qualifying umbrella company payment” means a payment made in respect of the employment of the worker to the extent that it is not in respect of the provision of services to a person other than the client. (4) The umbrella company arrangements conditions are that— (a) there is a contract between the umbrella company and— (i) the client, or (ii) another person, (b) under or in consequence of the contract— (i) the services are provided, or (ii) the umbrella company is paid, or otherwise provided with consideration, for the services, and (c) if the contract is not between the umbrella company and the client— (i) there is a contract between the client and another person, (ii) the provision of the services or of payment or other consideration for the services is also a consequence of that other contract (whether directly or as a result of a series of contracts involving other persons). (5) For the purposes of subsection (1)(b)(ii)— (a) “material interest”, in relation to a company, means— (i) beneficial ownership of, or the ability to control, directly or through the medium of other companies or by any other indirect means, more than 5% of the ordinary share capital of the company, (ii) possession of, or entitlement to acquire, rights entitling the holder to receive more than 5% of any distributions that may be made by the company, or (iii) where the company is a close company, possession of, or entitlement to acquire, rights that would in the event of the winding up of the company, or in any other circumstances, entitle the holder to receive more than 5% of the assets that would then be available for distribution among the participators, but (b) the worker is to be regarded as not having a material interest in a company if that interest is a result, to any extent, of any arrangements the main purpose, or one of the main purposes, of which is to secure that subsection (2) does not apply. (6) And for the purposes of subsection (5)(a) “participator” has the meaning given by section 454 of CTA 2010. (7) In this Chapter— - “arrangements” include any agreement, understanding, scheme transaction or series of transactions (whether or not legally enforceable); - “the client”, “the umbrella company” and “the worker” are to be construed in accordance with subsection (1); - “employed”, in relation to an individual, does not include the individual being treated as employed as a result of any of—Chapters 7 to 10 of this Part (deemed employment by intermediaries), orsection 863A of ITTOIA 2005 (deemed employment of partners in limited liability partnerships),and “employer” is to be construed accordingly; - “PAYE provisions” means the provisions of Part 11 or PAYE regulations; - “the umbrella company arrangements conditions” means the conditions set out in subsection (4). (61Z) (1) If the contract referred to in subsection (4)(a) of section 61Y is between the umbrella company and a person other than the client, the person referred to in subsection (4)(c)(i) of that section is a relevant party. (2) The client is a relevant party if— (a) the contract referred to in subsection (4)(a) of that section is between the umbrella company and the client, or (b) the person referred to in subsection (4)(c)(i) of that section— (i) is connected with the umbrella company, or (ii) is non-UK resident. (3) In a case where— (a) both the client and the person referred to in subsection (4)(c)(i) of section 61Y are non-UK resident, (b) the provision of the services or payment or other consideration for the services is a consequence of a series of contracts involving other persons (other than the worker), and (c) at least one of those persons is UK resident, the person who is UK resident and is closest, by reference to that series of contracts, to the client is a relevant party. (61Z1) (1) Subsection (5) applies if any of the following cases applies. (2) Case 1 is that— (a) a person (“the purported umbrella company”) participates in arrangements that would, if an individual were employed by the purported umbrella company, result in the umbrella company arrangements conditions being met in relation to services the individual provides to the client, (b) either— (i) it is reasonable to suppose that one or more participants in the arrangements, other than the purported umbrella company or the individual, would assume that the purported umbrella company is the employer of that individual, or (ii) the purported umbrella company has taken any step that it is reasonable to suppose was intended to give the impression to any person (whether or not that impression is given) that the purported umbrella company is the employer of the individual, (c) the individual is not employed by the purported umbrella company, and (d) if the individual were employed by the purported umbrella company subsection (2) of section 61Y would apply. (3) Case 2 is that— (a) a person (“the purported umbrella company”) participates in arrangements that would, if an individual were employed by the purported umbrella company, result in the umbrella company arrangements conditions being met in relation to services the individual provides to the client, (b) the individual would, ignoring this section, be treated as employed by the purported umbrella company as a result of Chapter 7 of this Part, (c) if the individual were employed by the purported umbrella company subsection (2) of section 61Y would apply, (d) if it did apply accordingly, the contract referred to in subsection (4)(a) of that section would be between the umbrella company and the client, and (e) the provision of the services by the individual to the client was not as a result of services having been provided to the individual in connection with finding the client with a view to the individual personally providing services to the client— (i) by the purported umbrella company, or (ii) where the provision of services to the client is as a result of a series of contracts, by one or more of the parties to those contracts. (4) Case 3 is that— (a) a company (“the purported umbrella company”) in which an individual has a material interest, within the meaning given by subsection (5)(a) of section 61Y, participates in arrangements that would, if the company were the umbrella company, result in the umbrella company arrangements conditions being met in relation to services the individual provides to the client, (b) either— (i) it is reasonable to suppose that one or more participants in the arrangements, other than the purported umbrella company or the individual, would assume that a substantial proportion of amounts provided to the purported umbrella company in respect of the services will be paid to the individual as earnings, or (ii) the purported umbrella company has taken any step that it is reasonable to suppose was intended to give the impression to any person (whether or not that impression is given) that a substantial proportion of amounts provided to the purported umbrella company in respect of the services will be paid to the individual as earnings, (c) it is not the case that a substantial proportion of amounts provided to the purported umbrella company in respect of the services is paid to the individual as earnings, and (d) subsection (2) of section 61Y would apply if subsection (1)(b)(ii) of that section (requirement that the umbrella company is not a company in which the worker has a material interest) were omitted. (5) If this subsection applies— (a) the individual is to be treated for income tax purposes as holding an employment with the purported umbrella company, the duties of which consist of the services the individual provides to the client, (b) all relevant remuneration is to be treated for income tax purposes as earnings from that employment, (c) where there is any provision of relevant remuneration (by any person and to any person) that does not result (whether as a direct result of that provision, as a result of the onward provision of that remuneration or otherwise) in the payment of PAYE income of that remuneration, or any part of it, to the individual, the purported umbrella company is treated as making, and the individual is treated as receiving— (i) a payment of PAYE income in the relevant amount made at the time it was provided for the purposes of the PAYE provisions, and (ii) a qualifying umbrella company payment made in the relevant amount at that time for the purposes of section 61Y (3), (d) Chapters 7 to 10 of this Part (deemed employment by intermediaries) do not apply in relation to the provision of those services, (e) section 863A (deemed employment of partners in limited liability partnerships) of ITTOIA 2005 does not apply so far as it otherwise would apply in relation to the provision of those services, and (f) accordingly, section 61Y (2) will apply in relation to the purported umbrella company. (6) For the purposes of subsection (5)— (a) in paragraph (c) the relevant amount means so much of the remuneration provided as does not result in the payment of PAYE income to the individual, and (b) that paragraph only applies in relation to the initial provision of an amount of relevant remuneration (and not to any subsequent onward provision of that same amount). (7) If subsection (5) would, ignoring this subsection, apply in relation to more than one purported umbrella company in relation to services the individual provides to the client, that subsection only applies in relation to the purported umbrella company that— (a) is a person to whom PAYE regulations apply and is closest to the individual, by reference to the contract or series of contracts resulting in the provision of those services, or (b) if none of the purported umbrella companies is a person to whom PAYE regulations apply, is closest to the individual by reference to that contract or those contracts. (8) Where subsection (5) applies and there is a person who is an umbrella company in relation to the services the individual provides to the client, that subsection has effect as if— (a) paragraph (a) were omitted, (b) in paragraph (b), the reference to that employment were to the employment of the individual by the umbrella company, (c) in paragraph (c), the reference to the purported umbrella company were to the umbrella company, and (d) paragraph (f) were omitted. (9) Subsection (10) applies where subsection (5) applies and there is more than one person who— (a) is an umbrella company in relation to services the individual provides to the client, or (b) is a purported umbrella company in relation to those services (including a purported umbrella company in relation to which subsection (5) does not apply as a result of subsection (7)). (10) Where this subsection applies, each of the persons falling within paragraphs (a) or (b) of subsection (9) is (to the extent this would not otherwise be the case) jointly and severally liable to pay any amount payable, in accordance with the PAYE provisions, in relation to the relevant remuneration. (11) For the purposes of this section “relevant remuneration” means— (a) all remuneration receivable by the individual (from any person) in consequence of providing the services, and (b) any other amount that it is just and reasonable to attribute to provision of the services by the individual (for example, any amounts that would form part of any deemed direct employment payment or deemed direct payment if any of Chapters 8, 9 or 10 of this Part applied). (61Z2) (1) Subsection (2) applies where an officer of Revenue and Customs considers that a person is, or may be, jointly and severally liable to pay an amount as a result of this Chapter. (2) The officer may at any time disclose to the person such information as the officer considers appropriate (whether or not such a disclosure would otherwise be permitted under section 18(2)(a) of CRCA 2005 or any other enactment) for the purposes of informing the person about that liability (“the joint liability”) including— (a) the identity of any person who is an umbrella company, a purported umbrella company or the worker in relation to the arrangements to which the joint liability relates, and (b) information about the nature and extent of the liability of an umbrella company or a purported umbrella company that (by virtue of this Chapter) results, or may result, in the joint liability. (3) Information disclosed in reliance on subsection (2) may not be further disclosed without the consent of the Commissioners for His Majesty’s Revenue and Customs (which may be general or specific). (4) Where a person contravenes subsection (3) by disclosing information relating to a person whose identity— (a) is specified in the disclosure, or (b) can be deduced from it, section 19 of CRCA 2005 (offence of wrongful disclosure) applies in relation to the disclosure as it applies in relation to a disclosure in contravention of section 20(9) of that Act. (5) In this section “CRCA 2005” means the Commissioners for Revenue and Customs Act 2005.

(3) In section 7 (meaning of employment income etc), in subsection (5)(a)—

(a) for “10” substitute “11”, and

(b) omit “and”, and

(4) In section 44 (treatment of workers supplied by agencies)—

(a) in subsection (4), omit paragraph (b) (and the “or” before it),

(b) in subsection (5)(b), omit “or (as the case may be) with the relevant person”, and

(5) In section 61V (consequences of providing fraudulent information), after subsection (4) insert—

(4A) But where the fraudulent documentation condition would (ignoring this subsection) be met as a result of the provision of a fraudulent document intended to constitute evidence that section 61Y (umbrella companies) applies in relation to the services provided by the worker, that condition is to be treated as not met.

(6) In section 684 (2) (PAYE regulations), in the list of provisions, after item 7 insert—

Provision in connection with the recovery of amounts to which a person is jointly and severally liable as a result of Chapter 11 of Part 2 (umbrella companies).

(7) In section 689(4) (employee of non-UK employer), after “sections” insert “61Z1 (5)(c)(i),”.

(8) In section 716B (employment intermediaries to keep, preserve and provide information etc)—

(a) in subsection (1)—

(i) omit “of Part 2”, and

(ii) after “agencies)” insert “or 11 (umbrella companies) of Part 2”, and

(b) in subsection (2), in the words before paragraph (a)—

(i) after “person” insert “(other than an individual mentioned in paragraph (a) or (b))”, and

(ii) after “makes” insert “or participates in”.

(9) In regulation 69 of the Income Tax (Pay As You Earn) Regulations 2003, in paragraph (1A)—

(a) the words from “any amount” to the end become sub-paragraph (a),

(b) in that sub-paragraph, omit the words from “whether” to the end, and

, and (b) any amount the employer must account for under regulation 62(5) (notional payments) in respect of notional payments made by the employer during the tax period, whether or not those amounts were included in any return under regulation 67B (real time returns of information about relevant payments) or 67D (exceptions to regulation 67B).

(10) In regulation 80 of those Regulations (determination of unpaid tax and appeal against determination), after paragraph (5) insert—

(5A) Where a person is jointly and severally liable to pay an amount as a result of Chapter 11 of Part 2 of ITEPA 2003 (umbrella companies)— (a) this regulation applies to that amount as it applies to an amount of tax payable by an employer (and the references to “the employer” in paragraphs (2) and (5)(b) are to be read accordingly), (b) in cases that operate by reference to a determination made, or that may be made, under this regulation in relation to the person, the references to “the employer” in the following provisions are to be treated as references to the person— (i) regulation 81(4) (employee liability if tax unpaid after regulation 80 determination), and (ii) regulation 97P(1) (persons from whom security for PAYE can be required), and (c) the references to “the employer” in regulation 72E(6) and regulation 72F (recovery from employee of tax that has been self-assessed etc.) are to be treated as references to the person for the purposes of making a direction under section 72F in relation to the person.

(11) The amendments made by this section have effect in relation to payments made on or after 6 April 2026.

Loan charge settlement scheme

25

(1) The Treasury must by regulations provide for a scheme under which persons who are liable to pay loan charge amounts may enter into an agreement (“a settlement agreement”) with the Commissioners as regards those amounts.

(2) The scheme must provide that the Commissioners must, in accordance with the scheme, make an offer to enter into a settlement agreement (“a settlement offer”) to every person who—

(a) they believe is liable to pay loan charge amounts, and

(b) is not a person who the Commissioners reasonably suspect is, or has at any time been—

(i) a promoter or introducer for the purposes of Part 7 of FA 2004 (disclosure of tax avoidance schemes), or

(ii) a director or shadow director of such a person.

(3) The scheme must provide that a settlement offer made to a person (P) must—

(a) set out the terms of the proposed settlement agreement, including—

(i) the loan charge amounts to which it would apply (“relevant loan charge amounts”), and

(ii) the amount P would instead be required to pay under it (“settlement amount”), and

(b) remain open to P for such reasonable period as may be specified by the scheme.

(4) The scheme must provide that the relevant loan charge amounts must not include loan charge amounts which are the subject of, or under, a contract settlement entered into before 1 June 2021.

(5) The scheme must provide that if P enters into the proposed settlement agreement with the Commissioners—

(a) every relevant loan charge amount ceases to be, or will no longer become, payable by P, but

(b) P is instead liable to pay the settlement amount.

(6) The scheme must provide for the calculation of P’s settlement amount and must secure—

(a) that amounts are arrived at by—

(i) determining the value of the Schedule 11 or 12 to F(No. 2)A 2017 loans and quasi-loans to which the relevant loan charge amounts are connected,

(ii) determining the other amounts paid to P under the arrangements under which those loans or quasi-loans were made,

(iii) determining the amounts charged to P (as deductions, fees or otherwise) under those arrangements,

(iv) attributing the amounts determined as mentioned in sub-paragraphs (i) to (iii) to tax years in accordance with the scheme and assuming that income tax and national insurance contributions were payable as regards those tax years in relation to those amounts, and

(v) on that assumption, determining the total amount for each of those tax years of the additional income tax and national insurance contributions which would have been payable by P as regards the tax year (“starting amount”),

(b) that the starting amount for each tax year is lowered (but not below nil) by the amount that results from adding together—

(i) the amount of reduction given by reducing by 10% the first £50,000 of the total amount attributed to the tax year under paragraph (a)(iv), and

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