Midweek Tax News

At a special conference in London on 17 July 2026, Andy Burnham was elected unopposed as the Labour Party leader. In the UK, the Prime Minister is the leader of the political party with a majority of MPs in the House of Commons (currently the Labour Party) and as such, following Sir Keir Starmer’s resignation, Mr Burnham became UK Prime Minister on 20 July 2026. He has subsequently appointed John Healey (who had Treasury experience in Tony Blair’s government) as Chancellor of the Exchequer to replace Rachel Reeves.

The new Prime Minister’s first policy announcement was to reduce the rate of VAT from 5% to 0% on domestic energy bills for six months from October 2026. The accompanying press release states that the measure applies for and is funded for the current financial year, with any longer-term action to be considered at the Autumn Budget alongside an OBR forecast.

Further policy announcements are likely to follow, and it is expected that the Autumn Budget will be held in October 2026 (after the next Labour Party conference). In the absence of exceptional circumstances, the new Chancellor of the Exchequer must give the Office for Budget Responsibility (OBR) at least 10 weeks’ notice ahead of this event, to allow the OBR to prepare its independent economic and fiscal forecasts.

Emma Reynolds has been appointed as Chief Secretary to the Treasury (CST) – a role responsible for public expenditure including spending reviews and strategic planning; in-year spending controls; and driving efficiency and value for money.

It may well be that the reshuffle will now extend across the Treasury ministerial team (including those Ministers who focus on tax policy, such as the Financial Secretary, Exchequer Secretary, and Economic Secretary (City Minister) to the Treasury), which could signal shifts in fiscal strategy, delivery priorities and engagement with business.

The Taxation (Energy and Vehicles) Act received Royal Assent on 15 July 2026.

As a reminder, the Act makes provision for three previously announced tax measures:

• The increase in the rate of the Electricity Generator Levy (EGL) from 45% to 55% from 1 July 2026
• An increase in the rate of Approved Mileage Allowance Payments (AMAPs) with effect from the start of the current tax year (2026/27)
• The introduction of a temporary 12-month Vehicle Excise Duty (VED) exemption for certain heavy goods vehicles (HGVs) to apply from 1 July 2026 and 30 June 2027

Schedule 23 Finance Act 2026 introduced the power to make regulations to require certain organisations to collect, verify and report data to HMRC, including financial institutions such as banks and building societies as well as merchant acquirers and payment facilitators. From April 2028 in-scope data-holders will provide data on an ongoing basis without issuance of a notice from HMRC, report data to a set frequency and submit this data to HMRC by a set timeframe as well as collecting specific tax references from customers and verifying this information before submitting it to HMRC. Data-holders must make reasonable efforts to obtain any missing data required to be collected and must register with HMRC before reporting.

The Government has now published a technical consultation on draft legislation to improve the quality and consistency of data HMRC receives on interest income and card sales. The consultation covers draft secondary legislation made under Schedule 23 and draft notices and guidance covering mandatory due diligence requirements for those persons required to provide data to HMRC, as well as on how and when relevant data holders should notify HMRC. Responses are sought by 20 August 2026.

On 16 July 2026, HMRC published a technical consultation seeking views on draft regulations to update some definitions used in the Bank Levy legislation at Schedule 19 Finance Act 2011 and The Bank Levy (Loss Absorbing Instruments) Regulations 2020. The proposed amendments would update certain definitions in the Bank Levy legislation to align with regulatory changes. The amendments would have effect for chargeable periods beginning on or after 1 January 2027. Responses are sought by 13 August 2026.

On 14 July 2026, the Government issued a written statement providing an update on the progress of the UK carbon border adjustment mechanism (CBAM) which comes in from January 2027. The statement confirmed that the first tranche of secondary legislation had been laid, setting out the majority of the detailed design and administrative framework for the UK CBAM.

It advised that further secondary legislation, confirming details on how to monitor, report and verify emissions, will follow. The scope of the UK CBAM remains unchanged, with the sectors included being iron and steel, aluminium, fertiliser, hydrogen and cement.

Comprehensive guidance will be published later in the year, but additional guidance was published on 16 July along with an update to the useful policy summary for the UK CBAM.

In May 2026, the second Pensions Commission published its interim report, setting out the challenges that the UK's pensions system is facing out to 2050. The second Pensions Commission’s final report is planned for Spring 2027. The report will make recommendations to the UK Government for a pensions system that is adequate, fair and sustainable. Submissions were invited from stakeholder groups.

In response to the interim report, our comments look at the use of tax incentives and the importance of stable tax policy as well as more generally at the importance of education, demographic changes, flexibility, employer affordability, decumulation and investment strategy. Please speak to your usual EY contact if you would like to discuss any of these issues.

On 13 July 2026, the Government announced the conclusion of a new UK-Switzerland Free Trade Agreement (FTA), which contains provisions that facilitate the movement of business travellers and certain employees between the UK and Switzerland.

The agreement is not yet in force and remains subject to the relevant parliamentary scrutiny, approval and implementation processes in both countries. Details regarding commencement dates and operational guidance of the FTA are expected to be released following parliamentary scrutiny and ratification.

The Government has announced that, under the FTA, UK services professionals will be able to undertake visa-free travel to Switzerland for up to 90 days per year. The measure is intended to support cross-border business activities and the provision of services in Switzerland.

The FTA also includes provisions that would allow UK businesses to transfer personnel to Switzerland for assignments of up to five years. According to the Government, these assignments would not be subject to certain economic needs tests that may currently apply in some circumstances. These provisions are expected to provide greater flexibility for organisations deploying personnel to Switzerland in connection with business operations, service delivery and project-based work.

For more details, please see our global immigration alert.

The UK has published the Social Security (Contributions) (Isle of Man) Order 2026 which looks to give effect to the new social security agreement with the Isle of Man agreed on 18 May 2026. The agreement modernises the provisions in the 1977 Agreement which determine where workers and employers pay their National Insurance contributions, so that they operate in line with the social security agreement the UK has with Jersey and Guernsey, as well as those with other countries.

The Order will come into force, and implement the agreement, on the first day of the month after such time as both parties have completed the necessary domestic procedures and have notified the other party. The agreement will have effect in relation to the tax year beginning on or after 6 April next following the date on which letters are exchanged.

Following a review of the EU Foreign Subsidies Regulation, the European Commission will propose targeted amendments to reduce the administrative burden related to the number of submissions, streamline reporting requirements and focus on cases that are more likely to raise concerns.

The Commission has started work on the targeted adjustments. The draft targeted adjustments will be published in the autumn, giving stakeholders the possibility to submit comments. Based on the feedback and any additional evidence gathered, the Commission will look to adopt the targeted adjustments in 2027.

Our next Technology, Media and Telecommunications (TMT) VAT short-circuit webcast on Thursday, 30 July, 15:00 – 15:30 will focus on the impact of Brazil’s indirect tax reform on non-resident suppliers and digital platforms, based on the information published to date. We will cover the potential impact on TMT businesses.

We will be providing an overview of the latest guidance issued by the Brazilian tax authorities relevant to non-resident suppliers, and the expected compliance obligations impacting online marketplaces. We will also look at recommended actions that businesses can take now to prepare for the forthcoming requirements in Brazil.

You can register here for this event.

We have included links to a selection of our tax alerts below. Additional articles are available in our global tax alert library.

Belgium: Belgium has entered into the final phase of implementing its Pillar Two compliance framework. The tax authorities have finalised and published various Pillar Two filing forms, the corresponding XSD schemas and supporting administrative guidance required for taxpayers to comply with their Belgian Pillar Two obligations. In addition, specific administrative guidance by means of a dedicated Frequently Asked Questions list has been issued addressing several practical implementation questions in relation to the Qualified Domestic Minimum Top-up Tax and the General Representative.

Gibraltar: Gibraltar's Budget for fiscal year 2026/27 did not announce changes to headline corporate tax or personal income tax rates, but it does address a number of fiscal and social policy measures, including further insight into the implementation of the UK-EU Treaty in respect of Gibraltar (signed on 14 July) that will be relevant to businesses, employers and individuals.

Poland: The President of Poland signed into law an Act introducing substantial changes to the Mandatory Disclosure Rules (MDR), with the new MDR framework scheduled to take effect substantially on 1 October 2026.

Tanzania: The Tanzanian Finance Act 2026 took effect from 1 July 2026 with many of its changes being effective from 1 July 2026. The new law is aimed at accelerating economic growth, particularly in strategic sectors including manufacturing, extractive, agriculture, energy and health.

The July edition of PE Watch, our summary of the latest international developments regarding permanent establishments, is available. This month’s edition covers a ruling from a Belgian Court in favour of a Belgian company with a Luxembourg permanent establishment (PE) for which the Belgian tax authorities had denied treaty relief. There is also coverage of Germany’s final guidance updating the administrative principles on the existence of a PE under both domestic law and tax treaties.

The latest EY UK DNA of the CFO research suggests that while AI is raising expectations of finance, many organisations are still working out how to turn that ambition into measurable business value. The challenge is clear: while 81% of UK CFOs expect AI-enabled business models, only 8% say AI is fully integrated across finance operations. Drawing on insights from 170 UK CFOs and senior finance leaders, our report identifies five shifts that will help finance leaders close that gap.