Draft Finance Bill 2026/27: Key themes

Following the publication of the draft Finance Bill 2026/27 legislation on 13 July 2026, tax advisers and accountants have the opportunity to review the detailed clauses that may form part of the next Finance Act.

Although the final contents will not be confirmed until after the next Budget, the draft legislation provides a clear indication of the government’s tax policy priorities. 

Modernising the tax system and tackling non-compliance

One of the clearest themes in the draft Finance Bill is HMRC’s continued drive towards a more digital and real-time tax system.  

The Exchequer Secretary to the Treasury said: ‘The government is committed to modernising the tax system so that it is fit for our 21st century economy and provides sustainable revenue to fund our public services into the future.’ 

Several measures within the draft Finance Bill support this ambition.

Mandatory payrolling of benefits in kind

Draft legislation has now been published for the mandatory reporting of some benefits in kind through payroll from 6 April 2027 (with additional benefits being mandated from 6 April 2028). This will move reporting away from the traditional P11D process and into real-time reporting via RTI.   

Employers need to take action now in order to review payroll software readiness and prepare for the revised reporting processes.

Securities Transfer Tax

The government continues its move towards replacing Stamp Duty and Stamp Duty Reserve Tax with a new digital, self-assessed Securities Transfer Tax framework. Changes aim to ensure that all transactions are taxed under a comprehensive digital system, thereby removing the need for non-electronic instruments and paper-based reporting and payment processes.

Compliance and closing the tax gap

Another key focus of the current government is closing the tax gap and the draft Finance Bill contains several proposals aimed at compliance and enforcement. These include a number of reforms to modernise HMRC’s civil information and inspection powers as well as the following specific changes.

Publishing details of deliberate defaulters

HMRC is proposing to broaden its ability to publish information about deliberate defaulters and disclose further details regarding deliberate non-compliance. The measure will also allow HMRC to start publishing details of company officers who have received personal liability notices in connection with company penalties charged for deliberate non-compliance.

Modernising error corrections

HMRC is proposing a significant shift in how inaccuracies are corrected. The legislation introduces an explicit obligation on taxpayers to take reasonable action to correct errors once identified. It also gives HMRC a new power to issue a Customer Correction Notice, which requires the taxpayer to check their position and either correct the inaccuracy or explain why no correction is needed.

Cryptoassets

Several changes were announced in relation to the taxation of cryptoassets: 

• Various changes will be made to treat stablecoins (where the value is pegged to a currency such as pounds or dollars) more like money for tax purposes from April 2027. This will include exempting disposals from capital gains treatment and taxing interest-like returns as income. 
• Draft legislation would apply no gain, no loss treatment to certain cryptoasset loans and liquidity pool arrangements, which effectively defers Capital Gains Tax until an economic disposal of the cryptoasset. 

International developments

Foreign permanent establishment reform 

For accounting periods beginning on or after 1 January 2027 it is expected that the current regime which allows UK-resident companies with foreign Permanent Establishment (PE) to elect for any profits or losses to be exempt from UK taxation will be replaced with a mandatory regime. Foreign PE profits and losses will generally be excluded from the UK Corporation Tax calculation automatically. This means that UK companies will typically no longer be able to benefit from loss relief on losses incurred in the foreign PE. 

According to HMRC, the objective is to ‘protect the UK's territorial Corporation Tax base, preventing costs incurred overseas being used to reduce UK tax’. 

Pillar Two changes continue 

The draft Bill also contains further amendments to the UK’s Pillar Two regime. This is further to publication of the ‘side-by-side package’ by the Organisation for Economic Cooperation and Development (OECD) in January 2026, which aims to provide greater certainty for business, simplify compliance and protect groups from retaliatory tax measures introduced by other countries. The proposals introduce a series of safe harbours and technical simplifications that reduce compliance burdens while maintaining the overall 15% minimum tax objective. 

The draft legislation also contains a range of technical amendments intended to align UK law with OECD commentary and administrative guidance. 

Indirect taxes

From an indirect taxes perspective, the following point are of note: 

• The draft legislation confirms plans for the new mileage-based Electric Vehicle Excise Duty from 1 April 2028.
• As announced at Budget 2025, the legislation sets out reforms to the Soft Drinks Industry Levy from 1 January 2028, including reducing the sugar threshold and removing certain exemptions.
• The higher Air Passenger Duty rate will be extended to more private and business jets from April 2027 by reducing the weight threshold for the higher rate to be payable. Currently smaller private jets pay the same rate as applies to scheduled services.  

Other

Other clauses include: 

• A new authorised payment category will allow defined benefit pension scheme surpluses to be paid directly to members for whom it will be treated as pension income.
• Simplifying administration of EMI by removing a separate requirement to notify HMRC when companies grant their employees EMI options from 6 April 2027 (details of grants instead to be recorded through existing EMI end of year return). 
• Introduction of a £925 international student levy from 1 August 2028 for each international student registered on higher education courses. 
• Informants who receive a reward from the Strengthened Reward Scheme (see further details here) will be subject to withholding tax at 45%. 

What should accountants do now?

With technical consultation running until 7 September 2026, advisers have an opportunity to review the detail and contribute feedback before the Bill reaches Parliament. Details of all the draft legislation has been published by HMRC. 

Priorities are likely to be focused on the mandation of payrolling benefits. If you would like to get to grips with this topic, Mercia is running a course in November 2026 that will cover the legislation and action points: Payrolling benefits – what we know so far. 

Otherwise, aspects of the draft Finance Bill will be covered in our Autumn updates and Budget coverage.