Tax Matters Digest

Tax Matters Digest: 23 July 2026 Edition

To go straight to the articles in the latest edition please scroll down and expand the section/s below that are of interest to you. For a preview of these articles, read the introduction to the latest edition from Stefanie Redmond here:

It’s been emotional. Tears, laughter, controversy, and decisive interventions from the American President……..but alas it’s all over now – at least for another four years. (Obviously I’m talking about the World Cup, which is coming home to Madrid. Felicidades a los campeones!)

A parallel drama has been playing out in Westminster (with the notable difference of the four-year cycle between events). On Monday 20 July the final whistle blew on Keir Starmer’s premiership and Prime Minister Burnham moved into Number 10. After weeks of speculation that centred on Shabana Mahmood and Ed Miliband as candidates for Chancellor of the Exchequer, Burnham made the surprise announcement that John Healey would be taking the helm at Number 11. The new Administration didn’t waste any time and on Tuesday 21 July it announced that VAT on electricity bills would be temporarily cut to help households with the cost-of-living – although there were immediate claims this policy was not fully funded, as the Government had suggested. At this stage it seems unlikely there will be further tax announcements made before the Autumn Budget. Unfortunately the intervening period risks becoming a vacuum for another ‘summer of speculation’ on possible future tax rises (que horrible…)

In the meantime, the unglamorous but necessary job of administering one of the most complex tax systems in the world continues in earnest (que pena!). Monday 13 July was L-Day, which saw the Government publish draft clauses for Finance Bill 2026-27 and accompanying documents including a number of consultations, making for a bumper edition of Tax Matters Digest (De. Nada.).

For UK companies with overseas Permanent Establishments, our spotlight article summarising one of the key L-Day releases – the draft legislation for the recently announced changes to the Foreign Branch exemption regime – is a must-read. Our next two articles will be of interest to those in the energy sector, looking at the L-Day measure that expands the definition of exploitation rights and the draft legislation for the UK Oil and Gas Revenue Levy which will replace the Energy Profits Levy.

We then examine the draft legislation to implement the OECD Pillar Two Side-by-Side package, exploring a series of new elective safe harbours. Companies with substantial predevelopment costs on capital projects should check out our next article on the new consultation on the capital allowances treatment of such costs. Companies who have made, or are considering substantial investment in ground-up developments (particularly those undertaking brownfield redevelopment projects) will want to read our piece on the new Land Remediation Relief consultation.

Que no pare la (L-Day) fiesta just yet: next we turn to a series of articles on various L-day measures that will be of interest to a range of readers. We look at the proposals for the new securities transfer tax to replace Stamp Duty Reserve Tax and Stamp Duty on transfers of UK shares and securities. Then there is an overview of the draft legislation for the taxation of crypto loans, liquidity pools and stablecoins. The following article considers the implications for companies with Employee Management Incentive (EMI) plans, following the removal of the requirement for a separate notification to HMRC of the grant of EMI options from 6 April 2027. Our next article explores draft legislation introducing a statutory duty for taxpayers to correct known inaccuracies, that covers a broad range of taxes including (but not limited to) income tax, corporation tax and VAT and other indirect taxes.

Our L-Day coverage ends with an article sweeping up some of the remaining L-Day announcements including: draft legislation to establish the legal framework for mandatory payrolling of benefits in kind; changes to ISA reporting from April 2028; changes to HMRC’s civil tax information and inspection powers; reforms to the rules governing defined benefit pension scheme surplus payments to members; measures in respect of Local Government Pension Scheme Relief for Stamp Duty Land Tax (SDLT); and reforms to the Cultural Gift Scheme. Two consultations published with the L-Day package are also covered: proposals to simplify treaty relief for withholding tax on overseas interest and to align the time limits for recovery of National Insurance contributions with income tax.

The eagle eyed amongst you may spot two measures missing from the above, which the Government previously said would be in Finance Bill 2026-27: the tax treatment of image rights and SDLT changes needed following the Renters’ Rights Act. Rest assured this isn’t an oversight on our part – these measures were not included in the L-Day releases, and it is unclear why this was or when we can expect to hear more on them (Que sera…).

Leaving L-Day behind, we reflect on key lessons learned from the first cycle of Pillar Two filings and then have a must-read article for importers looking at the final regulations and detailed guidance for the UK’s Carbon Border Adjustment Mechanism (CBAM), that moves the regimes decisively from concept to implementation.

We also have plenty of ‘other news’ in this edition: HMRC guidance re retaining original submission dates when filing corrections to Pillar Two information returns; more announcements on the new mandatory registration of tax advisor rules (including welcome guidance that in-house tax teams are not intended to be within the scope of the regime); the publication of HMRC’s 2025/26 annual report and accounts and business customer surveys; and changes to HMRC guidance for Patent Box claimants subject to transfer pricing amendments. We also cover the publication of consultations on draft regulations to update definitions in the Bank Levy legislation, improvements to the third-party data collected by HMRC on interest income and card sales, and draft regulations to reduce ISA limits, as well as publication of HMRC’s response to the consultation on simplifying the taxation of offshore interest.

Finally, indirect tax weekly Talking Points brings you all you need to know on L-day indirect tax measures, as well as other key developments in the past few weeks, and Week in Tax brings you latest tax updates from KPMG member firms around the world. 

Phew! That was a lot. All that remains to say is - disfrutas leyendo…....y Viva Espana!

Enjoy reading these articles and please do get in touch with our experts if you want to discuss them further.

Stefanie Redmond
Senior Manager, Tax Policy
KPMG in the UK