Autumn Budget 2026: VAT, environmental and other indirect taxes

Current easements for low-value imports (LVI) will be removed six months earlier than previously announced. Civil penalties for wrongdoings related to excise duty and certificates of origin will be legislated, and HMRC will have increased powers in its right to dispose of seized goods.

Summary

The reform of the customs treatment of LVI will be implemented by October 2028, six months earlier than previously announced. These reforms are intended to remove the long-standing easements of LVI imports, which have made it attractive for online retailers to ship low-value consignments from overseas to UK consumers.

The government also announced that it will legislate in the Finance Bill 2026/27 to:

• Introduce a targeted civil penalty for deliberate evasion of UK excise duty

• Validate fees charged in connection with the issuing of certificates of origin

• Provide HMRC with a power to dispose of seized goods if the continued storage, or handling of the seized goods, would be impractical or involve unreasonable expense

Our comment

The historical LVI easements have not only benefitted overseas retailers, both large and small, but also UK consumers, who have been able to buy low-value goods online with no, or lower, import taxes applied to the goods. This will now come to an end earlier than previously expected, in line with recent developments in the US and the EU.

The intention behind the reform is to allow UK retailers to compete more easily with overseas online retailers. It does, however, potentially come at the expense of UK consumers, who may face higher product prices for the same products from the same suppliers, if they don’t change their purchasing decisions.

From April 2027, non-UK businesses providing business-to-business (B2B) services to non-VAT registered UK traders will need to register for, and charge, UK VAT where it is deemed that the UK is the place of supply.

This change effectively introduces a new general place of supply rule and moves away from how the EU generally accounts for VAT on B2B services.

Summary

Currently, UK businesses self-account for VAT when they receive services from non-UK businesses. This applies to most, but not all types of services. Where a UK business is not VAT registered, for example, due to trading below the registration threshold, or is wholly exempt, it has to treat the price of the bought-in service as if it were a taxable supply by the UK business. This often means UK businesses must register and then account for VAT on the bought-in service under the reverse charge mechanism.

From April 2027, such transactions will not create a VAT registration requirement for the UK business. Instead, there will be an immediate VAT registration requirement for the overseas supplier, as there is a zero threshold for compulsory VAT registration for overseas businesses trading in the UK.

Once VAT registered, the overseas business will need to submit quarterly VAT returns and account to HMRC for the VAT charged to the UK business, in accordance with making tax digital (MTD) requirements.

Our comment

HMRC’s policy paper suggests this is to simplify matters for UK and non-UK businesses and create a level playing field.

The announcement raises several questions, such as whether UK businesses that are only VAT registered because of the reverse charge will need to deregister. Will HMRC be able to cope with the influx of VAT registration applications, especially since overseas VAT registrations can take months to process? Will the online registration application form be amended to reflect this change, and will the overseas business have to register for VAT even where the UK business is in the process of VAT registering?

VAT-exempt traders may welcome the change, but it is unlikely to please overseas traders looking to provide services in the UK.

There were no changes to stamp duty land tax (SDLT) rates announced in the Autumn Budget, with only minor technical changes introduced.

Summary

No changes to the rates or thresholds for SDLT were announced in the Autumn Budget, which included the following technical changes:

• Rules to remove rent payable on assured shorthold tenancies from the scope of SDLT to be included in the Finance Bill 2026/27, effective retrospectively from 1 May 2026. This change was previously announced when the Renters Rights Act was introduced earlier in the year

• The rules for SDLT group relief, which provides 100% relief for transfers of land in England or Northern Ireland between members of a corporate group, will be changed from 29 October 2026. The relief will be withdrawn if the vendor is wound up and the purchaser subsequently leaves the group within three years from the date of the original transfer

• An exemption from SDLT for transfers from local government pension schemes to qualifying pooled investment vehicles will be introduced for transfers taking place between 28 October 2026 and 31 March 2032

Our comment

None of the SDLT changes announced should affect individuals buying their own homes. HMRC has already adopted the changes to assured shorthold tenancy rents in practice, given their intended retrospective nature, so they should not result in any changes for tenants entering new leases.

The changes to SDLT group relief will have implications for businesses restructuring, particularly in the real estate sector. Previously, groups could close off the risk of a clawback of group relief initially claimed on an inter-company transfer by liquidating the vendor if it had no ongoing activities. Under the proposed rules, this relief could be withdrawn if the purchaser company leaves the group after the vendor is liquidated and within three years of the original transfer. This will put the purchaser in the same position whether the vendor remains in the group, is liquidated or leaves the group through a sale of its shares.

It remains to be seen whether equivalent changes to group relief for Scottish land and buildings transactions tax or Welsh land transactions tax will also be made.

The previously announced introduction of the securities transaction tax (STT) to replace stamp duty and stamp duty reserve tax (SDRT) on shares is going ahead.

Summary

As part of the 2026 Budget, the government published draft legislation to introduce the STT – a new tax on all transfers of shares and securities, as announced in the 2025 Budget. The main rate of tax is to be 0.5%, in line with current stamp duty, with a higher rate of 1.5% applying to certain transfers, such as to clearance schemes.

STT will be introduced in late 2027, and there will be a four-year transitional period for transactions within the scope of either stamp duty or stamp duty reserve tax entered into before the commencement date but not due to be reported or paid until on or after that date.

Our comment

There have been no significant changes to the draft STT since the previous announcements.

The approach to modernising the tax regime for share transfers is welcome and could result in administrative savings for businesses. One point that is not yet clear is the level of detail required in STT returns submitted to HMRC, particularly in cases where reliefs for intra-group transfers or corporate restructures apply. The equivalent stamp duty provisions currently require complex applications for relief to be submitted to HMRC with copy documentation. It is hoped that the burden under STT will be less onerous.

The range of products in scope for the UK Carbon Border Adjustment Mechanism (UK CBAM) might go beyond those previously announced by the government to include refinery products.

Summary

Subject to a consultation on feasibility and impacts, the scope of UK CBAM may be extended to include refinery products, in addition to the five product categories previously included.

The government will also introduce legislation in the Finance Bill 2026/27 to correct a minor error in the Finance Act 2026, adding “other ferro-silicon”, commodity code subheading 7202 29, to the existing ferro-silicon exceptions from UK CBAM scope.

There is no change to the date for UK CBAM coming into force, which remains 1 January 2027.

Our comment

Until today, the message from the government was that UK CBAM will apply only to the following five product categories: aluminium, iron and steel, hydrogen, cement, and fertilisers.

If the suggestion to increase the scope to include refinery products goes ahead, UK importers of petrol, diesel, gasoil and jet fuel will also be in scope for UK CBAM. This would mean many more UK businesses would be obliged to register for CBAM, and the tax burden would increase too.