Tariffs, Trade Deals and Tax Rises – What Businesses and Individuals Should Expect
With international tensions, economic headwinds, and ongoing budgetary pressures, the UK government faces a complex financial environment. While recent trade agreements with the EU, India, and the United States offer some positive news, the broader landscape is still one of cautious optimism — especially when it comes to tax planning.
At Merranti Accounting, we’re keeping a close eye on these developments to ensure our clients stay ahead of potential tax rises and regulatory shifts. Here’s what you need to know:
📈 Rising Pressures and Likely Tax Increases
With government spending under strain, tax increases are expected in the near future, despite past manifesto commitments not to raise core taxes like:
- VAT (Value Added Tax)
- Corporation Tax
- Income Tax for working individuals
However, significant revenue needs remain. The most likely areas for tax hikes are:
- Inheritance Tax (IHT)
- Pensions Taxation
We’ve already seen changes to employers’ National Insurance contributions, and it’s clear that wealth and retirement planning are next in line for reform.
🏠 Inheritance Tax Changes on the Horizon
The government has proposed restricting IHT relief for farms and trading businesses — changes set to take effect from April 2026, with further changes coming in April 2027.
Of particular note:
- From 2027, it will be more difficult to leave pension funds or unused wealth in trusts without attracting additional IHT.
- This especially affects those planning to use trusts in their estate planning or pension structures.
If this could impact you or your family, there’s still time to act — but planning should begin well ahead of 2027 to make use of the current reliefs and allowances.
💷 Winter Fuel Payments May Now Be Taxable
For the first time, the government has introduced potential tax implications for receiving the Winter Fuel Payment, previously a tax-free benefit for pensioners.
This change means:
- The payment may now need to be included as taxable income.
- Pensioners could face higher tax bills or changes to benefit eligibility depending on their overall income.
We’ll be monitoring HMRC’s implementation closely and advising clients on the best course of action.
🧾 VAT and Charities – A Caution for Donors
A recent VAT case has led HMRC to review how VAT is applied to charitable donations, particularly those made in exchange for services or benefits.
If you’re:
- A business making corporate donations, or
- An individual donating in a way that might be linked to services (e.g., in events or fundraising structures),
…then these changes could mean you no longer benefit from full VAT relief. As always, we recommend reviewing any planned giving with a tax adviser to ensure compliance and maximise benefit.
📦 Looking Ahead
The Autumn Budget is expected to include additional updates, particularly around:
- Property taxation
- Pension reforms
- SME incentives
In an election-sensitive environment, tax policy could shift rapidly, so proactive planning will be essential.
🔍 What Should You Do Now?
- If you’re planning to pass on wealth, review trust and IHT strategies well before 2027.
- If you’re receiving the Winter Fuel Payment, check how it might affect your tax position.
- Businesses should ensure charitable giving and VAT treatments remain tax-efficient.
- Stay informed — new tax rules can create opportunities if acted upon early.
📨 Find more insights like this in Merranti’s newsletter – designed to keep you ahead of changes that matter to you, your family, or your business.
