Category: Resources

Two UK brothers were recently convicted for abusing the government’s film tax relief scheme. Between 2011 and 2015 they submitted bogus Film Tax Relief (FTR) and VAT claims to HMRC, falsely inflating production costs on three film projects. One brother fled the UK during the trial, was later tracked to the Czech Republic and was extradited back to Britain. Both men were found guilty of conspiring to cheat the public revenue. Each was given a multi-year prison sentence (7 years in absence) and banned from acting as a company director for 15 years. The  film tax relief fraud case highlights how UK law defines and punishes creative tax credit fraud.

How the Film Tax Relief Fraud Worked

In this case, the brothers created fictitious or foreign-based “films” to claim relief they were not entitled to. They reportedly:

• Invented or inflated costs: One claimed a film shot in the US was British, and another “film” was entirely made up. By overstating or fabricating production spending, they tried to maximise tax credits.
• Claimed VAT unlawfully: In addition to FTR, they sought large VAT repayments on inputs that either didn’t exist or weren’t actually incurred. This is illegal under the VAT Act.

Because they lied about where and how the films were made, none of their projects genuinely met the UK expenditure rules. In effect, they tried to steal around £1 million in relief and tax refunds by presenting false evidence. HMRC uncovered the scheme and pursued prosecution. (By UK standards, a conspiracy to cheat the revenue like this is a very serious offence.)

HMRC’s Film Tax Relief (FTR) Rules

The UK government offers Film Tax Relief to encourage domestic production, but it has strict conditions. Under current HMRC guidance:

• British certification: A film must be certified as British by the British Film Institute (BFI) cultural test. This means it must meet cultural content criteria or be an official co-production.
• UK expenditure threshold: At least 10% of the film’s core production costs must be spent on UK activities. (Core costs cover pre-production, principal photography and post-production.)
• Theatrical intent: The project must be intended for cinema release.

If these conditions are met, a production company can claim a corporation tax deduction equal to the lower of 80% of its total core costs or the amount of UK core costs. In practice, loss-making companies surrender the relief for a payable tax credit at 25% of their qualifying costs. For example, a film spending £1 million in qualifying UK costs could generate a £250,000 cash credit. All claims must be evidenced by detailed cost breakdowns and must include a valid BFI certificate.

Because of these rules, legitimate claims require real UK spending and paperwork. Fraudsters typically try to fake or inflate these numbers. In this creative tax credit fraud case, the brothers exploited the scheme’s mechanics – they submitted false UK cost statements and bogus project documents – which directly violated the FTR requirements.

Read: How Creative Industry Tax Reliefs Can Reduce Your Corporation Tax Bill

Legal Penalties for Tax Fraud

UK law treats tax fraud very harshly. The brothers here were convicted under common law conspiracy and VAT offences. 

Under the Sentencing Council’s revenue-fraud guidelines, serious VAT and tax credit fraud carries heavy jail terms: up to 14 years’ imprisonment for major VAT evasion (increased from 7 years for offences after Feb 2024). 

Conspiracy to cheat the public revenue (the common law offence covering tax credit fraud) can theoretically carry a life sentence, though in practice sentences are lower based on case facts.

In practice, each brother received a 7-year term for their role. Courts also typically order restitution: any fine or penalty should remove the offender’s economic benefit from the crime. This means HMRC usually seeks to recover all wrongfully claimed relief plus interest. 

Company directors involved in fraud face director disqualification: the Insolvency Service can ban them from heading any UK company for up to 15 years. In this case, both men were disqualified for that maximum period.

Beyond criminal penalties, HMRC may impose civil penalties for inaccurate claims, require repayment of the full tax credit and VAT plus interest, and potentially levy fines on top. Tax fraud conviction also typically results in large confiscation orders against assets.

Extradition and Enforcement

When a suspect flees the UK, international cooperation can force their return. Since Brexit, the UK and EU rely on the UK–EU Trade & Cooperation Agreement (TCA) for extradition. The TCA provides a streamlined extradition process (similar to the old European Arrest Warrant). In this case, UK authorities secured a TCA warrant for the fugitive. A Czech court approved the extradition order, and UK police facilitated the return.

The National Crime Agency (NCA) notes that under the TCA, extradition between the UK and EU is “streamlined” with only narrow grounds to refuse. Once a UK court orders extradition, the authorities ensure the person is sent back to face justice. This case underscores that even fleeing abroad is no guarantee of evading prosecution; digital clues and international law-enforcement cooperation made his arrest and return possible.

What Businesses Should Know

This case offers important lessons for film companies and accountants:

• Strict compliance: Always follow HMRC’s Film Tax Relief rules to the letter. Keep clear records showing actual UK expenditure and BFI certification. HMRC stresses documentation for each production.
• Beware of aggressive claims: If any percentage of UK costs or cultural tests are borderline, obtain professional advice. The scheme is generous, but it has many qualifying conditions.
• Robust enforcement: HMRC and police actively pursue fraud. Digital evidence (e.g. emails, signatures) and international warrants can expose offenders. Sentencing is severe for those caught.
• VAT checks: Claiming VAT credits requires genuine business expenses. HMRC will challenge suspicious VAT refund claims under s.72 VATA 1994 (fraudulent evasion of VAT) – also punishable by long jail terms.

In summary, UK law provides generous relief for legitimate film projects, but firms caught abusing the rules face severe consequences. Clear accounting, transparency, and following official guidance are essential to avoid legal risk.

Also Read: Financial Planning for the Entertainment Industry for Long-Term Creative Success

How We Help Creative Businesses in UK

At Apex Accountants, we help media and creative businesses navigate tax relief schemes safely. Our services include:

• Film Tax Relief Advising: Ensuring your production meets all FTR criteria (BFI certification, UK expenditure thresholds, eligible costs).
• Tax Compliance Reviews: We review company records and claims before submission to HMRC, reducing the risk of disallowed claims.
• VAT Planning and Audit Support: We help clients correctly reclaim VAT on film production expenses and prepare for any HMRC enquiry.
• Investigation Response: If HMRC queries or investigations arise, our experts represent clients through the process. We liaise with authorities and prepare legal defences.
• Director Risk Management: We advise directors on legal responsibilities; if fraud is alleged, we assist with response strategies to minimise disqualification risk.

Our team stays current with UK tax law and relief updates. We speak with HMRC in your language and use our forensic accounting expertise to document genuine claims. In light of recent prosecutions, we emphasise caution: any suspicion of irregular claims is fully investigated to protect your business.

Conclusion

Tax relief schemes like FTR can benefit UK filmmakers, but only when rules are followed exactly. The recent sibling case shows that fraudulent claims trigger the full force of UK law – lengthy prison terms, fines, and professional bans. At Apex Accountants, we provide the expertise and due diligence needed to claim relief correctly and avoid costly errors or accusations.

Recent headlines cite official UK data showing that HMRC spent “£186 million” enforcing the loan charge. The loan charge enforcement costs around £31 million per year, which over six years (2019–2025) implies about £186 million. In fact, HMRC projects at least £310 million over ten years if the status quo continues. Only around 800 individuals have settled under the loan charge since April 2019, while roughly 32,000 cases remain open, with about £1.7 billion still owed. This £186 million tax clawback campaign has been a key part of HMRC’s ongoing efforts to recover unpaid taxes.

The government accepted almost all recommendations of the 2025 independent review and introduced a new settlement scheme (Finance Act 2026). Under the new terms, most eligible taxpayers will see large reductions in their liabilities (by using original tax rates, deducting fees, waiving interest and inheritance tax, etc.). Flexible 5–7 year payment plans are now available, and normal lending or selling of personal assets is not required.

Loan Charge Enforcement 

Official sources provide these key numbers on the loan charge (a tax on certain undeclared “loan” schemes):

Measure	Official figure	Source
Loan Charge effective date	5 April 2019	Finance Act provisions (No. 2 Act 2017)
Individuals settled with Loan Charge	~800	Independent review report (2025)
Individuals unresolved (outstanding loan charge)	~32,000	Independent review report (2025)
Estimated outstanding liability (Loan Charge)	~£1.7 billion	Independent review report (2025)
HMRC annual cost (Loan Charge compliance)	~£31 million	Independent review report (2025)
Projected 10-year cost if unchanged	≥£310 million	Independent review report (2025)
DR scheme settlements (2016–Mar 2023)	£3.9 billion	HM Treasury/Parliament (2024)
• from employers	~80% of £3.9bn	HM Treasury/Parliament (2024)
• from individuals	~20% of £3.9bn	HM Treasury/Parliament (2024)

These data are drawn from HMRC and Treasury reports. For example, HMRC’s 2025 review states only ~800 individuals have settled on loan charge terms, versus ~32,000 still owing. The outstanding tax ($\sim£1.7bn$) and enforcement cost (£31m/yr) are official. Separately, HM Treasury reported that from 2016–2023 about 15,300 individuals and 6,600 employers settled any DR schemes (not just the loan charge), yielding £3.9bn total (about 80% of that from employers).

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Interpreting the £186 Million Tax Clawback Campaign

We should be clear: the £186m appears to be a back-of-envelope total. HMRC’s own estimate is £31m per year on loan-charge work. Since the charge began in April 2019, six years of enforcement would cost roughly £186m (6×£31m). By extension, the ten-year cost hits at least £310m. None of these numbers is “new spending”; they reflect ongoing HMRC tax compliance efforts. Official language puts it this way: “over [a] ten-year period, on current estimates, HMRC will spend at least £310m if the current impasse were to continue. ”.

For context, the loan charge was projected to affect around 50,000 individuals and 10,000 companies at the start. With 32,000 people still unresolved, the UK ends up spending a lot per case. The high figure also reflects that HMRC continued to work on these cases despite criticism: the 2019 review noted that “very few” scheme promoters have been penalised, pushing the burden onto thousands of users.

Why loan charge enforcement has been so costly

Several official reasons emerge:

• Large backlog: Only ~800 individuals have settled under the loan charge since 2019, yet ~32,000 cases remain open. The unresolved liabilities total about £1.7bn. HMRC must process each case, often repeatedly, so costs accumulate.
• Small cases vs large debt: Over 73% of the unresolved cases owe less than £50,000 each, but these small debts account for only 22% of the total tax due. In contrast, the largest 1% of cases (owing £500k+) account for 19% of the tax. This imbalance means many low-value cases consume enforcement resources, while a few big debts dominate the total.
• Uncertainty and delay: About 26% of those with loan-charge cases will be 65 or older within 5 years. Such cases can delay collections (due to retirements, insolvencies or death). Meanwhile, taxpayers who decline HMRC’s terms may appeal: HMRC itself notes that going to tribunal “could take several years” and add legal costs. Such an approach prolongs the process for both sides.
• Complexity: HMRC’s calculations and case handling were often slow and opaque. Over time, HMRC had to repeatedly work through old records, sometimes reopening tax years. Every reopening or inquiry costs staff time.
• Policy design: The loan charge was highly controversial (see Commons Library briefing). Early on, HMRC encouraged taxpayers to settle under old terms (with interest/penalty waivers) if done by Sept 2020, but many did not. Any remaining cases meant HMRC stayed in enforcement mode, accumulating costs.

These factors combine to explain why compliance costs were so high. Official data do not show any needless waste – rather, they reflect a deliberate, extended crackdown on a difficult problem.

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Changes after the 2025 review

In Autumn 2025, the government accepted most recommendations of the loan charge review and enacted major changes (Finance Act 2026). Key points (from official guidance) include:

• Scope narrowed: Only loans made from 9 December 2010 onwards are charged. Any loans before 6 April 2016 are out if they were fully disclosed to HMRC. This change removes many older cases from scope.
• Lower tax rates: The new settlement bases the tax on the original years’ rates, not the higher 2019 rates. This alone reduces many bills significantly.
• Fee and flat reductions: Each taxpayer gets a discount for any promoter fees they paid (up to £10,000 per year). All taxpayers then get an additional £5,000 reduction, which can bring many liabilities to zero.
• No late interest: All late payment interest on the loan charge is wiped out in the new calculation (roughly a 20% cut on the original amount).
• Cap on total reduction: For any one person, the total tax reduction can’t exceed £70,000.
• Inheritance tax written off: Any IHT due to these loan schemes is cancelled.
• Penalties waived: Standard penalties will not apply as long as taxpayers come forward under the scheme.
• Payment terms: If you cannot pay immediately, you can opt to pay the new reduced amount over 5 years without affordability checks. HMRC will also offer up to 7-year terms for lower-income cases. (HMRC will not require anyone to sell their home or touch their pension early to pay.)
• Promoters excluded: Those who promoted or sold these schemes cannot use the settlement to avoid consequences. The scheme is only for scheme users and their employers.

These changes dramatically cut most people’s bills. For example, the government notes many taxpayers could pay 50% less or nothing under the new terms. Roughly 30% of outstanding cases involve people who originally paid little or no tax on the loans, and these may now owe nothing whatsoever.

Letters explaining these changes have been sent to affected taxpayers (from Jan 2026). A detailed technical note and HMRC helplines are available to guide taxpayers through the new process.

How We Help You

At Apex Accountants, we help clients:

• Review whether your case qualifies for the loan charge or other DR rules and which settlement terms apply.
• Recalculate any tax owed under the new rules, ensuring HMRC’s offer is correct.
• Prepare the required disclosure paperwork (loan summaries, income records, etc.) for HMRC.
• Advise on setting up a time-to-pay plan and negotiate terms on your behalf.
• Assist with any refunds of overpayments or voluntary restitution claims if you paid early.
• Support you through any appeal process if needed (using formal objections or tribunals).

Our team stays fully updated on HMRC’s guidance and new legislation. We aim to maximise any available reductions and minimise stress on the taxpayer. Please contact Apex Accountants for personalised advice on your situation.

Conclusion

Official sources make clear that the loan charge compliance has been a prolonged, high-cost effort. The £186m figure comes from multiplying HMRC’s £31m/yr enforcement cost over 6 years. However, much has changed. The new settlement scheme (Budget 2025/Finance Act 2026) cuts most peoples’ bills dramatically. Late payment interest and many penalties are waived, and simple payment terms are available. Rather than a surprise “crackdown”, the latest official position emphasises resolving matters under fairer terms. For affected taxpayers, the key is to engage with the new scheme promptly. All the above figures and rules come from UK government sources, as cited – we base our advice strictly on these official facts.

FAQs on £186 Million Tax Clawback Campaign 

Q: What is the loan charge? 

It is a tax introduced in 2019 on certain unpaid ‘loan’ payments from disguised remuneration schemes. It only applies to loans outstanding on 5 April 2019. Loans before 9 December 2010 are completely out of scope now, as are loans before April 2016 if they were fully disclosed on a tax return.

Q: Do I still owe tax if I already paid something? 

Yes, if you owe under the old terms or new terms. HMRC’s new scheme will give credit for any amounts you already paid, including voluntary repayments. (Note: Payments made before 2020 to avoid a now-disallowed charge can be reclaimed under HMRC’s voluntary restitution scheme, but standard loan-charge payments count as credit toward your new liability.)

Q: Can I spread payments, and for how long? 

Yes. HMRC will accept a Time-to-Pay plan. You will never be asked to pay more than 50% of your disposable income per month. By law, you can get at least a 5-year plan (or 7-year if your income is lower). If eligible, you can often set this up online or via HMRC’s loan charge helpline. During any arrangement, you just pay what you agreed; HMRC will not insist on selling your home or tapping pensions to fund it.

Q: What if I disagree with HMRC’s amount? 

HMRC’s approach is set by strict rules (the 2020 settlement terms or the new 2026 scheme). If you think their calculation is wrong, you should provide correct figures and supporting evidence. You may have an independent review by a tribunal, but note that process can take years and add costs. It is usually better to work with HMRC on a settlement agreement, especially under the new scheme’s favourable terms.

Q: I’m worried I can’t pay. Can I avoid enforcement? 

HMRC emphasises working with people in hardship. They will offer payment plans as above, and they explicitly say they will not use extreme measures. For example, they “will not force anyone to sell their main home or access their pension early” to pay these debts. If you are struggling, contact HMRC early. If you have advisors (e.g., accountants, tax lawyers), they can also negotiate on your behalf.

Q: What happens to promoters (agents who sold the schemes)? 

The new settlement is only for taxpayers, not promoters. Promoters are ineligible for the settlement. HMRC and other authorities may pursue promoters separately. If you worked with a promoter, it’s often a good idea to mention that, but you must resolve your tax liability either way.

Q: Where can I get official help? 

HMRC guidance is on GOV.UK (search “loan charge guidance” or use the LR section of gov.uk/money-tax). There is a special loan-charge helpline (0300 322 9494). Apex Accountants can assist by explaining the rules and liaising with HMRC using the official process.

The position is now much clearer. Retail access to certain crypto exchange-traded notes (crypto ETNs) in an IFISA was reopened in late 2025, and from 6 April 2026, new ISA eligibility for those products sits in the Innovative Finance ISA rather than the standard Stocks and Shares ISA. That matters because the tax wrapper now follows the product into the IFISA.

Stratiphy and ISA

For Stratiphy, the timing is important. The official approved-managers list was updated on 1 April 2026 to show that Stratiphy’s ISA permissions now include the Innovative Finance ISA, and Stratiphy’s own site says investors can access Bitcoin and Ethereum ETNs inside its IFISA wrapper, powered by 21Shares. 

As per our expert’s perspective, the main point is simple. The investment is not direct crypto inside an ISA. It is a regulated note, held inside an ISA wrapper, with the usual ISA shelter for income and capital gains. The tax advantage is real, but the investment remains high risk and complex. 

Key takeaways of crypto ETNs in an IFISA:

• New crypto ETN ISA investing now belongs in an IFISA, unless the holding was already inside a Stocks and Shares ISA before 6 April 2026. 
• The eligible asset is the ETN itself, which the regulations define as a debt security, not direct ownership of a coin or token. 
• Stratiphy now appears to be a practical route for that structure, because its IFISA approval is on the official list and its site actively markets crypto ETNs within an IFISA wrapper. 
• The tax wrapper does not remove market risk, product risk, or the fact that crypto ETNs do not have FSCS cover. 

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The rule change

The story starts with the regulatory shift in retail access. In March 2024, FCA still kept the retail ban in place, even while allowing recognised exchanges to develop a listed market for professional investors. That changed on 8 October 2025, when retail consumers were allowed to access certain crypto ETNs, provided they were on the Official List and admitted to trading on a UK recognised investment exchange. 

The tax treatment then moved again. The 2026 ISA amendment regulations, which took effect on 6 April 2026, defined a UK cryptoasset exchange traded note in law and made it a qualifying IFISA investment. At the same time, the rules removed it from new Stocks and Shares ISA eligibility, while allowing older holdings already in Stocks and Shares ISAs to remain there. 

This is why the current market feels narrow rather than wide open. The legal route exists, but it only works if a provider can offer an IFISA and has the right permissions and product set-up to distribute retail-accessible crypto ETNs. Official ISA manager approval is therefore part of the commercial story, not just a back-office detail. 

How ETNs fit inside an IFISA

An Innovative Finance ISA is no longer just a peer-to-peer lending wrapper. GOV.UK now lists four broad categories that can sit inside an IFISA: peer-to-peer loans, crowdfunding debentures, certain less-liquid funds, and cryptoasset exchange traded notes. That is the rule change which makes the current structure possible. 

The legal definition matters. A UK cryptoasset exchange-traded note is now defined as a debt security traded on a UK recognised investment exchange, with no periodic coupon payments. and a return that tracks an unregulated, transferable cryptoasset minus fees. In other words, the ISA-eligible asset is the listed note. It is not direct custody of Bitcoin or Ether inside the wrapper. 

That distinction answers one of the biggest investor questions. The route back into “tax-free crypto” is really a route into a tax-sheltered security that references crypto. Stratiphy’s own wording makes that practical point clearly: it offers Bitcoin and Ethereum ETNs in an IFISA wrapper and frames the product as crypto exposure without wallets or exchanges. Stratiphy also states that brokerage and custody services are provided through WealthKernel. 

Why Stratiphy matters now

The official update is recent. The approved ISA manager list was updated on 1 April 2026, and the recent changes section records that Stratiphy Limited’s components were updated to include the Innovative Finance ISA. In the detailed register, Stratiphy is listed with both Stocks and Shares and Innovative Finance ISA components under reference Z2096 and FCA reference 976267. 

That provider-level change lines up with the wider legal changes. On its own site, Stratiphy states that investors can access Bitcoin and Ethereum ETNs within its IFISA wrapper, and that the crypto offer is powered by 21Shares. Its own materials also state that the firm is authorised and regulated by the FCA. Separately, Companies House shows STRATIPHY LIMITED as an active private limited company. 

So the significance of Stratiphy is practical. The UK now has rules that allow new crypto ETN ISA investing through the IFISA channel, and Stratiphy is one of the providers whose official approvals and primary materials indicate that it can actually operate that route. That is what turns a rule change into a usable investor pathway. 

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Key facts at a glance

The table below pulls the current position into one place. 

Area	Current position
Product features	A UK crypto ETN is now legally defined as a debt security traded on a UK recognised investment exchange, with no periodic coupon and a return linked to an unregulated transferable cryptoasset minus fees.
Tax treatment	Inside an ISA, you do not pay tax on investment income or capital gains, and ISA income or gains do not need to be declared on a tax return. For crypto ETNs, the main practical benefit is usually shelter for gains on the note.
Eligibility	An ISA generally requires the investor to be aged 18 or over and a UK resident, subject to the usual service and Crown servant exceptions. Stratiphy states its service is available to UK taxpayers over 18.
Custody and asset treatment	The qualifying asset is the ETN, not direct crypto held in a personal wallet. Stratiphy states that custody and brokerage services are provided through WealthKernel.
Risks	The FCA classifies crypto ETNs as complex products and Restricted Mass Market Investments. There is no FSCS cover for cETNs, and the official ISA manager list also warns that ISA eligibility does not protect against loss.
Provider responsibilities	Firms need the correct permissions, approved prospectuses, and products listed on the Official List and traded on a UK recognised investment exchange. They must follow financial promotion rules, risk warnings, appropriateness checks, client categorisation, cooling-off requirements, Consumer Duty, target-market controls, fair-value rules, and ISA reporting requirements for cETNs held in IFISAs.

How We Help Clients in UK

At Apex Accountants, we help clients make sense of the tax position around new investment structures without overcomplicating the issue.

We can support with:

• reviewing how ISA and non-ISA crypto exposure fits into your wider tax planning
• checking the reporting position on holdings outside wrappers
• helping you keep clean records for ETNs, disposals and transfers
• working alongside your financial adviser or platform where regulated investment advice is needed
• explaining the practical tax difference between direct crypto holdings and ETN exposure inside an ISA

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Conclusion

The real development here is not that direct crypto has been folded into mainstream ISA investing. It has not. What has changed is more precise: retail access to certain listed crypto ETNs is open again, and from 6 April 2026 the main tax wrapper for new ISA purchases of those products is the Innovative Finance ISA. 

Stratiphy matters because its approvals now line up with that rulebook. The official ISA manager list indicates that it has IFISA capability, and its own platform materials show a live ETN-based crypto offer within that wrapper. For investors, that creates a cleaner route to tax-sheltered exposure. It does not reduce the fact that the product remains complex, high risk, and outside FSCS cover. 

FAQs About Tax-Free Crypto

Can I buy actual Bitcoin or Ether in an IFISA?

No. The rules currently allow UK crypto-asset exchange-traded notes inside an IFISA. The ISA-eligible asset is the note itself, not direct coin ownership. Stratiphy’s own materials also describe the offer as ETN-based exposure rather than wallet-based ownership. 

Can I still buy crypto ETNs in a Stocks and Shares ISA?

This will not be treated as a new holding after 6 April 2026. GOV.UK now states that cryptoasset exchange-traded notes cannot be held in a Stocks and Shares ISA unless they were already there before that date. 

Can I move crypto ETNs I already hold outside an ISA into an IFISA?

This does not involve transferring the existing investment in specie. GOV.UK’s ISA guidance states that you cannot transfer arrangements or investments you already hold into an IFISA. 

Can I transfer an existing ISA to a new manager who offers an IFISA?

Yes, ISA transfers are allowed, but they must be done through the formal transfer process with the new manager. The rules also say you cannot preserve ISA status by closing the old ISA and paying the proceeds into a new one yourself. 

Will the ISA wrapper protect me if the investment falls in value?

No. The wrapper protects tax treatment, not investment outcomes. The official approved-managers list states that ISA eligibility does not guarantee returns or protect against losses, and the FCA states that cETNs do not have FSCS cover. 

Will I need to pass investor checks before buying?

In most cases, yes. The FCA says firms offering cETNs to retail consumers must use robust appropriateness assessments, client categorisation, cooling-off periods, and clear risk warnings, alongside wider Consumer Duty obligations.

The UK’s new packaging EPR rules (often called the “packaging tax”) took effect on 1 January 2025. Any company with turnover over £1 million and supplying more than 25 tonnes of packaging per year must register, report and pay disposal fees. The fees fund local recycling: PackUK, the government-appointed scheme administrator, collects payments from producers and pays local councils to process packaging waste. 

Large UK firms may face bills in the millions – for example, Vinarchy UK (a leading wine distributor) reported multi‑million‑pound EPR costs for 2025. Companies must meet quarterly reporting deadlines or face penalties. This article explains the rules, key dates, fee calculations and penalties under the UK Packaging EPR scheme and how businesses can comply.

What is the UK packaging “tax” (EPR)?

• The UK packaging EPR scheme was introduced by the Producer Responsibility Obligations (Packaging Waste) Regulations 2024, which came into force on 1 January 2025.
• It’s not a traditional tax but an Extended Producer Responsibility (EPR) system. Producers (companies that supply packaged goods) must fund the cost of collecting and recycling packaging waste. In practice, businesses pay “disposal fees” based on the weight and material of packaging they place on the UK market.
• PackUK (a DEFRA-run body) was appointed as the scheme administrator, formally launching on 21 Jan 2025. PackUK sets the per-tonne fees, issues annual Notices of Liability, collects payments, and passes funds to local authorities.

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Who must register and report?

Thresholds: 

Businesses must comply if in the previous year they had UK turnover >£1 million and placed more than 25 tonnes of packaging on the UK market. (A “producer” is any company that manufactures, imports or packs goods under its own brand, places goods in packaging, or supplies packaging to another company.)

Small vs Large producers: 

From 2025, those with a turnover of £1–2m and 25–50t of packaging are classed as small producers, while those with a turnover of ≥£2m and >50t of packaging are large producers. Both categories must report data; large producers pay higher fees.

Exemptions: 

Charities are exempt from EPR fees. Some packaging may also be excluded (e.g., fully reusable packaging or packaging exported from the UK).

Registering: 

Affected businesses had to register via the government portal (RPD service)—large organisations in July 2023 and small ones in January 2024—and submit biannual packaging data.

How are the fees calculated and paid?

Notices of Liability (NoL): 

Each spring, after data is submitted, PackUK issues a Notice of Liability stating how much must be paid. This “bill” is based on the annual weight of each category of “household” packaging reported for the previous year. (For 2025 fees, packaging data from calendar year 2024 is used.)

Rates: 

Fees are set per material (e.g., plastic, glass, cardboard). For example, roughly speaking, Year 1 rates were on the order of £200–£485 per tonne depending on material type (PackUK publishes detailed rates). 

The total liability = (tonnes of each material) × (fee per tonne). This covers the full costs of collection and recycling.

Payment schedule

PackUK usually allows payment by direct debit over up to four quarterly instalments. Producers receive the NoL (usually October each year) and then pay quarterly amounts. Final payment is due within ~50 days of the notice (and 50 days after each subsequent invoice).

2025 Year‐1 update:

 In Feb 2026 the government confirmed no change to Year 1 fees despite data resubmissions – the Treasury covered a funding shortfall so local authorities received the full promised funding. In effect, producers’ Year 1 rates stayed as originally issued.

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Vinarchy UK and £8 Million Packaging Tax 

High costs for big producers: 

UK EPR fees can run to many millions for large companies. In fact, Vinarchy UK – the merged Accolade/Pernod Ricard wine business – disclosed an ~£8 million EPR charge for its 2025 financial year (30 June 2025) when accounting for packaging waste. This one-off cost turned what would have been a profit into a loss.

Illustration: 

To put the proposal in context, the scheme is expected to raise about £1.4 billion in 2025/26 for councils. Vinarchy’s £8m is just a fraction of that national total, reflecting its share of the UK packaging market. Smaller firms will pay proportionally less.

Budgeting: 

Companies should plan for these costs. EPR fees are essentially a waste-disposal liability, so budgeting for extra several-percent costs on packaging-heavy products is prudent.

Penalties and enforcement

PackUK penalties: 

If a producer fails to pay its disposal fees on time, PackUK can impose a variable monetary penalty (VMP). For an individual company, the fine is greater than 20% of unpaid fees, or 5% of UK turnover (for a single company). For a group registration, it can be 20% of fees or 2% of group turnover.

Process: 

PackUK first sends a “notice of intent” with the penalty grounds, allowing 28 days to respond. After considering representations, a final notice of penalty is issued, to be paid within 28 days. Penalties are suspended during any appeal.

Environment Agency: 

The Environment Agency (EA) enforces the underlying obligations—registering and reporting packaging data—but does not enforce the fee itself. In other words, PackUK handles non-payment, while the EA can intervene if a business refuses to register or report data. The EA can impose its own civil sanctions (fixed or variable fines) under the Environment Act 2021 for breaches like missing the registration deadline or filing incorrect data.

Missing deadlines: 

If a business misses the initial reporting deadlines, it may owe interest on late fees or face fines by the EA. Timely compliance is essential.

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Key facts at a glance

Feature	Vinarchy UK (example)	UK EPR rules
Turnover	~£422 million (FY25; company reports)	Liability if >£1m; higher-tier at >£2m
Packaging volume	Well above 25 tonnes (wine cases, bottles)	Liability if >25 t packaged goods (various materials)
Fees (Year 1)	~£8 million (as reported in FY2025 accounts)	Calculated by PackUK: (reported tonnes) × (£/t fee)
Fee basis	UK sales of packaged products in 2024	2024 calendar-year data used for 2025 fees
Payment terms	Paid via PackUK instalments (by early 2026)	Pay within 50 days of invoice (usually by Q1 after notice)
Penalty for non‑payment	N/A (no penalty applied; fully paid)	20% of unpaid fees or 5% of turnover
Enforcement	Reporting followed scheme rules	EA enforces registration/reporting; PackUK enforces fees

FAQs

What exactly is the “UK packaging tax”? 

It’s the UK packaging EPR scheme: producers must fund recycling of packaging waste. Effective Jan 2025, it shifts costs onto companies (the “polluter pays” principle).

Who has to register or report packaging? 

Any UK business with a turnover exceeding £1 million and supplying more than 25 tonnes of packaging in the prior year must register, report data, and pay fees. Small organisations (e.g., £1–2m turnover) still report if packaging > 25T.

How are fees worked out, and when do I pay? 

After you report last year’s packaging volumes, PackUK issues a bill. Fees equal the weight (in tonnes) of each type of packaging you supplied multiplied by set per‑tonne rates. The Notice of Liability (issued in October for Year 1) is payable by direct debit in instalments, typically due within ~50 days of issue.

What if we fail to comply or pay? 

Non-compliance can be costly. PackUK can fine up to 20% of the unpaid fees (or 5% of your turnover). The Environment Agency can also sanction failures to register or submit data. It’s important to register on time, report accurately, and meet payment deadlines.

Are any companies exempt? 

Yes. Charities are exempt from both the obligations and fees. Packaging that is reused (and meets certain conditions) or exported may not count toward your total. Full details are in gov.uk guidance, but in practice most commercial producers (especially large ones) will be liable.

How We Help Businesses Navigate Packaging Tax in UK

At Apex Accountants, we help businesses navigate these new obligations. Our services include:

• EPR Compliance Review: We assess whether your business meets the turnover/packaging thresholds.
• Registration & Reporting: Our experts assist with PackUK/RPD portal registration and prepare your semi‑annual packaging data returns.
• Data Management: We track and verify packaging weights by material to ensure accurate reporting.
• Fee Calculation: We estimate your expected disposal fees and plan cash flow for payments.
• Appeals & Queries: If you think a fee calculation or notice is wrong, we guide you through PackUK’s complaints and tribunal processes.
• Enforcement Advice: We advise on avoiding penalties (e.g., late filing fees) and liaise with regulators if issues arise.

Our specialist tax and compliance team stays on top of DEFRA guidance and Environment Agency updates. We ensure you’re fully prepared to meet packaging EPR deadlines and help minimise costs and risks.

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Conclusion

The new UK rules on packaging EPR represent a major shift for businesses that handle packaging. Companies like Vinarchy UK have already felt the impact of multi-million-pound fee liabilities. It’s vital to understand who is liable, how fees are calculated, and to meet all reporting/payment deadlines. By following the official guidance and seeking expert help, UK businesses can comply with confidence and avoid penalties under the EPR scheme.

Close companies (broadly, those controlled by five or fewer shareholders or participators) and their owners have new reporting requirements under consultation. As part of the proposed changes around reporting company payments to participators, the UK government announced in Spring 2026 that all transactions between a close company and its participators (owners or shareholders) will need to be disclosed. This initiative aims to improve tax compliance for small and owner-managed businesses. In practice, virtually all owner-managed businesses will be affected, not just those under a certain size.

What Is a Close Company and a Participator?

• Close company: By UK tax law, a close company is one “controlled by 5 or fewer participators, or by any number of participators who are directors”. In other words, most family firms and owner-managed companies are close companies. (Even many private equity-owned firms are technically close companies under this definition.)
• Participator: A participator is a person with a share or interest in the capital or income of a company – usually a shareholder or director. Banks or unrelated lenders generally don’t count.

Because participators are often the directors and shareholders, funds can move back and forth easily (for example via director loans or drawings). HMRC’s concern is that these transactions may blur the line between company and personal finances, leading to missed tax.

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Why the Change? Tackling the Tax Gap

HMRC’s tax consultation highlights that the small-business corporation tax gap has risen recently. 

Poor record-keeping and sometimes deliberate tax avoidance in close companies contribute to this gap. Current rules classify any loan or benefit taken by a participator from the company, which is not a normal salary or dividend, under the “loans to participators” regime (section 455 of the Corporation Tax Act). If companies fail to repay loans within 9 months of year-end, the regime can trigger additional tax or penalties. But apart from this loan charge, there is no single reporting regime for other payments. Companies simply record these transactions in their accounts and tax returns without routine HMRC oversight.

The new proposals aim to plug that gap. By mandating that close companies report all payments or transfers to participators, HMRC can cross-check company records against personal tax returns. The expectation is that companies and directors will keep better books and pay any due tax on earnings or benefits from the company. HMRC states that the measure aims to guarantee the payment of the correct tax amount and minimise errors or evasions.

Proposed Requirements For Reporting Company Payments to Participators

Under the current consultation (open 19 March–10 June 2026), HMRC is considering requiring detailed reporting of every transaction between a close company and each participant. This would include, for example:

• All payments: Cash or bank payments to participators (e.g., drawings or director loans).
• Asset sales/purchases: If a participator sells assets to the company or buys company assets, those transactions must be reported.
• Dividends and distributions: All dividends, bonuses, or other profit distributions paid to participators.
• Any transfer of value: Essentially any benefit or value that passes from the company to a participator (e.g., interest-free loans, gifts, asset transfers).

At a high level, HMRC says the report would need who (which participator), how much, and when each transaction occurred. 

For example, an entry might show: “Director John Smith, £5,000 salary advance, 15 November 2026.” HMRC may also ask for identifiers (like National Insurance numbers) to match personal tax records. (Any payments already reported through payroll or RTI – such as normal salaries – likely wouldn’t need separate reporting, as they’re already tracked.)

How and When to Report

The exact filing mechanism is not decided. HMRC’s current thinking is to link the process to the existing Company Tax Return (CT600). One idea is an annual reporting cycle: updates or new supplementary pages (akin to the old CT600A for loans) could be added to the CT600, or a bespoke digital portal could be provided. HMRC specifically says it does not want to impose undue burdens, so an annual report with the CT600 is likely preferred.

Key points on timing:

• Reporting frequency: Probably annual, matching each accounting period’s tax return. HMRC is open to more frequent or real-time reporting if practical, but annual is the starting assumption.
• Deadline: If tied to the CT600, the deadline would be nine months after the period end (the normal corporation tax return deadline) or as otherwise set by HMRC.
• Transitional dates: The consultation suggests rules will come into force after responses are reviewed – likely in a future Finance Act. We expect new reporting to apply to accounting periods ending after legislation is enacted. (The consultation runs until June 2026, so changes might appear in late 2026 or 2027 budgets.)

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What to Do Now

Even before any formal change, companies should start keeping clear records of all transactions with participators: track director’s loan accounts, asset dealings, dividends, etc. Review your accounting software: HMRC is asking if common tax software can already track loans and shareholder transactions. Many modern accounting packages do this, which will help when reporting starts.

Penalties and Compliance

HMRC indicates that normal corporation tax penalties will apply if the required information is missing or incorrect. This means heavy penalties could be charged for late filing or inaccuracies, just as with a late or wrong tax return. HMRC is also consulting on whether specific penalties should apply for deliberately omitted participator transactions.

In practice, that means it’s important to be accurate and thorough. Keep good records now, double-check your directors’ loan accounts and dividend records, and ensure any loan repayments or write-offs are documented (since companies can reclaim tax on repaid loans, and write-offs can trigger personal tax).

What Transactions Trigger Tax vs. Reporting

It’s helpful to distinguish taxable events from reporting requirements. Under current law, only certain transactions give rise to additional tax (e.g., loan repayments or write-offs under section 455 CTA 2010). Under the proposed rules, every transaction must be reported even if it’s already taxed (like dividends) or currently not taxed (like repaid loans). Reporting is not the same as tax liability – it just means HMRC will see everything.

Example Transactions of Tax vs. Reporting

Transaction Type	Current Tax Treatment	Reporting under Proposals
Director cash withdrawal	Recorded as loan or salary (tax may apply if it’s a loan)	Must report amount, date, recipient
Director buys asset (e.g., a car).	Treated as benefit (taxable on director)	Must report purchase and details
Company sells asset to the director.	Part disposal (CGT for company, BIK for director)	Must report sale and recipient
Dividend payment	Director pays income tax via personal return	Must report dividend amount, date, recipient

(This table is illustrative; companies should await final guidance on exact categories.)

Next Steps and Preparation

This is a consultation stage, so rules aren’t law yet. However, the direction is clear: close companies should prepare. Here’s how to stay ahead:

• Review records: Ensure your company accounts clearly separate company funds from personal expenses. Keep detailed ledgers of any director’s loan accounts, dividends declared, and asset transactions.
• Ask your accountant: Accounting software can help. Many modern packages track loans to directors and equity payments. Make sure your system can produce a report of transactions by participator.
• Educate directors: Remind company owners that even small drawings or informal “loans” must be recorded. Going forward, always document any personal use of company assets or funds.
• Plan cash flow: In the current loan charge regime, unpaid loans trigger corporate tax charges, and write-offs trigger income tax for the director. Under the new rules, HMRC will know about all loan advances and repayments, which may accelerate scrutiny. Keep loans minimal or repay promptly if possible.
• Watch deadlines: The consultation closes on 10 June 2026. After that, HMRC will draft legislation. Once final rules are published (likely in future tax legislation), AIM to adapt for accounting periods thereafter. Your accountant should monitor updates and may respond to the consultation on your behalf.

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How We Help Businesses in UK

At Apex Accountants, we specialise in helping owner-managed businesses navigate UK tax changes. We can assist you by:

• Assessing your status: Checking whether your company is a “close company” and identifying all participators.
• Record-keeping: Advising on best practices for tracking directors’ loans, dividends, and asset transactions. We ensure your accounts and tax software capture every participator transaction clearly.
• Tax return support: Updating your CT600 filings (including any new supplementary pages like CT600A) so you report participator payments correctly. We’ll guide you on when and how to enter this data once the rules take effect.
• Compliance checks: Reviewing any loans or benefits already given to participators, and calculating any potential section 455 tax due. We can handle claims for loan repayments or reliefs when loans are repaid.
• Responding to HMRC: If HMRC queries your participator transactions, we can liaise with them on your behalf. We also stay on top of HMRC consultations and can help draft responses to protect your interests.

Our team keeps abreast of HMRC’s transformation roadmap and tax consultations. We will assist you in meeting the new reporting requirements seamlessly.

If you need any clarification about these changes or need a review of your records, please contact Apex Accountants. We’ll provide personalised advice so you’re fully prepared for the new participator reporting framework.

FAQs

Who is required to report transactions between a close company and its participators?

Any close company, large or small, regardless of turnover. Even companies with only one director or shareholder are close companies.

Which individuals or entities qualify as participators for reporting purposes?

All persons or entities who have shares or are connected to shares (including some partnerships or trusts). Corporate participators (e.g., a parent company) are included.

Are there any exemptions from reporting company payments to participators?

Items already reported through payroll (RTI) are expected to be exempt (e.g., a director’s regular pay). HMRC is asking if any other categories should be excluded, but currently none are specified beyond payroll.

How should repayments or write-offs of loans to participators be reported?

If a participator repays a loan, the company will report the repayment. If the company writes off or releases a loan, it should also report the write-off (so HMRC can check if the personal tax on that write-off is due).

The Finance Act 2026 is the latest UK tax law to come out of the government’s annual budget process. It received Royal Assent on 18 March 2026, which means it has now passed through Parliament and become law. In practical terms, it gives legal effect to a range of tax measures announced in Budget 2025 and set out in the Finance Bill 2025-26.

For businesses, investors, advisers, landlords, and high-net-worth individuals, this matters because the Finance Act is where tax announcements stop being proposals and start becoming enforceable legislation. Some measures take effect from Royal Assent, while others start on later dates such as 6 April 2026 or 6 April 2027.

Key facts at a glance

Point	Detail
Name	Finance Act 2026
Chapter number	c. 11
Royal Assent	18 March 2026
Origin	Finance Bill 2025-26
Main purpose	To implement tax measures announced in Budget 2025 and renew annual tax provisions
Why it matters	It turns tax policy into law

What is the new UK Finance Act 2026?

The Finance Act is the main annual tax law passed by Parliament. Each year, the chancellor announces tax measures in the budget. The government then introduces a finance bill to put those measures into legislation. Once Parliament approves the bill and it receives Royal Assent, it becomes the Finance Act for that year.

So, the Finance Act 2026 is the law that followed Budget 2025. It is not just one tax change. It is a package of tax rules, rate changes, relief reforms, compliance rules, and administrative measures.

What is the purpose of the Finance Act?

The purpose of the Finance Act is simple. It gives legal force to the government’s tax decisions. Without it, many budget announcements would remain proposals only. The House of Commons Library notes that the annual Finance Bill is used to implement the tax measures set out in the Chancellor’s statement, and at least one Finance Bill is needed each year because taxes such as income tax and corporation tax must be renewed by legislation annually.

In short, the Finance Act does three main jobs:

• Sets or renews annual tax charges
• Changes tax rates, reliefs, and allowances
• Updates HMRC powers, compliance rules, and tax administration

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What is included in the Finance Act 2026?

The Finance Act 2026 is broad, but some of the most significant measures include the following.

1. Changes to dividend and savings income taxation

Budget 2025 confirmed that legislation would be introduced in Finance Bill 2025-26 to increase dividend income tax rates from 6 April 2026. It also set out later changes to savings income rates from 6 April 2027.

2. Reform of carried interest taxation

The government said Finance Bill 2025-26 would move carried interest into an Income Tax framework from April 2026. That is an important shift for affected fund managers and investment structures.

3. Agricultural Property Relief and Business Property Relief changes

One of the most discussed parts of the Act is the reform of Agricultural Property Relief (APR) and Business Property Relief (BPR). HMRC’s policy papers state that, from 6 April 2026, a new £1 million allowance applies to the combined value of qualifying property attracting 100% relief, with 50% relief applying above that allowance in the cases covered by the reform.

4. Mandatory registration of tax advisers

Finance Act 2026 also supports a new regime requiring tax advisers who deal with HMRC on behalf of clients to register and meet minimum standards. HMRC says this will begin in May 2026, with a transitional period of at least three months.

5. EIS and VCT changes

Budget 2025 also said Finance Bill 2025-26 would increase the investment and gross asset limits in the Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) rules, while reducing VCT income tax relief from 30% to 20%, with changes taking effect from 6 April 2026.

6. Inheritance Tax changes affecting pensions

HMRC has also published material showing that legislation in the Finance Bill 2025-26 would bring most unused pension funds and pension death benefits into scope for inheritance tax from 6 April 2027. That gives individuals and families time to review estate planning before the rules bite.

Why Finance Act 2026 matters

This Act matters because it affects both current planning and future planning.

For some taxpayers, the immediate issue is compliance. For others, it is timing. A measure may now be law, but its effective date may still be months away. That distinction is vital when making decisions on share structures, succession planning, investment, remuneration, or tax advice arrangements.

It also matters because Finance Acts often shape behaviour before the start date arrives. For example:

• families may revisit succession and estate plans
• tax advisers may prepare for registration rules
• investors may review EIS or VCT timing
• businesses may reassess dividend extraction strategies
• affected individuals may review pension and carried interest planning

How We Help You Understand And Navigate The Upcoming Changes

At Apex Accountants, we help clients understand what a new finance act means in real terms.

Our support includes:

• tax planning for business owners and investors
• inheritance tax and estate planning reviews
• EIS and VCT guidance
• remuneration and dividend planning
• compliance support for advisers and firms
• practical reviews of how new tax law affects your structure, timing, and reporting

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Conclusion

The Finance Act 2026 in UK is now law. It received Royal Assent on 18 March 2026, and it brings a wide range of Budget 2025 tax measures into the statute book. Some changes apply now. Others start from 6 April 2026 or 6 April 2027. Either way, this is the point where proposals become rules.

For anyone affected, the key step is not just knowing that the Act exists. It is knowing which part applies to you, when it starts, and what action should be taken before the deadline arrives.

FAQs About The Finance Act 2006 in UK

1. Is there a finance act every year?

Yes. In practice, there is at least one Finance Bill each year because annual taxes such as income tax and corporation tax must be renewed by legislation. Once passed, that bill becomes the Finance Act.

2. What is the Finance Act in UK in simple terms?

It is the annual law that turns Budget tax announcements into enforceable UK tax legislation.

3. Which Finance Act is applicable for FY 2024-25?

For the UK tax year 2024-25, the main annual legislation is Finance Act 2024. That said, tax law can later be amended by subsequent Finance Acts, so the exact rule depends on the issue and the date the relevant provision takes effect.