Category: Taxes

British retailers are calling on the government to accelerate plans to close the loophole for small parcel import taxes, which allows overseas sellers to ship low‑value parcels into the UK without paying customs duty. Their appeal comes after the 2025 Autumn Budget confirmed that the longstanding low-value import (LVI) relief will be abolished by March 2029 at the latest. For companies competing with online marketplaces that ship millions of parcels valued at £135 or less, the wait for reform feels too long. Accelerating the closure of the loophole for small parcel import taxes would align the UK with reforms in the United States and European Union, helping restore a level playing field for domestic retailers.

A loophole that has grown too large to ignore

Under current rules, individual consignments valued at £135 or less can enter the UK duty‑free. The relief was originally designed for infrequent and low‑value transactions, but it has become a fundamental part of cross‑border e‑commerce. Parcel operators and customs intermediaries submit simplified declarations using a Bulk Import Reduced Data Set (BIRDS), which allows them to clear multiple consignments at once. This simplification has helped overseas sellers to flood the UK market with very cheap goods. 

HMRC estimates that the number of consignments imported using BIRDS more than tripled between 2021 and 2024, reaching around 600 million parcels a year. During the same period, the value of low-value imports recorded in BIRDS rose from £3.8 billion to £5.9 billion.

Removing customs duty from these parcels made sense when cross-border parcel volumes were low, but the low-value import relief the UK now offers distorts competition. UK‑based retailers import goods in bulk and pay duties at standard tariff rates, while overseas sellers shipping individual parcels valued under £135 effectively avoid customs duty. The government acknowledges that this situation undermines fair competition and has committed to reforms that will require all sellers, regardless of their location, to pay duties on goods sold to UK consumers.

What the government proposes and why it matters

The 2025 Autumn Budget signposted an end to low-value import relief in the UK, describing it as an “unfair customs arrangement” that allows some online retailers to import goods duty-free. HM Treasury and HM Revenue & Customs have since published a detailed consultation outlining UK customs duty changes for parcels and the broader low-value import regime. The document proposes that the new arrangements take effect by March 2029. For UK high street chains, that timetable feels far away, particularly now that the US has removed its $800 de minimis threshold, and the EU plans to eliminate duty relief on consignments under €150 by 2028.

The government’s consultation suggests three key changes:

• Duty liability shifts to sellers and online marketplaces

Under the proposed LVI customs arrangements, sellers and the operators of online marketplaces will be responsible for paying customs duty on consignments of £135 or less. This mirrors the existing VAT model, where marketplaces must charge and remit UK VAT on low‑value sales. By consolidating liability, duty could be collected through quarterly payments away from the border. That would reduce disruption at ports and ensure duty is visible at the point of sale, improving price transparency.

Potential introduction of an administrative fee

The government is considering a flat fee on low‑value imports to fund the extra customs and border costs associated with processing millions of parcels. This fee would be limited to the cost of services rendered and would be paid by sellers or the platforms facilitating sales. Similar fees have been proposed or introduced in other jurisdictions.

A simplified tariff schedule

To help sellers and marketplaces apply the correct duty without having to assign full commodity codes to every item, officials are exploring a “tariff bucket” system – effectively grouping products into bands with set duty rates. Simplifying classification could make compliance more manageable for overseas sellers unfamiliar with the UK Global Tariff schedule.

The consultation also proposes that overseas sellers without a UK presence appoint a fiscal representative in the UK who would be jointly liable for customs debts. The government intends to maintain the existing relief on gifts valued at £39 or less sent between individuals.

Why retailers want reform sooner

Retailers pressing for change argue that waiting until 2029 will allow overseas platforms to cement an even larger presence in the UK. The consultation notes that low‑value import volumes are already substantial, with an estimated 1.6 million parcels arriving every day. Since the United States abolished duty relief for imports under $800 in 2025 and the EU is moving to scrap its €150 exemption, the UK has become an outlier. Industry groups worry that global sellers will increasingly divert their parcels to UK consumers to exploit the remaining duty relief, further eroding domestic market share. They also highlight product safety concerns; when goods circumvent import duties, they often bypass quality checks.

From a revenue perspective, the low‑value import relief is becoming expensive. Once goods are subject to duty, receipts could help fund public services. Introducing an administrative fee of around £2.60 per parcel, as suggested by some retailers, could raise over £1 billion annually. However, designing and implementing new systems will take time, and businesses need certainty. HM Treasury has therefore signalled that reforms must balance fairness with the practicalities of collecting duty and data at scale.

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Practical steps for businesses

Although the new regime and UK customs duty changes for parcels may be several years away, businesses should not wait to prepare. Overseas sellers and marketplace operators should review their supply chains, ensure that systems can capture and report product data, and prepare for quarterly customs duty payments. 

Those not established in the UK may need to appoint a fiscal representative and budget for administrative fees. UK retailers should assess how the changes could affect pricing and inventory strategies; some imports currently shipped under the £135 threshold may become subject to duty and higher costs. 

All stakeholders can respond to the government consultation, which runs until March 2026, and help shape the final design of the new customs arrangements.

The abolition of LVI relief also interacts with VAT. Since January 2021, the UK has abolished the VAT exemption for goods under £15 and requires sellers dispatching goods valued at £135 or less to register for UK VAT and charge it at the point of sale. Businesses must continue to account for VAT correctly while preparing for future customs duties.

How Apex Accountants & Tax Advisors can help

Navigating cross‑border trade rules is complex. Apex Accountants & Tax Advisors works with retailers, online marketplace operators and logistics firms to interpret the evolving customs and VAT landscape. Our team can help you:

• Analyse how the removal of the LVI relief and the potential small parcel import tax loophole closure will affect your cost base and pricing.
• Register for UK VAT and design systems to collect customs duty and VAT on low‑value consignments.
• Prepare for quarterly duty payments and develop processes for appointing fiscal representatives if you do not have a UK establishment.
• Model the financial impact of possible administrative fees and simplified tariff schedules.

We collaborate closely with clients to ensure compliance with HMRC guidance, integrate duty calculations into accounting systems and plan for changes well ahead of the March 2029 target. Contact Apex Accountants today to discuss tailored strategies for your supply chain and e‑commerce operations.

Frequently asked questions

What is the low-value import relief, and why is it being removed? 

The LVI relief allows consignments of goods valued at £135 or less to enter the UK without paying customs duty. The government plans to abolish it by March 2029 because the relief has been exploited by overseas sellers, distorting competition and undermining tax fairness.

When will the new customs arrangements come into force?

HM Treasury intends the new LVI customs arrangements to take effect by March 2029, but British retailers are urging the government to implement changes sooner.

Who will pay customs duty under the new regime? 

The consultation proposes making sellers and online marketplace operators responsible for paying duty on low‑value consignments, aligning with existing VAT rules.

Will there be any exemptions? 

The government plans to retain the relief for non‑commercial gifts valued at £39 or less sent between private individuals. All other consignments will be subject to customs duty and potentially an administrative fee.

What is the proposed administrative fee and why? 

Officials are considering a flat fee on low‑value imports to cover the cost of processing millions of parcels. Retailers have suggested a fee of about £2.60 per parcel, but the government is still gathering views through its consultation.

How should businesses prepare? 

Companies should ensure they are compliant with VAT rules, plan for quarterly customs duty payments and monitor the consultation. Overseas sellers without a UK presence may need to appoint a fiscal representative. Engaging with advisers, such as Apex Accountants, can help businesses adapt their systems and minimise disruption.

A recent case in Shetland has put the spotlight on VAT fraud and confiscation orders in the UK. A businessman from Cunningsburgh, who fraudulently claimed £166,000 in VAT refunds, was sentenced to 18 months in prison, highlighting the severe VAT evasion penalties in the UK, and ordered to pay only £1 under the Proceeds of Crime Act. The man, a company director in his forties, exploited the VAT system by inflating invoices, claiming input tax on personal purchases, and submitting falsified bank statements to HM Revenue & Customs (HMRC). Despite the significant financial wrongdoing, the court was only able to enforce a token confiscation order due to the man’s lack of assets to seize.

This case highlights the risks of VAT fraud and raises concerns for UK businesses about the consequences of such offences. With the tax authorities pursuing strict punishments for fraudsters, this case serves as a reminder to businesses about the importance of VAT compliance and the consequences of evading tax responsibilities.

How the fraud was carried out

Evidence presented in court suggested that the Cunningsburgh director used a mix of fraudulent techniques:

• Falsified paperwork – he created or edited invoices and bank statements to inflate the value of purchases or to show that personal expenses were legitimate business costs. Under the VAT system, businesses can reclaim the tax paid on goods and services used in their trade; by doctoring documents, he increased his input tax claims.
• Misuse of personal purchases – personal items such as vehicles and household goods were bought at the normal VAT-inclusive price and then claimed as business expenses. HMRC considers such behaviour fraudulent VAT evasion because the input tax is not attributable to taxable supplies.
• Sustained deception – local reports indicate that the fraud continued for almost two years before HMRC identified irregularities. The sentencing judge at Lerwick Sheriff’s Court described the behaviour as “devious” and “calculated.”

The fraudulent scheme was uncovered after VAT compliance services for businesses flagged inconsistencies between VAT returns and underlying records. This case further highlights the importance of UK VAT fraud risk management to help businesses avoid such risks and ensure proper VAT compliance. During the sentencing hearing, the judge mentioned the need for a deterrent sentence and stressed that VAT fraud harms the public purse. The 18‑month custodial term is consistent with the Sentencing Council’s guidelines, which state that fraudulent evasion of VAT under section 72 of the Value Added Tax Act 1994 can result in custodial sentences of up to 14 years and that offence ranges span from a band C fine to 13 years’ custody.

VAT fraud in the UK: Legal framework and penalties

Fraudulent evasion of VAT is a criminal offence under section 72 of the Value Added Tax Act 1994. The legislation provides for serious penalties. Where a person is knowingly involved in the fraudulent evasion of VAT, they are liable:

• On summary conviction – to a penalty up to the statutory maximum of £20,000, or three times the amount of VAT evaded, whichever is greater, and up to six months’ imprisonment.
• On conviction on indictment – to an unlimited fine or imprisonment for up to 14 years, or both. The Sentencing Council notes that the maximum sentence for offences committed on or after February 22, 2024, is increased from seven to fourteen years.

HMRC also has civil penalties for participating in transactions connected with VAT fraud. Company officers may be jointly liable if their actions facilitated the fraud. HMRC’s compliance‑checks factsheet states that when HMRC denies input tax under the ‘knowledge principle’ (where a trader knew or should have known the transaction was fraudulent), the penalty is fixed at 30% of the VAT denied, emphasising the importance of UK VAT fraud risk management.

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Confiscation orders and the £1 payment

After criminal convictions, courts can make confiscation orders under the Proceeds of Crime Act 2002. These orders require offenders to repay the benefit from their crime. Where no recoverable assets are available, the court may impose a nominal order, often £1. The token order does not wipe out the debt – if assets are discovered later, the full sum can be recovered, and failure to pay can lead to further imprisonment. The Cunningsburgh case thus illustrates a paradox: although the offender stole more than £166,000, he currently has no assets, so he is only ordered to repay a pound. The debt remains enforceable for life and will be revisited if he acquires assets in future.

Implications for UK businesses

This case underscores several broader themes for businesses:

1. VAT is a trust-based tax – HMRC relies on businesses to submit accurate returns, and VAT compliance services for businesses can help ensure compliance and avoid costly mistakes. Fraudulent claims directly deprive the Treasury of revenue, and HMRC invests significant resources in compliance checks and data analytics. Finding irregularities can lead to civil penalties, public naming, and criminal prosecution.
2. Directors can be personally liable – under HMRC’s guidance, company officers may be liable for penalties when they knew or should have known that transactions were connected with VAT fraud. Directors should ensure robust controls over invoicing, record‑keeping and VAT calculations.
3. Fines and prison terms are severe – VAT fraud is not a minor offence. The Value Added Tax Act allows fines up to three times the tax evaded and imprisonment for up to 14 years. Sentences vary according to culpability and harm, but courts take sustained deception seriously, as shown by the 18‑month term in this case.
4. Confiscation orders persist – nominal orders do not absolve the offender. Businesses and individuals tempted to hide assets should note that the Proceeds of Crime Act enables recovery years after conviction.

Practical steps to prevent VAT fraud

Businesses can mitigate risk and avoid unintentional involvement in VAT fraud by adopting good practices:

• Strengthen internal controls: implement checks on invoicing and purchasing processes to improve HMRC VAT audit support and help prevent VAT fraud for companies. ensure that all expenses claimed for VAT recovery are wholly and exclusively for business purposes.
• Keep accurate records: maintain digital and physical records that support VAT claims. HMRC’s Making Tax Digital rules mandate the electronic storage of VAT records.
• Conduct due diligence on suppliers: if you buy from missing traders or carousel fraudsters, HMRC can deny your input tax claim and charge a 30 % penalty. Verify that suppliers are genuine and VAT‑registered.
• Seek professional advice early: consult tax advisers before embarking on complex transactions; disclosure of errors to HMRC can reduce penalties.
• Train staff: ensure finance and procurement teams understand the VAT rules and the difference between business and personal expenditure.

How Apex Accountants & Tax Advisors can help

Apex Accountants & Tax Advisors offers specialist support to prevent VAT abuses like those seen in the case of the Cunningsburgh man who evaded £166,000 in VAT. Our chartered tax advisers assist clients with:

• Compliance reviews – assessing whether your VAT returns and systems meet HMRC standards.
• VAT planning: structuring transactions to maximise legitimate relief while avoiding the pitfalls of fraudulent schemes.
• Representation in HMRC investigations – if HMRC opens a compliance check, we provide expert advocacy and negotiate on your behalf.
• Training and governance – designing internal controls and staff training to minimise the risk of errors or fraud and enhance HMRC VAT audit support for businesses.

With the tax authority increasingly using sophisticated analytics and the courts imposing severe penalties, expert advice has never been more important. Contact Apex Accountants today to arrange a confidential consultation and ensure your business stays on the right side of the law.

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Frequently asked questions

What constitutes VAT fraud?

VAT fraud involves deliberately misstating or concealing information to reduce VAT liabilities. Examples include failing to register for VAT when required, submitting false invoices, claiming input tax on personal expenses, and participating in missing trader carousel schemes. Section 72 of the Value Added Tax Act 1994 criminalises fraudulent VAT evasion.

What penalties can HMRC impose without a criminal prosecution? 

HMRC can deny input tax and levy civil penalties. Under the knowledge principle, the penalty is 30 % of the VAT denied. HMRC may also publish the names of businesses and directors involved in serious VAT fraud.

When must a business register for VAT?

 A UK business must register if its taxable turnover exceeds the registration threshold (currently £90,000 per annum). Deliberate failure to register when required is treated as tax evasion and can lead to penalties or criminal charges.

Can directors be personally liable for VAT fraud committed by their company? 

Yes. HMRC guidance states that company officers who knew or should have known about fraudulent transactions can be liable for all or part of the penalty. Criminal prosecution is also possible under section 72 of the VAT Act.

What happens if someone cannot pay a confiscation order? 

The court may impose a nominal order, often £1, if there are no recoverable assets. However, the full amount remains due, and authorities can recover assets later. Failure to pay confiscation orders can result in additional prison sentences.

In the United Kingdom, “new financial year” can mean two things. The government’s financial year typically runs from 1 April, while the personal tax year runs from 6 April to 5 April. For 2026/27, the tax year started on 6 April 2026.  This matters because a lot of the practical tax changes in UK (PAYE, National Insurance, dividend tax rates, capital gains tax relief rates, and the rollout of Making Tax Digital for Income Tax) start from 6 April. 

Key dates at the start of the year

Personal tax changes for 2026/27

Most headline Income Tax rates are unchanged, but allowances and thresholds still drive what you actually pay. 

Income Tax bands and thresholds

For most people in England, Wales and Northern Ireland, the standard Personal Allowance remains £12,570, and the basic/higher/additional rate structure is unchanged. 

Read: How to Increase Your Tax-Free Personal Allowance to £20,070 Through HMRC Rent-a-Room Scheme

If your adjusted net income is over £100,000, your personal allowance is tapered away at £1 for every £2 over £100,000, reaching zero at £125,140. 

These bands are set out in government guidance for the 2026/27 tax year. 

Tax changes for Scottish taxpayers

If you live in Scotland, you pay Scottish income tax rates on wages, pensions and most other non-savings, non-dividend taxable income. Dividends and savings interest remain taxed at UK-wide rates. 

The tax changes for Scotland taxpayers in the 2026/27 financial year include updated income tax bands and rates, reflecting changes that affect both higher and lower earners across Scotland.

Dividend tax rises from 6 April 2026

A clear “start of tax year” change for investors and owner-managed businesses is dividend taxation. From 6 April 2026:

• the dividend ordinary rate rises to 10.75%
• the dividend upper rate rises to 35.75%
• the dividend additional rate stays at 39.35% 

The dividend allowance remains £500 for 2026/27 (so you only pay dividend tax on dividends above this allowance, after considering how the allowance interacts with your wider Income Tax position). 

For close companies, it is also worth noting that the “loans to participators” charge is linked to the dividend upper rate and therefore moves in line with that increase. 

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Capital Gains Tax and relief rates

The Capital Gains Tax Annual Exempt Amount for individuals remains £3,000 for 2026/27 (with a lower allowance of £1,500 for most trustees). 

For many disposals in 2026/27, government guidance shows CGT rates at 18% and 24% for individuals (depending on whether you are a basic rate or higher/additional rate Income Tax payer), with trustees and personal representatives generally at 24% (subject to the detailed rules). 

Business Asset Disposal Relief goes to 18%

If you are selling a business (or qualifying shares), the rate under Business Asset Disposal Relief increases again.

Business Asset Disposal Relief means you pay:

• 18% on qualifying gains for disposals on or after 6 April 2026
• 14% for disposals between 6 April 2025 and 5 April 2026 (and 10% for earlier disposals) 

This change is also reflected in wider official CGT policy material. 

Investors’ Relief similarly moves to 18% for disposals on or after 6 April 2026. 

Inheritance Tax changes affecting farms and family businesses from 6 April 2026

Another major change that takes effect from 6 April 2026 is a reform to 100% Agricultural Property Relief and 100% Business Property Relief.

Official guidance confirms that, for deaths on or after 6 April 2026, the combined value of qualifying agricultural or business property that can receive 100% relief is capped at £2.5 million. 

Where qualifying value exceeds £2.5 million, relief at the lower rate (50%) applies to the excess. 

The allowance can also be transferable between spouses and civil partners if a claim is made, and rules also apply for trusts. 

Business and employer changes for 2026/27

For employers, the start of the tax year is primarily a payroll event. Rates, thresholds, and employer reliefs need to be correct from the first pay run after 6 April. 

National Insurance rates and thresholds

For 2026/27, published National Insurance contribution rates show:

• employees in the main category (A) pay 8% on earnings above the Primary Threshold up to the Upper Earnings Limit, and 2% above that 
• employers pay 15% on earnings above the Secondary Threshold (with modified treatment for specific categories such as under-21s and apprentices) 
• Class 1A and Class 1B National Insurance on expenses and benefits is 15% for 2026/27 

The key thresholds that align strongly with payroll for 2026/27 include:

• Primary Threshold: £242 per week (£12,570 per year)
• Secondary Threshold: £96 per week (£5,000 per year)
• Upper Earnings Limit: £967 per week (£50,270 per year) 

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Employment Allowance remains a key employer offset

The employment allowance can reduce eligible employers’ annual employer (secondary) Class 1 National Insurance liability by up to £10,500. 

HMRC guidance also confirms that the previous restriction linked to having more than £100,000 of secondary Class 1 NIC liability (in the prior year) ceased from 6 April 2025 onwards. 

Corporation Tax for financial years starting 1 April

Corporation Tax rates depend on profits, and the published table for Corporation Tax years starting 1 April shows:

• 19% small profits rate for companies with profits under £50,000
• 25% main rate for companies with profits over £250,000
• marginal relief applies between those limits (with published limits and fraction). 

VAT thresholds and registration

The VAT registration threshold is more than £90,000 of taxable turnover (rolling 12-month test). The voluntary deregistration threshold is £88,000. 

If you exceed the threshold, government guidance explains that you must register within 30 days of the end of the month when you went over the threshold. It also sets out the “effective date of registration” as the first day of the second month after you go over. 

Making Tax Digital for Income Tax begins for many from April 2026

For sole traders and landlords, the biggest operational change at the start of 2026/27 is the move into Making Tax Digital for Income Tax.

Who must comply from 6 April 2026

Government guidance confirms Making Tax Digital for Income Tax becomes mandatory from 6 April 2026 for individuals with qualifying income over £50,000 from self-employment and property. 

It is being phased in, with published thresholds showing:

• qualifying income over £50,000 → mandatory from 6 April 2026
• qualifying income over £30,000 → mandatory from 6 April 2027
• qualifying income over £20,000 → mandatory from 6 April 2028 

What it changes day-to-day

HMRC guidance states that you (or your agent) will need compatible software to keep digital records and send quarterly updates, and then submit your tax return and pay tax due by 31 January after the end of the tax year. 

There is also a published first-year “soft landing” on quarterly update penalties: where you are required to use MTD from 6 April 2026, HMRC will not apply penalty points for late quarterly updates in the first year (2026/27), though penalties still apply for late tax returns and late payment. 

Start-of-year checklist

A clean start in April saves time (and usually stress) later in the year.

Individuals and families:

• Check your tax bands and Personal Allowance position, especially if your income is around £100,000 (Personal Allowance taper) or close to £125,140. 
• If you receive dividends outside ISAs and pensions, update your 2026/27 dividend tax estimates for the rate rise. 
• If you are planning a business sale or exit, factor in the Business Asset Disposal Relief rate now being 18% for disposals on or after 6 April 2026. 
• If you have significant farm or business assets, review Inheritance Tax exposure under the new £2.5 million cap on 100% relief for deaths on or after 6 April 2026. 

Employers:

• Confirm payroll software has the correct 2026/27 PAYE and National Insurance settings. 
• Check Employment Allowance eligibility and ensure it is being claimed correctly (up to £10,500). 
• If you want to payroll benefits in kind for 2026/27, registration needed to be completed by 5 April 2026. 

Sole traders and landlords:

• Use HMRC’s eligibility guidance to confirm if you must join Making Tax Digital from 6 April 2026 and choose compatible software early. 

How We Help You Deal With the Recent UK Tax Updates

At Apex Accountants, we help you translate the rules into practical decisions.

We support clients with:

• personal tax planning (income tax bands, dividends, CGT planning, and reliefs)
• director remuneration reviews in light of the 2026/27 dividend tax rates
• payroll compliance, including correct NIC settings and Employment Allowance claims
• VAT registration planning and ongoing VAT returns
• Making Tax Digital for Income Tax readiness: eligibility checks, software setup, and quarterly update workflows
• exit planning (including Business Asset Disposal Relief considerations) and succession planning where Inheritance Tax relief rules have changed from 6 April 2026

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Conclusion

The new 2026/27 tax year brings fewer “headline” rate changes, but several impactful shifts are now live: higher dividend tax rates, an 18% rate under Business Asset Disposal Relief, new Inheritance Tax limits on 100% relief for qualifying farm and business assets, and the first mandatory phase of Making Tax Digital for Income Tax. 

FAQs About 2026 Tax Changes in UK

When does the UK tax year run?

The 2026/27 tax year runs from 6 April 2026 to 5 April 2027. 

What are the recent tax changes in the UK?

Recent tax changes include the Corporation Tax main rate remaining at 25% (unchanged since 2023), with dividend tax rates increasing to 10.75%/35.75% and Business Asset Disposal Relief rising to 18% from April 2026.

Are taxes going up in 2026 in the UK?

Corporation Tax remains at 25% for profits over £250,000 (unchanged since 2023). However, dividend tax rates will rise significantly from 6 April 2026, impacting many taxpayers.

Have Income Tax rates changed for 2026/27?

The main Income Tax rates remain 20%, 40% and 45% for England, Wales and Northern Ireland, with published bands as per government guidance.
If you live in Scotland, the Scottish Income Tax bands and rates apply to most non-savings, non-dividend income and differ from the rest of the UK. 

What are the dividend tax rates for 2026/27?

From 6 April 2026, the dividend ordinary rate is 10.75% and the dividend upper rate is 35.75% (additional rate remains 39.35%), with a £500 dividend allowance. 

What is Business Asset Disposal Relief in 2026/27?

Business Asset Disposal Relief applies a reduced CGT rate to qualifying disposals, and the rate is 18% for disposals on or after 6 April 2026 (compared with 14% in 2025/26). 

What is the VAT threshold in April 2026?

The VAT registration threshold is more than £90,000 of taxable turnover, with an optional deregistration threshold of £88,000. 

Do I need to use Making Tax Digital from April 2026?

Making Tax Digital for Income Tax becomes mandatory from 6 April 2026 if your qualifying income from self-employment and property is over £50,000, with phased expansion in later years. 

Can I just gift 100k to my son?

You can gift £100,000 to your son, but it may be subject to inheritance tax if you pass away within seven years, following the Potentially Exempt Transfer (PET) rule and taper relief.

Who pays 40% tax in the UK?

The 40% higher rate applies to taxable income between £50,271 and £125,140 after the £12,570 Personal Allowance. The Personal Allowance tapers from £100,000, reducing by £1 for every £2 earned over that threshold.