VAT & CBAM Budget Bullets

As the dust settles on the 2025 budget, we wanted to highlight several key indirect tax updates.

1. CBAM – Confirmation of live date being 1 January 2027. An update that scope 2 emissions, also known as indirect emissions have been delayed until 2029. The government’s looking at the impact and feasibility of including refined oil and fuel products within the CBAM, an indication that the scope is going to increase in the future. Finally the OBR is forecasting a rise in carbon prices but a decline in its forecast in expected revenues, with exclusion of the indirect emissions until 2029.

2. Taxis & PVH – As a result of the much-publicised BOLT and UBER cases it has been confirmed that as of 2 January 2026 PVH firms will be excluded from the ability to account for VAT under TOMS, meaning that they will have to account for VAT on the whole fare.

3. Charity VAT Relief – New relief to come into force on 1 April 2026 for goods donated to charities from businesses. With more details to be published by HMRC in advance of this, this new policy is a significant development expected to unlock a substantial volume of donations, reduce waste, and support the vital work of charities across the UK.

4. Tax Advisors Regulation – Confirmation that the government will no longer be proceeding with plans to regulate tax advisors. Instead, the government will collaborate with the sector to raise standards.

5. E-Invoicing – From April 2029 all VAT invoices to be issued in a specified electronic format, with an implementation roadmap to be published at Budget 2026. While the mandate may start in 2029, we urge you to start migrating clients to these systems much sooner to ensure they are ahead of the mandate curve.

6. VAT late payment penalties – Increases to penalties to be introduced from 1 April 2027, more details to follow in 2026.

7. Timely payments – In early 2026 the government will publish a consultation considering ways that VAT liabilities can be paid promptly without the taxpayer falling behind, including more payments by direct debit.