Monthly Newsletter March 2026

Welcome to the March 2026 edition of the ASWATAX newsletter.

This month we cover four topics that are front of mind for our clients. The Spring Statement was delivered on 3 March with no new tax announcements, but the existing pipeline of changes already legislated carries real consequences for individuals and businesses over the coming two years, and we set those out here.

We then turn to crypto taxation, which has entered a new phase with the introduction of the CARF international reporting framework that will, for the first time, give HMRC systematic data on UK taxpayers' crypto activity. We also update you on HMRC's ongoing compliance push: the targets are real, the resources are arriving, and the data tools are improving.

Finally, we take a broader look at the tax costs of property transactions, from SDLT rates and reliefs to CGT on disposal and the SDLT implications of portfolio incorporation.

As always, if any of the topics covered raise questions for your own position, please do not hesitate to contact us.

1. THE SPRING STATEMENT: THE TAX PICTURE FOR 2026/27 AND BEYOND

The Chancellor delivered her Spring Statement in early March with no new tax announcements. The government has committed to a single fiscal event each autumn, and Rachel Reeves held to that. For clients wondering whether anything changed on tax, it did not. But the statement, and the OBR forecasts that accompanied it, provide a useful moment to take stock of where the tax landscape actually stands and what is still to come. The short answer is that the tax burden is rising, quietly and persistently, and the pipeline of changes already legislated carries real consequences for individuals and businesses over the next two years.

THE TAX BURDEN IS AT A HISTORIC HIGH

The OBR confirmed that taxes as a share of GDP are forecast to rise from 34.5% in 2024/25 to 38.5% by 2030/31. The OBR describes this as a historic high. What is notable is that this trajectory does not depend on any further tax rises being announced. It is the product of measures already in place; principally the freeze on income tax thresholds through to April 2031, the increased rates of taxation on dividend and property income, and the changes to capital gains and inheritance tax announced at the Autumn Budget in October 2024.The threshold freeze is the quietest but most pervasive of these. The personal allowance has been fixed at £12,570 since April 2021 and it is expected it will remain there until April 2031. With earnings rising, a growing proportion of income falls into the basic rate band, and a growing number of taxpayers are crossing the higher rate threshold of £50,270. The OBR projects that an additional one million pensioners will be drawn into paying income tax by 2031 as the state pension rises under the triple lock while the personal allowance stays static.

CAPITAL GAINS TAX 

The CGT rate increases announced at the Autumn Budget 2024 are now fully embedded. The main rates for capital gains (other than residential property and carried interest) are 18% for basic rate taxpayers and 24% for higher and additional rate taxpayers. These replaced the previous 10% and 20% rates with effect from 30 October 2024.

Business Asset Disposal Relief, which the relief available on the first £1 million of qualifying gains on the disposal of a business or shares continues to exist, but the rate attached to it has been stepped up progressively. For disposals made in 2025/26, the BADR rate was 14%. From 6 April 2026, it rises again to 18%, the same as the main basic rate. The relief therefore no longer provides the significant rate advantage it once did for higher rate taxpayers, whose effective saving over the standard 24% rate is now only 6 percentage points rather than the 14 percentage points available before October 2024.

For clients considering a business exit in the near term, the window where BADR provided substantial savings has effectively closed. The planning conversation has shifted away from maximising BADR and towards structuring the timing, nature, and proceeds of an exit to make best use of the current rates, available reliefs, and any personal circumstances that affect the calculation.

The OBR forecasts that CGT receipts will continue to rise across the forecast period to 2030/31, driven by projected increases in equity and asset prices and the October 2024 rate changes. The record January 2026 self-assessment surplus (£30.4 billion), driven in significant part by elevated CGT and self-assessment receipts reflects both the behavioural response to the recent taxation changes (clients accelerating disposals ahead of the rate rises) and the ongoing growth in the asset-owning taxpayer base. It is not a windfall; it is the new baseline.

INHERITANCE TAX 

No changes were made to IHT at the Spring Statement. The significant change already legislated remains the changes to Business Relief from April 2026 and the inclusion of pension funds within the scope of IHT from 6 April 2027. Under the current rules, pension funds sit entirely outside a deceased's estate. From April 2027, unused pension funds and unspent drawdown funds will form part of the estate and be subject to IHT at 40% (subject to available nil rate bands and reliefs).

The practical implications are significant. A client with a £500,000 pension fund, a property at the nil rate band threshold, and modest other assets could face an IHT bill of £200,000 entirely attributable to the pension where previously there would have been none. The planning options such drawdown strategy, nomination reviews, trust arrangements, spousal planning are well understood but time-sensitive. 

MAKING TAX DIGITAL 

Making Tax Digital for Income Tax Self Assessment becomes mandatory for sole traders and landlords with qualifying income above £50,000 from 6 April 2026. The requirement to maintain digital records and submit quarterly updates to HMRC is now weeks away for clients in scope. Those who have not yet transitioned to compatible software should treat this as urgent. From April 2027, the threshold drops to £30,000, bringing a further tranche of clients into scope.

Our view

The Spring Statement changed nothing on tax. The changes that matter are the ones already in the pipeline, the continuing freeze on thresholds, increased rates of personal taxation, the permanent shift in CGT rates, and the IHT changes arriving in April 2026 and 2027. The overall tax burden is rising year on year without new legislation being required. For clients, the priority is to understand where they sit within the existing framework and whether any of the changes already legislated require action this tax year or next.

2. CRYPTO ASSETS — HOW THEY ARE TAXED AND WHY 2026 IS A TURNING POINT

Crypto assets have moved from the fringes of personal finance to the mainstream. HMRC has been clear for some years that crypto is taxable and that it expects taxpayers to report their gains and income accordingly. What changes in 2026 is not the law — it is HMRC's ability to enforce it. New international reporting requirements mean that, for the first time, HMRC will begin receiving data directly from exchanges about UK taxpayers' crypto holdings and transactions. For anyone who has not been reporting correctly, the window to regularise the position is open now — and closing.

How Crypto Assets Are Taxed: The Basics

For most individuals, crypto assets are subject to capital gains tax rather than income tax. Every disposal of a crypto asset is a taxable event, this is broader than many clients assume. The following all constitute disposals:

• Selling crypto for cash (pounds, dollars, or any other currency)

• Exchanging one cryptocurrency for another (Bitcoin for Ethereum, for example,this is a disposal of the first asset and an acquisition of the second)

• Using crypto to pay for goods or services

• Gifting crypto to anyone other than a spouse or civil partner

The gain is calculated as the disposal proceeds minus the allowable cost, using HMRC's share pooling rules. Under these rules, all holdings of the same type of cryptocurrency are treated as a single pool, with an average cost per unit. Buying and selling must be tracked against this pool, not on a specific identification basis.

The current CGT rates on crypto disposals are 18% for basic rate taxpayers and 24% for higher and additional rate taxpayers, after applying the £3,000 annual exempt amount. There is no Business Asset Disposal Relief or other reduced rate available on crypto gains, they are taxed at the full capital rates.

When Income Tax Applies

Income tax, rather than CGT, applies where crypto is received as income rather than as a capital investment. This includes:

• Crypto received from employment or as payment for services rendered

• Staking rewards in most circumstances (HMRC treats these as miscellaneous income)

• Airdrops where the recipient did something in return for the tokens

• Mining income where it amounts to a trade

Income tax rates apply in full to these amounts, with no annual exempt amount. The value is calculated at the time of receipt, using the sterling equivalent of the crypto received.

The Common Mistakes

The most frequent errors we encounter are:

• Not reporting disposals: Many clients assume that if they have not withdrawn cash from an exchange, there is nothing to report. This is incorrect. Every swap between cryptocurrencies, every use of crypto to pay for something, is a disposal that must be reported.

• Wrong cost basis: Using a specific identification method, treating each individual coin or token as a separate asset, rather than HMRC's required pooling rules.

• Unreported staking income: Failing to declare staking rewards on the basis that they have not been converted to cash. The taxable event is receipt, not conversion.

• Incomplete records: Many clients have transacted across multiple exchanges and wallets over several years and no longer have complete records. HMRC expects taxpayers to make reasonable estimates where records are genuinely unavailable, but the burden of proof rests with the taxpayer.

The CARF Reporting Framework: What Changes Now

The Crypto-Asset Reporting Framework (CARF) is a new initiative to create automatic international exchange of information on crypto transactions, equivalent to what already exists for bank accounts under the Common Reporting Standard. The UK has implemented CARF through new reporting requirements for crypto exchanges or service providers, which took effect from 1 January 2026.

From that date, UK-based crypto exchanges and other reporting crypto-asset service providers are required to collect detailed transaction data from all UK customers. That data, covering the type and quantity of assets traded, the proceeds received, and the identity of the account holder, will be reported directly to HMRC in 2027, covering all transactions from 1 January 2026 onwards.

HMRC will then cross-reference those exchange reports against self-assessment returns. Discrepancies will generate compliance activity. 

What Clients Should Do Now

Anyone who holds or has held crypto assets and has not been reporting gains or income correctly should take advice now. The position is almost always better regularised voluntarily before HMRC has the data than after. HMRC's Digital Disclosure Service provides a route to bring historic non-compliance forward at reduced penalty rates. Once HMRC opens an enquiry using CARF data, those options become considerably less favourable.

For clients who have been reporting correctly, the message is simpler: ensure records are complete, pooling calculations are accurate and staking and airdrop income is properly classified. If you use multiple exchanges or wallets, consolidating records now is considerably easier than reconstructing them under enquiry.

Our view

CARF is a genuine turning point for crypto tax compliance. The framework that allowed gains to go unreported because no one was checking is being dismantled. The 2026/27 return due 31 January 2028 will be the first return HMRC can systematically cross-check against exchange data. That gives clients who need to regularise their position roughly two years to do so proactively. We would not advise waiting.

3. HMRC'S COMPLIANCE PUSH: WHAT IT MEANS FOR YOU

HMRC has committed publicly to delivering £10 billion of additional compliance yield per year by 2029/30. That is not a modest ambition; it represents a significant expansion of enforcement capacity, backed by a genuine investment programme. For clients who keep their tax affairs in good order, the practical impact will be limited. But understanding what HMRC is prioritising, how it is finding cases, and what it expects to see when it looks is increasingly important.

The Scale of the Push

HMRC's compliance yield target for 2025/26 is £50.4 billion. As of the third quarter of the year, it had delivered £24.2 billion and was tracking within its forecast range. The tax gap which is the difference between what HMRC believes is owed and what it actually collects stood at £46.8 billion in the most recently published figures. The government has made closing that gap a stated fiscal priority and has backed HMRC accordingly: 5,500 additional compliance caseworkers are being recruited over five years, of whom over 1,500 have already joined. A further 1,200 debt management staff are being recruited specifically to pursue outstanding tax debts, with most expected to be in post by the end of 2026/27.

How HMRC Is Finding Cases

The most significant development in HMRC's compliance approach is its use of data and technology. HMRC is deploying AI-driven risk targeting to identify cases for investigation, moving away from the relatively random enquiry selection of earlier years towards a model in which cases are selected because something in the data looks anomalous. The data HMRC holds, from employer payroll submissions, bank interest reporting, property transactions, Companies House filings, the Land Registry, and now crypto exchanges is increasingly comprehensive. Gaps between what third parties report to HMRC and what appears on a self-assessment return are the primary trigger for enquiry selection.

Current Enforcement Priorities

HMRC has been explicit about where it is focusing resource. The main areas of current emphasis are:

Offshore income and assets

The expansion of the Common Reporting Standard and now CARF are providing HMRC with data it has not previously had at scale. Clients with overseas bank accounts, foreign property, or international investments who have not been declaring income and gains should treat this as an urgent priority. 

R&D tax relief

HMRC has significantly increased scrutiny of R&D claims following a period in which a large number of poor-quality and fraudulent submissions were made. In addition to the additional information form requirement introduced in August 2023 and the pre-notification deadline, a range of new compliance letters including formal enquiry letters, and what the profession is calling concern letters form part of a systematic effort to improve claim quality. Clients making R&D claims should ensure their technical narrative is robust and their cost methodology is well documented. Submitting a claim and then not responding to a compliance letter is one of the worst outcomes, please contact us immediately if you receive any correspondence from HMRC about an R&D claim.

Property income

HMRC continues to pursue landlords who have not registered for self-assessment, who have been incorrectly treating capital expenditure as revenue expenditure, or who have not been declaring rental income at all. The Let Property Campaign remains open but HMRC is also pursuing cases directly where its data indicates undeclared income. With Land Registry data and bank interest reporting both feeding into HMRC's risk models, undeclared property income is an increasingly visible target.

Legal interpretation disputes

HMRC has identified legal interpretation disputes, cases where there is no deliberate avoidance but where the taxpayer and HMRC disagree on how the law applies to a particular set of facts, as contributing £5.4 billion to the tax gap. HMRC has signalled it will pursue these cases more actively through litigation rather than settling at a discount. For clients in areas where the law is genuinely uncertain, this underlines the importance of taking a well-reasoned and documented position rather than simply filing and hoping.

Mandatory Tax Adviser Registration

From this year, all individuals and firms acting as tax agents must be registered with HMRC. This replaces a fragmented system of multiple registrations and is designed to ensure HMRC knows who is acting for whom, can monitor advice quality, and can take action against advisers who facilitate non-compliance. For clients using qualified, regulated advisers, this change will be invisible. For those using unregulated individuals, which remains surprisingly common, it is worth checking their status before that requirement takes effect.

What Good Record-Keeping Looks Like

The best defence against an HMRC enquiry is a well-maintained record and a consistent, defensible position:

• Tax returns filed on time with complete and accurate information

• Supporting records retained for at least six years from the end of the relevant tax year

• Significant transactions documented at the time they occur, not reconstructed afterwards

• Areas of complexity or uncertainty, for example, R&D, BPR, employment status, offshore interests reviewed with a qualified adviser before a position is taken

• Correspondence with HMRC retained and responded to promptly

An enquiry does not necessarily imply wrongdoing. HMRC opens enquiries for many reasons, and many are resolved quickly with no adjustment. But the cost in time, professional fees, and uncertainty is real. Reducing the risk of being selected in the first place is considerably less expensive than managing an enquiry once it has been opened.

Our view

HMRC's compliance push is real, well-funded, and increasingly data-driven. The era of non-compliance going undetected because HMRC lacked resource or data is ending. Clients who are proactive in keeping good records, filing accurately, and taking advice on complex areas before committing to a position are in the best possible place. Those who are not should act now, because voluntary disclosure is almost always better than waiting to be found.

4. THE COST OF TRANSACTING IN PROPERTY — WHAT YOU PAY AND WHERE YOU CAN PLAN

Buying and selling property in the UK carries a substantial and often underestimated tax cost. The combination of SDLT rate changes, CGT reform, and tighter HMRC scrutiny of property transactions means that the cost of proceeding without advice or seeking it after the fact  is higher than it has ever been. This piece sets out the main taxes at play and the planning areas that most commonly make a material difference.

SDLT on Residential Property: The Current Rates

For residential property, SDLT applies at graduated rates from nil on the first £125,000 up to 12% on the portion above £1.5 million. A 5% surcharge applies across all bands for anyone purchasing an additional residential property such as a second home, a buy-to-let, or any residential purchase by a company. The surcharge increased from 3% to 5% in October 2024 with no transitional relief.

On a £750,000 buy-to-let, the SDLT bill is now £65,000. This is routinely one of the largest single costs of a property transaction for investors and must be built into return calculations before a purchase is agreed, not after.

	SDLT Comparison: £750,000 Residential Purchase Illustrating the 5% surcharge on additional dwellings (buy-to-let / second home)
Band		Amount Taxable	Rate (Main Home)	Rate (BTL/2nd Home)	Amount (Main)	Amount (BTL)
£0 – £125,000		125,000	0%	5%	Nil	£6,250
£125,001 – £250,000		125,000	2%	7%	£2,500	£8,750
£250,001 – £925,000		500,000	5%	10%	£25,000	£50,000
Total SDLT payable					£27,500	£65,000
Surcharge cost					—	£37,500 extra

SDLT on Commercial and Mixed-Use Property

Non-residential property such as commercial premises, agricultural land, and properties with a genuine commercial element is subject to a different and more favourable SDLT regime. The nil rate applies to the first £150,000, 2% to the portion between £150,001 and £250,000, and 5% above £250,000. There is no surcharge.

Mixed-use property, which is any property with both a residential and a commercial element qualifies for the non-residential rates. Relevant examples include a flat above a shop, a barn conversion where outbuildings remain in active agricultural or commercial use, a live-work unit, and a farmhouse with land under agricultural tenancy. 

HMRC challenges mixed-use claims and the test requires actual commercial use at the point of completion, not potential use. Where the facts support it, the saving is legitimate and very substantial and must be assessed before contracts are exchanged.

The 36-Month Replacement Rule: Refunds That Go Unclaimed

The 5% surcharge does not apply where a buyer is replacing their only or main residence, provided the previous main residence is sold within 36 months of the new purchase. 

Refund claims must be made within 12 months of the sale of the previous main residence, or within 12 months of the filing date of the original SDLT return, whichever is later. The refund is not issued automatically. On a £600,000 purchase at the 5% surcharge rate, the refund is £30,000. For any client who paid the surcharge recently and has since sold their former home, this is worth checking as a matter of priority.

Linked Transactions

HMRC treats two or more transactions as linked where they form part of a single scheme, arrangement, or series of transactions between the same buyer and seller or connected persons. Where transactions are linked, SDLT is assessed on the aggregate consideration across all of them, which can push the applicable rate significantly higher than if each transaction were assessed independently.

This arises most commonly where a developer acquires multiple plots or properties from the same vendor, where a buyer purchases a property and associated land from a connected seller in separate transactions, and in family arrangements where multiple properties are transferred as part of a single reorganisation. The interaction between the linked transaction rules and the higher residential rates can be particularly punishing. Where a series of related transactions is being planned, the SDLT position across all of them should be assessed before any individual transaction completes.

CGT on Residential Property Disposals

The disposal of a residential property that is not the seller's only or main residence is subject to CGT at 18% for basic rate taxpayers and 24% for higher rate taxpayers on the net gain, after the £3,000 annual exempt amount. For landlords and second homeowners, this is now a significant cost of exit. Where a property was partly owner-occupied and partly let, Private Residence Relief is available on a time-apportioned basis, the final 9 months of ownership always qualifies for relief regardless of actual occupation.

Critically, disposals of residential property must be reported to HMRC and any CGT paid within 60 days of completion. This window is frequently missed, particularly where the seller assumes the gain will simply appear on their self-assessment return in the usual way. 

Incorporating a Property Portfolio: The SDLT Obstacle and How It Is Addressed

One area that may be relevant for some clients is the SDLT partnership incorporation relief. Where a property portfolio is already being run as a genuine partnership, for example, between spouses or family members who jointly manage the properties as a business, and that partnership then incorporates, the SDLT on the transfer can be reduced or eliminated altogether.

The relief applies to genuine, pre-existing partnerships; it is not available where a partnership is formed specifically for the purpose of the transaction. From April 2026, CGT incorporation relief also requires an active claim rather than applying automatically. Any client who already holds property through a partnership structure should take specific advice on whether this relief is available to them before proceeding with any incorporation.

ATED - The Ongoing Cost of Residential Property in a Company

Companies holding residential properties valued above £500,000 are subject to the Annual Tax on Enveloped Dwellings, a recurring annual charge. Properties let on the open market on commercial terms, and properties held for development, qualify for ATED relief but the relief must be claimed annually. Failure to claim it results in a full ATED charge and automatic penalties.

For any client holding residential investment properties in a company, confirming that ATED returns are filed and all available reliefs are claimed is a basic but important compliance step.

Key Action Points

• Before any purchase: Assess the SDLT position before contracts are exchanged. Mixed-use, MDR, and linked transaction issues cannot generally be rectified after completion.

• Surcharge refunds: Assess whether a refund claim is available and act within the 12-month window.

• Residential disposals: The 60-day CGT reporting and payment deadline runs from the date of completion not from 31 January. Ensure this is flagged before a sale completes.

• Partnership structures: If a property portfolio is already held through a genuine partnership structure, SDLT partnership incorporation relief may be available on transfer to a company. Take specific advice on the full SDLT, CGT, and ATED implications before proceeding.

• Corporate landlords: File ATED returns annually and actively claim all available reliefs, particularly the commercial letting exemption.

Our view

Property transactions carry a substantial and largely irreversible tax cost that must be built into decision-making from the outset. SDLT in particular cannot be recovered once a transaction has completed. The planning opportunities, mixed-use arguments, the partnership incorporation relief, refund claims are all legitimate and established, but they require advice at the right stage. We would encourage any client with property transactions planned or in progress to contact us early.