From HMRC’s latest court victory on disguised remuneration to upcoming inheritance and wealth tax reforms, recent developments signal a clear warning: business owners must urgently review their legacy planning, pension structures, and remuneration strategies. The articles below explain the risks — and why early action is essential to avoid costly consequences.
Renumeration Trust Users Take Note: HMRC Secures A Significant Win In Court Of Appeal
The Court of Appeal has now handed down a decision in Marlborough DP Limited v HMRC [2025] EWCA Civ 796, marking yet another blow to those who have participated in Remuneration Trust arrangements. This is a stark reminder that the tide continues to turn firmly in HMRC’s favour — and it does so with wide-reaching implications for Remuneration Trust users.
At the heart of this case was Dr Matthew Thomas, a dentist operating through his own company, Marlborough DP Limited (MDPL). Like many before him, he entered into what was promoted as a tax-efficient loan scheme involving a Remuneration Trust (RT). HMRC challenged this under PAYE, NICs, and the disguised remuneration rules — and after a prolonged legal battle, HMRC have emerged victorious.
Initially, Dr Thomas had some success before the First-tier Tribunal (FTT), which held that the loans he received did not constitute employment income and, perhaps more surprisingly, did not fall within the scope of the disguised remuneration legislation. That decision gave some taxpayers hope — but it has not stood the test of higher scrutiny.
HMRC appealed on three grounds. The Upper Tribunal (UT) agreed with them on two, and now the Court of Appeal has backed the UT’s findings. In short:
- The payments made via the Remuneration Trust were taxable as employment income.
- Those payments are not deductible for Corporation Tax purposes.
The UT and Court of Appeal clarified that the FTT had applied the wrong legal test. It had asked whether the loans were made by reason of employment — requiring a direct causal link. However, under the disguised remuneration rules (Part 7A of ITEPA 2003), the test is broader: it’s enough that the payments are connected with employment. On that basis, the payments clearly fell within the scope of the legislation.
The result: the loans are now subject to Income Tax and NICs, and the company cannot deduct the trust payments as a business expense.
This case is notable for being one of the few examples where Part 7A ITEPA 2003 (the Disguised Remuneration rules) have been examined by the courts since their introduction 15 years ago. The Court of Appeal took a fairly wide interpretation of a key part of the legislation (what was meant by “in connection to employment”) albeit there may be an appeal to the Supreme Court.
Why This Matters
If your business has ever used a Remuneration Trust — particularly where loans were made to owner-directors — this ruling will be relevant.
Despite years of litigation, many of these schemes remain under review, and taxpayers are still navigating HMRC enquiries, settlements, and (in some cases) open appeals. Unfortunately, this latest decision narrows the window for successful resistance and reinforces HMRC's approach to treating such loans as taxable income — even where the original intent was framed as something else.
What Should You Do Now?
This decision underscores the urgency of reviewing any historical involvement with RTs, or similar schemes. HMRC continues to pursue open cases, and this ruling gives them further ammunition to do so. If you have not yet sought advice or reached a settlement, the time to act is now.
We are available to help review your position and guide you through your next steps, including managing HMRC enquiries, litigation, considering settlement options, or assessing your potential exposure.
Please get in touch if you’d like to arrange a confidential discussion.
How Inheritance Tax Changes On Pensions Could Devastate Family Businesses
New inheritance tax rules coming into effect from April 2027 may do more than just chip away at your retirement planning — they could force the break-up or sale of your family business. The most pressing risk doesn’t come from Business Property Relief alone, but from the perfect storm created when BPR restrictions meet new tax rules on pensions.
Many business owners have sensibly used pensions such as SIPPs or SSASs to hold commercial property and other business assets. But few realise how these assets — often illiquid — could create a sudden, unavoidable tax bill that the next generation simply cannot afford to pay.
What’s Changing?
Currently, most unspent pension assets can be passed to beneficiaries free of inheritance tax (IHT), allowing the next generation to continue operating the family business — often from the same premises — and benefit from rental income or business continuity.
That all changes in April 2027, when:
- Unspent pension funds, including commercial property, will be brought into the IHT net.
- Inheritance tax will be due within six months of the pension holder’s death.
- The pension scheme itself, not the wider estate, must settle the bill — even if its assets are tied up in buildings, machinery, or other illiquid investments.
If the fund cannot meet its IHT liability in cash, the only way to pay will likely be to sell part or all of the assets — and fast.
Why This Is Such a Problem for Business Owners
Using a pension to hold business premises or operational property has been standard practice for decades. It provided retirement security, tax efficiency, and succession planning all in one. But with the upcoming IHT change, a well-structured pension can become a ticking tax time bomb.
Here’s the issue:
- Many SIPPs and SSASs are heavily invested in property, especially among owners of logistics companies, workshops, manufacturing plants, or professional practices.
- These assets can’t be sold quickly — not without deep discounts or damaging operational continuity.
- The inheritance tax bill could be in the millions, depending on the property value — and must be paid in six months.
This creates a cash-flow crisis. The fund needs to settle its tax bill, but the cash isn't there. A forced sale becomes the only option.
And if that property is being used by the family business? That means selling your own premises just to satisfy HMRC — potentially leaving the next generation with no office, no workshop, and no business.
It Gets Worse: The BPR Changes
On their own, the pension tax changes would be disruptive in April 2027. But from April 2026, there will also be a major cut to Business Property Relief:
- At present, most qualifying business assets receive 100% inheritance tax relief, no matter the value.
- Under the upcoming rules, only the first £1 million will qualify for full relief with anything above that being subject to somewhere between 20% and 40% IHT.
So, in a worst-case scenario, a business-owning family could face:
- A hit on the value of the business itself, which will no longer enjoy BPR protection;
- A second hit of 40% inheritance tax bill on millions of pounds' worth of commercial property held inside a pension — payable within six months;
- The real possibility of having to sell either the business, the pension property, or both.
A Case Study: How a Pension Strategy Backfires
One North England business owner followed the conventional advice: set up a SSAS, made regular contributions, and used the fund to purchase nearby land and properties used by his logistics business. Over the years, the fund grew to include five properties worth £20 million. It became a core part of the business infrastructure and retirement plan.
His children are trustees and beneficiaries of the fund. But under the new rules, if both parents were to pass away after April 2027, the children would face an inheritance tax bill of £9 million — due in six months.
And there’s no spare cash to pay it. The fund’s value is almost entirely tied up in the properties — including the buildings that house the family business. The only realistic solution would be to sell the business premises at short notice, probably below market value, just to pay the taxman.
In his words: “Rachel Reeves is driving a bus through my life’s work with these changes.”
What Can Be Done?
This is not an issue that can be resolved at the last minute. If your pension holds business property — or you’re relying on BPR to protect your estate — it’s essential to take action well ahead of the changes coming into effect. We do not have the draft legislation as yet and this may not be published for many months given the changes do not come into effect until April 2027.
Steps you might consider include:
- Reviewing your pension structure: Is your SSAS or SIPP still fit for purpose under the new rules?
- Building liquidity into the pension fund to avoid forced sales — but beware, more cash could mean a higher IHT bill.
- Re-evaluating your succession plans, especially if they assume business continuity through property held in a pension.
- Taking professional advice to assess exposure and explore potential mitigation strategies, such as spousal exemptions, trust structures, or pre-death asset transfers.
Dividend Tax Increase Rumours: What UK Business Owners Need To Know
With rumours swirling of a possible dividend tax hike in the next Budget, business owners across the UK may soon find themselves paying significantly more to extract profits from their companies. While no changes have been formally announced, there is growing speculation that dividends will be the next target for revenue-raising, particularly under the new government.
If the predictions come true, directors who rely on dividends as a tax-efficient method of remuneration could see a marked increase in their personal tax bills — potentially changing the way they structure their finances, rewards, and investment decisions.
What May Change?
The current government has made clear its intention to plug fiscal gaps and fund public spending with a more progressive approach to taxation. While the Chancellor has pledged not to increase Income Tax, National Insurance, or VAT for basic-rate taxpayers, dividend taxation has been noticeably absent from those promises.
This has led to widespread speculation that dividend tax rates will rise, and the tax-free dividend allowance may be reduced even further — possibly eliminated altogether.
Potential measures being discussed in policy circles include:
- Raising dividend tax rates by 1%–2% across all bands;
- Abolishing or further reducing the tax-free dividend allowance (currently just £500 as of April 2024);
- Aligning dividend tax rates with Income Tax rates — a long-debated move that would remove the current preferential treatment (although at the highest rates, employment taxes can be more efficient than dividend taxes).
Whilst nothing is confirmed, the rumours suggest that dividends will remain a likely target in upcoming fiscal reforms
Wealth Tax Rumours Resurface: Why UK Business Owners Should Be Paying Close Attention
Calls for the introduction of a UK wealth tax are growing louder, and business owners across the country may soon find themselves in the crosshairs of a tax overhaul aimed at high-net-worth individuals and entrepreneurs.
Campaigns backed by a coalition of environmental groups, unions and think tanks are ramping up pressure on the government to introduce a series of new wealth-focused tax measures. These include a 2% annual tax on assets over £10 million, as well as changes to Capital Gains Tax and property taxation that could dramatically increase the tax burden on business owners — particularly those who have built significant value through company shares, property, and long-term reinvestment.
“Tax the Super-Rich”
At the forefront of the push is the Pay Up campaign, spearheaded by climate activism group Green New Deal Rising, with support from organisations including Friends of the Earth, Tax Justice UK, and the National Education Union.
Campaigners argue that the ultra-wealthy should bear more of the cost of tackling climate change and rebuilding public services. “Fixing our broken tax system so that it finally taxes those who earn their income from assets and wealth at the same rates as the majority of the population, who earn their money from work, is the fair thing to do,” said Hannah Martin, co-director of GND Rising.
According to Tax Justice UK, a 2% wealth tax on fortunes above £10 million could raise £22 billion a year, with further tax reforms potentially bringing in an additional £50 billion. The proceeds, campaigners argue, should fund green investment and shore up struggling public services rather than allow wealth to remain concentrated among what they describe as "polluting corporations and hoarding elites".
A Growing Political Movement
While the idea of a UK wealth tax has long been debated on the fringes of policy circles, it is increasingly moving into the political mainstream. Prominent Labour figures, including former leader Neil Kinnock, have recently voiced support, and pressure from backbench MPs, unions and climate groups is mounting.
Zack Polanski, a candidate for the Green Party leadership, was blunt in his criticism of the current tax system: “The government has a series of choices – and right now they are choosing to subsidise dirty and dangerous parts of the economy like aviation, oil and gas. How dare they say there’s no money left and at the same time they also refuse to tax the super-rich?”
The issue is gaining momentum at a time when public frustration is high: the cost-of-living crisis continues, wages have stagnated, and public services are stretched thin. Campaigners say that asking working people to fund the green transition — while wealthy individuals benefit from favourable tax structures — is politically and morally unsustainable.
What It Could Mean for Business Owners
For business owners — particularly those who have spent years building value through retained profits, reinvestment, and property ownership — these proposals carry significant consequences.
A 2% annual wealth tax on assets above £10 million would apply not just to personal property but potentially to privately held company shares, commercial real estate, and business-related pension assets. It’s unclear whether business reliefs would soften the blow, but if the tax is applied broadly — as proposed — this could leave business owners facing an ongoing charge simply for retaining and growing their businesses.
Additionally, proposals to align Capital Gains Tax with Income Tax rates could see gains on the sale of business shares or property taxed at rates of up to 45%, compared to the current 10% or 20% in many cases. This would fundamentally change succession planning and exit strategies, especially for entrepreneurs hoping to sell or pass on their business.
As tax adviser Gary Smith of Evelyn Partners recently warned in a separate context: “Owners and directors who don’t take advice or make preparations could fall foul of the new tax environment — with the end result in some cases that their businesses are liquidated and jobs lost.”
Though wealth tax supporters insist that such a measure would only affect a small, ultra-rich minority, many business owners may find themselves uncomfortably close to the line — particularly those whose wealth is tied up in illiquid business assets or pension schemes.
Will the Wealthy Flee?
Critics of a UK wealth tax have long argued that such policies risk driving wealth — and the jobs it supports — out of the country. While campaigners say there is “no evidence” of a mass millionaire exodus, this remains a contentious point. The UK’s high-net-worth population has grown steadily, but it remains to be seen how mobile that wealth may become under a new tax regime.
Tax Justice UK dismisses such concerns, citing France and Norway as examples of countries that have successfully implemented wealth taxes — though both have since scaled them back. Others argue that the UK’s appeal as a global hub for investment and innovation could be seriously harmed if high-growth entrepreneurs or investors begin to look elsewhere.
A Summer of Pressure
Green New Deal Rising has promised to step up its campaign throughout the summer, with a series of protests aimed at high-profile figures in business and politics. Recent actions have targeted the offices and private clubs of billionaires such as Jim Ratcliffe (Ineos) and Denise Coates (Bet365), calling for an end to tax privileges for the ultra-wealthy.
Hannah Martin summed up the campaign’s goals bluntly: “The climate crisis and economic inequality are two sides of the same coin, because it’s the same broken system making billionaires richer, fuelling the climate crisis, and leaving working people to pick up the bill.”
What Should Business Owners Do?
With no formal announcement yet from the Treasury, a wealth tax is still just a rumour — but it’s one being taken increasingly seriously. Business owners should begin reviewing their personal and corporate structures now to understand where they may be exposed. This includes assessing:
- Share valuations and ownership structures
- Pension assets and property holdings
- Succession and exit plans
- Use of reliefs and trusts
The broader message is clear: the taxation of wealth is firmly on the political agenda, and business owners must be prepared for change.
We will continue to monitor developments and advise clients on the implications should such policies come into effect. If you’re concerned about how your business or personal wealth may be affected, now is the time to take advice — before decisions are made for you.
How Can Qubic Help?
To navigate these potential changes, Qubic offers tailored tax planning services. Our expertise can help mitigate the impact of higher taxes and leverage current reliefs effectively. The window of opportunity to capitalise on existing tax rates and reliefs is narrowing, making now the time to act.
We understand that uncertainty surrounding tax changes can be challenging, and we are here to help you.
To learn more about our tax planning services or to discuss your options with a member of our team, simply get in touch using the details below:
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