The government has confirmed that on 21 July 2025, it will be publishing draft legislation and other supporting materials for tax policy changes that it has previously announced, including additional details on these changes.

The so-called ‘legislation day’ is generally only of interest to tax advisers, but this year could be different as it is anticipated that draft legislation may be published for the proposed changes to key inheritance tax (IHT) reliefs, agricultural property relief (APR) and business property relief (BPR), announced at the previous budget.

The proposed changes to these key reliefs take effect from 6 April 2026, which is fast approaching. Additionally, transitional provisions will apply to any gifts made on or after 30 October 2024, if the individual making the gift dies within seven years of the gift, and on or after 6 April 2026. The initial announcement for these changes was relatively brief and the only noteworthy update since was in HMRC’s consultation on how the reforms may impact trusts. During the consultation period, which closed in April, professional bodies and tax advisers raised many concerns regarding the proposed changes and highlighted the need for further clarification. The impending changes are causing business owners to hesitate over business decisions, which may be contributing to a shrinking UK economy.

The draft legislation for these changes is expected to be highly complex. If it is not produced on legislation day before the parliamentary recess begins on 22 July, we will likely not have any further updates until at least September. This would give taxpayers a very limited window to fully understand how the changes may impact them and to feel they have certainty to plan accordingly. There has already been much lobbying to delay, reverse or amend these proposed IHT changes and the absence of a meaningful update before the parliamentary break may add fuel to the fire.

Another big change announced in the previous budget was that most pensions would be brought into the scope of IHT with effect from 6 April 2027. Given the fact that this date is still almost two years away, it is perhaps less likely that we may see any legislation on this topic. However, again, the detail on this proposal so far has been limited, so any draft legislation may help individuals begin to better understand the impact of this change on their pension planning.

The private equity industry may also be anticipating legislation day, as part of the last budget, the government announced significant changes to the way carried interest would be taxed from April 2026. Following two rounds of consultations and less than 12 months until the new rules kick in, legislation day would seem the perfect time to publish the draft legislation for the new regime.

On business taxation, in line with the relative recent stability of tax policy (although not tax rates) in this area, no draft legislation is expected for significant reforms to the way businesses are taxed. However, technical changes to the rules relating to employee car ownership schemes, umbrella companies and the corporate interest restriction are anticipated, although it is not clear that these will be published on 21 July.

Last month the government published its tax policy making principles, which sets out the principles that will guide how the government will design and deliver tax policy changes. This policy paper states that the government is looking to take a more flexible approach to publishing draft legislation. While it will typically continue to publish draft legislation on legislation day, it will where appropriate, publish at other points in the year to ease the burden on stakeholders. Whilst many will appreciate this more flexible approach, others will hope that this does not delay the publication of draft legislation for changes that are expected to apply in less than 12 months.

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