The Autumn Budget: What financial services firms need to know
The latest Budget brings changes for the financial services sector, from a temporary increase in the banking surcharge to developments affecting ISAs and investment.
Here’s a round-up of the key measures and what they could mean for your business.
1. Banking surcharge: A temporary increase
The rate of the Bank Corporation Tax Surcharge will temporarily increase from 3% to 6% for 15 months, from 1 January 2027 to 31 March 2028. The rate is then set to return to 3%.
For affected banking groups, the increase could have a significant impact on tax liabilities and financial forecasts.
What should you be considering?
- Financial forecasting: Assess the potential impact on tax liabilities and profitability.
- Tax planning: Factor the temporary increase into forecasts for the affected period.
- Looking ahead: Consider the implications for budgeting and financial planning beyond 2028.
2. ISAs: Compliance and investment developments
The Budget also includes measures affecting Individual Savings Accounts (ISAs), with implications for providers and the wider investment market.
The annual cash ISA limit will remain at £20,000. The government will also explore a new incentive for people investing in a stocks and shares ISA for the first time, working with the investment industry on its design.
Separately, new compliance powers for ISA managers are due to take effect from 6 April 2028, including provisions for suspensions, penalties and appeal rights.
What should you be considering?
- Compliance: Review reporting processes and prepare for the strengthened ISA manager compliance framework.
- Investment products: Monitor developments around the proposed new ISA incentive and what it could mean for investment providers.
- Future planning: Keep track of further announcements as the details develop.
3. Investment schemes and stamp taxes: What’s changing?
The Budget introduces technical changes to the Seed Enterprise Investment Scheme (SEIS), Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) rules, alongside plans to replace Stamp Duty and Stamp Duty Reserve Tax (SDRT) with a new Securities Transfer Tax.
For businesses involved in investment, fundraising or securities transactions, understanding the detail will be important as these changes develop.
What should you be considering?
- Investment schemes: Review the changes to SEIS, EIS and VCT rules to understand any implications for investment structures and eligibility.
- Securities transactions: Monitor the transition to Securities Transfer Tax and what it could mean for transaction processes and tax obligations.
- Plan ahead: Keep up to date with implementation details and consider whether your existing investment and tax arrangements may need to change.
4. Overseas services: Changes to the VAT reverse charge
From April 2027, the government will reform the VAT reverse charge for business-to-business services purchased from overseas suppliers. Under the new rules, the reverse charge will apply only where the UK recipient is VAT-registered. Overseas suppliers will instead need to charge UK VAT on relevant services supplied to UK organisations that aren’t VAT-registered.
What could this mean for your organisation?
- Increased costs: If your organisation isn’t VAT-registered, you could face additional VAT costs on overseas services, such as cloud software, digital subscriptions and consultancy.
- VAT registration requirement: Consider if this impacts any VAT registration requirements that may have arisen due to the previous reverse charge rules.
- Review your suppliers: Identify the overseas services your charity uses and consider how the changes could affect your costs.
- Plan ahead: Factor any potential additional VAT costs into your budgets ahead of April 2027.
What should you do next?
Now is a good time to review your overseas supplier arrangements and understand the potential financial impact on your organisation.
Our tax experts have taken a closer look at the announcements and their implications in our full Autumn Budget summary. Read the full version here.
