Unveiled last week, the 2025 Autumn Budget introduced a series of tax and regulatory changes that will influence how lenders, brokers and other financial institutions structure transactions, plan acquisitions, and manage ongoing compliance. In the below article, we’ve broken down some of the key takeaways that you need to know about.
Capital Allowances
From January 2026, a 40% first-year allowance will apply to qualifying plant and machinery, including assets intended for leasing. While exclusions remain (such as cars and second-hand items), this higher initial relief offers an incentive for new acquisitions. For lessors and providers of asset or equipment finance, this may lift demand for fresh stock and strengthen the case for upgrading assets rather than holding older items for longer.
Alongside this, the writing-down allowance for the main pool will fall from April 2026. This reduces ongoing relief on long-term asset groups, making it important for portfolio teams to reassess replacement cycles, pricing and forecasting. The contrast between strong up-front relief and weaker long-term deductions is likely to influence both customer offerings and internal budgeting.
Securitisation and Structured Funding
The Budget introduced a new tax measure aimed at arrangements where assets are transferred into a securitisation vehicle but continue to sit on the originator’s balance sheet, with a linked liability also recognised. If a deduction arises from this and tax benefit is a main motive, the deduction may be restricted.
This is significant for loan originators, banks and non-bank lenders that rely on securitisation for funding. Structures involving retained exposure, intra-group routing or complex balance sheet treatment will need review. Upcoming transactions may require adjustment to avoid unwelcome tax outcomes, and funding teams will need clear alignment between accounting treatment, tax treatment and economic purpose.
Corporation Tax and Reporting Discipline
The main corporation tax rate remains in place, but from April 2026 the penalties for late filing will increase. For lenders and brokers operating under tight regulatory expectations, this heightens the need for reliable data flow, timely reconciliation and firm control over reporting deadlines. Any gaps in process design or handover between teams may now carry greater financial consequence.
VAT Grouping for Cross-Border Structures
The government has reinstated the earlier approach to VAT grouping for services involving UK and non-UK members. Firms with operational hubs outside the UK may need to revisit internal billing, cost allocation and VAT recovery positions. For banks, lessors and lenders with shared service centres or multi-entity setups, this may alter internal pricing models and the VAT footprint of supply chains.
Economic Crime Levy Adjustments
From April 2026, changes to the levy will apply to businesses covered by anti-money-laundering rules and above the current turnover threshold. For regulated firms, this reinforces the need for strong AML frameworks and careful financial planning across compliance functions.
How VLS will support you
Each of these measures introduces fresh pressure points for the finance sector. Regular portfolio reviews may be needed to capture first-year allowance benefits and adjust for reduced long-term relief, tax-sensitive structures require prompt assessment to avoid unintended restrictions, borrower affordability could shift as broader tax measures interact with household finances, and higher penalties and revised VAT rules call for dependable reporting, accurate data and tight oversight.
With nearly three decades supporting financial organisations across the UK and beyond, VLS is equipped to help our clients adapt processes, manage risk and maintain smooth operations in light of the Budget. Our teams can provide targeted reviews, operational support and portfolio guidance tailored to your structure.
