A demerger involves splitting the trading activities of a single company or group into two or more independent entities. This can be facilitated by distributing the assets of a holding company to its shareholders.

There are special statutory demerger provisions that are designed to make it easier to divide and put into separate corporate ownership the trading activities of a company or group of companies. An exempt demerger will be deemed to occur under these provisions. As a result, the distribution is typically exempt from Income Tax and usually does not trigger any Capital Gains Tax, as the gains are effectively rolled over.

The provisions do not apply where a trading activity is to be sold or becomes owned by a person other than the existing member of the original company.

The provisions allow for the removal of the distribution charge in appropriate circumstances, making the distribution an ‘exempt distribution’. This applies to trading activities only. Companies that utilise the demerger provisions range from small private businesses to some of the largest public companies in the UK.

The legislation also provides for a clearance procedure. Under this a company that wants to demerge trading activities can obtain advance confirmation from HMRC that the distribution that will arise will be an exempt distribution.

1 December 2025 – Due date for Corporation Tax payable for the year ended 28 February 2025.

19 December 2025 – PAYE and NIC deductions due for month ended 5 December 2025. (If you pay your tax electronically the due date is 22 December 2025).

19 December 2025 – Filing deadline for the CIS300 monthly return for the month ended 5 December 2025. 

19 December 2025 – CIS tax deducted for the month ended 5 December 2025 is payable by today.

30 December 2025 – Deadline for filing 2024-25 self-assessment tax returns online to include a claim for under payments to be collected via tax code in 2026-27.

1 January 2026 – Due date for Corporation Tax due for the year ended 31 March 2025.

19 January 2026 – PAYE and NIC deductions due for month ended 5 January 2026. (If you pay your tax electronically the due date is 22 January 2026).

19 January 2026 – Filing deadline for the CIS300 monthly return for the month ended 5 January 2026. 

19 January 2026 – CIS tax deducted for the month ended 5 January 2026 is payable by today.

31 January 2026 – Last day to file 2023-24 self-assessment tax returns online.

31 January 2026 – Balance of self-assessment tax owing for 2024-25 due to be settled on or before today unless you have elected to extend this deadline by formal agreement with HMRC. Also due is any first payment on account for 2025-26.

The Chancellor’s Autumn Budget, delivered on November 26, 2025, sets the stage for a period of considerable fiscal change over the coming years. While headline income tax rates on earned income remain unchanged for now, the extensions of existing tax threshold freezes, and the introduction of targeted tax increases elsewhere, amount to a significant tax-raising event through “fiscal drag”.

For individuals and businesses, the key takeaway is a need for proactive financial planning. The measures announced create specific windows of opportunity and highlight the growing importance of using tax-efficient structures. Here are the immediate planning opportunities to consider.

1. Revisit Your Pension Strategy

Significant changes to pension rules are on the horizon. From April 2029, National Insurance relief on salary sacrifice pension contributions will be capped at £2,000 annually per employee. Additionally, from April 2027, most unused defined contribution pension funds will be subject to Inheritance Tax (IHT).

• Action Point: Higher earners using salary sacrifice should review contribution levels and potentially accelerate contributions before the cap. To mitigate future IHT, consider withdrawing the tax-free lump sum during your lifetime to spend or gift.

2. Optimise Your ISA and Savings Strategy

Changes to savings rules encourage a move towards investments over cash. From April 2027, the annual cash ISA allowance for those under 65 will be reduced from £20,000 to £12,000, although the overall £20,000 ISA limit remains. Tax rates on savings interest and property income will increase by two percentage points across all bands from April 2027, with dividend tax rates increasing for basic rate and higher rate tax payers by the same amount, two percentage points, from April 2026. Dividend income falling into the additional rate band is unchanged.

• Action Point: Consider low-risk investments within a Stocks and Shares ISA to utilize the full allowance. Maximize contributions to ISAs and pensions to shield savings from rising taxes, and business owners may consider bringing forward dividend payments before the rate increase.

3. Review Business and Property Structures

Immediate changes impact business owners and property investors. Capital Gains Tax relief on selling a business to an Employee Ownership Trust (EOT) was immediately halved from November 26, 2025. A new annual surcharge on properties in England valued over £2 million will apply from April 2028. Capital allowances are also changing, with a new 40% First-Year Allowance for plant and machinery in January 2026 and a decrease in the main Writing Down Allowance rate from April 2026.

• Action Point: Business owners considering an EOT exit should seek immediate advice. Owners of high-value properties should consider the long-term impact of the surcharge. Businesses should review capital expenditure plans to align with the new allowances.

Conclusion

The Autumn Budget 2025 signals a strategic shift in the tax landscape over the medium term, with the freeze on income tax thresholds until 2031 expected to bring more individuals into higher tax brackets. Effective financial planning requires adapting strategies to this new multi-year reality, making it crucial to consult with your qualified financial or tax advisor.