Compliance
Compliance Essentials Under Budget 2025: Inheritance Tax Anti-Avoidance & Employee Expense Reliefs
With Budget 2025 introducing new anti-avoidance measures for trusts and non-long-term residents, and changing reliefs for employee home-working and eye tests from April 2026, businesses and individuals must adjust to avoid unexpected tax liabilities.
By NomadicTax Research Team • 5-8 min read • May 20, 2026
## Trusts and Non-Long-Term Resident Inheritance Tax (IHT) Reforms
The government is closing loopholes for **non-long-term UK residents** and trusts. From **6 April 2026**, trusts that relocate situs before exit charges will be caught under new rules, and long-term UK residents & overseas investors will receive equal treatment regarding UK agricultural property. ([gov.uk](https://www.gov.uk/government/publications/budget-2025-overview-of-tax-legislation-and-rates-ootlar/budget-2025-overview-of-tax-legislation-and-rates-ootlar?utm_source=openai))
### What qualifies as a 'long-term resident'?
Defined as someone who has been a UK resident for **10 of the previous 20 tax years**, and then remains in scope for 3-10 years after leaving. Non-UK assets and interests in trusts may become subject to UK IHT depending on residence status. ([gov.uk](https://www.gov.uk/government/publications/tax-changes-for-non-uk-domiciled-individuals/reforming-the-taxation-of-non-uk-domiciled-individuals?utm_source=openai))
## Changes to Employee Benefits & Expenses Reliefs
From **6 April 2026**, certain employer-reimbursed costs such as **eye tests**, **home working equipment** and **flu vaccinations** will be **exempt** from Income Tax and National Insurance. Also, relief for employees for non-reimbursed home-working expenses is being removed; only employer-reimbursed or provided items qualify. ([gov.uk](https://www.gov.uk/government/publications/budget-2025-overview-of-tax-legislation-and-rates-ootlar/budget-2025-overview-of-tax-legislation-and-rates-ootlar?utm_source=openai))
## Key Compliance Actions
- If you operate or benefit from a trust, **review situs changes** or settlor interests. For overseas trust holders, pre-2025 foreign income may be taxed under new matching or IHT rules.
- Employers: set up policies to reimburse home-working expenses correctly; ensure taxable benefit reporting follows new exemptions.
- Employees: make sure any home-working expenses you pay yourself are not assumed deductible after April 2026—unless employer covers them.
- Prepare for enquiries: IHT valuation of agricultural property and trust exit charges may now include overseas or offshore interests where previously avoided.
## Examples
- **Landowner “GreenFields Ltd.”** owns UK agricultural land via offshore trust: under the new rules, this may now be taxed like land held onshore, if trust is overseas or settlor-interested.
- **Employee “Alex” works from home and buys a desk himself:** previously could claim some deduction if self-employed or via policy, but after 6 April 2026 this relief is removed; must get reimbursement from employer if available.
**Conclusion**: Budget 2025 introduced multiple compliance changes that will bite from April 2026. Trust owners, long-term residents, employers, and employees alike should perform tax health checks now—make sure policies, benefits, and structures are compliant to avoid surprise liabilities.