One-Off Tax Reduction—What You Can Do Now
Hong Kong’s Budget for the year of assessment 2025/26 includes a 100% reduction of profits tax, salaries tax, and personal assessment tax, but with a cap of HK$3,000 per case. (ird.gov.hk). Individual taxpayers with only salary income will benefit directly; those running businesses should see corresponding savings in profits tax.
Planning Tip:
If you expect to owe tax for 2025/26 across multiple sources (salary, business, rentals), consider whether electing personal assessment (which consolidates income types) gives you more favorable outcomes. The cap applies per case, so strategic election may increase benefit.
Adjusted Allowances—Make Them Count
From 2026/27 onwards, several allowances have increased: basic, married person’s, single parent, child, additional child, and dependent parent/grandparent allowances, plus deduction ceiling for elderly residential care expenses rising from HK$100,000 to HK$110,000. (ird.gov.hk)
Actionable Steps:
- Check your eligible dependents’ ages to ensure you maximise dependent parent/grandparent allowances.
- If considering for newborns born after April 1, 2025, note that the additional child allowance period is extended from 1 year to 2 years. Claim early. (ird.gov.hk)
Stamp Duty Reforms—Who Takes the Hit
Three important changes:
- Residential property sales above HK$100 million now see stamp duty increased from 4.25% to 6.5% for any instrument executed on or after February 26, 2026. (ird.gov.hk)
- Criteria for stamp duty relief for intra-group property transfers are relaxed to widen eligibility. (ird.gov.hk)
- Waiver of stamp duty for non-residential property transfers into REITs if certain conditions are met, aimed at encouraging institutional investment. (ird.gov.hk)
Strategy Tips:
- Consider delaying large transactions unless you clearly qualify for relief or are unaffected by the increased rate.
- Realtors and property investors should assess how intra-group setups change or simplify transactions under new relief criteria.
- REITs may benefit from strategic acquisition planning given the waiver, if current or prospective structures satisfy the new conditions.
Example
A married couple with one newborn born in mid-2025 will from 2026/27 claim child allowance and additional child allowance at HK$140,000 each, and double that allowance for the first two years post-birth under the extended period. The combined allowance boost plus one-off tax reduction could reduce their overall tax bill significantly—perhaps thousands of HK dollars depending on income bracket.
Bottom Line: The Budget’s measures open doors for both short-term relief (via one-off reductions) and longer-term savings via allowances and property transaction planning. Best to review your 2025/26 income mix and upcoming real estate or REIT moves now.