The government’s new tax policy making principles are welcome but will they be applied in practice?
Published in the wake of the Spending Review on 12 June 2025, the government’s new Tax Policy Making Principles document sets out the government’s approach to delivering tax policy changes.
These principles focus on predictability and stability – with confirmation of a single major fiscal event per year, a smart and agile approach to consultation which promises ‘dynamic and frequent’ engagement with the tax profession, and a commitment to transparency so that the rationales for tax policy changes are made clear.
Commenting on the new document, Paul Falvey, a tax partner at BDO said: “In recent years, we have heard a consistent message from businesses that they need tax certainty in order to take long-term investment decisions.
“The corporate tax roadmap published in October last year was a good first step in setting out the government’s plans for corporation tax and the areas for potential change.
“This new principles document is a further welcome sign that the government is listening and recognises that predictability and stability should be core features of our entire tax system.
“We also welcome the commitment to transparency and the apparent willingness of the government to engage with the tax profession on policy development.
“The tax profession is willing to play a role in commenting on policy development by making constructive suggestions, identifying unintended consequences and examining tax measures which may have an impact on businesses, communities and the wider economy.
“The principles also provide for some latitude and ‘flexibility’ when it comes to engaging with stakeholders on tax policy development – for example for rate and threshold changes where there may be a risk of forestalling.
“However, while there is much merit in these principles, it remains to be seen how they will be applied in practice.
“If you take the recent example of proposed changes to the business and agricultural relief from inheritance tax, there was only very limited consultation on technical aspects of the new rules – and, many would argue, insufficient consideration of the wider impacts on the sustainability of family businesses and farms.
“Mid-market businesses are set to contribute £745bn to the UK economy by 2028 but are frequently overlooked and undervalued by policymakers. We’ll be keeping a close eye on how these policy principles are applied in practice to check that the government recognises their importance.
“There is also a question over whether these principles will be able to withstand the pressures from unexpected economic shocks, market volatility and political short-termism. Only time will tell.”